February 9, 2010

Perth-based grain producer AACL Holdings is aiming to go public, after lodging a prospectus with the stock exchange to raise A$11 million (US$9.5 million).

AACL was established in Western Australia in 1997 and works in partnership with individual farm units to produce grain through its Grain Co-Production (GCP) product.

The company loans capital to farmers for planting, who in then share a certain percentage up to a certain production level with the company.

If there is no production, then the farmer is not liable to pay back costs, although rates for capital are slightly higher than conventional lenders if there is a crop, off-setting AACL's risk.

The GCP product has gone nation-wide and has attracted a loyal following from across the country, with total AACL-funded tonnages rising to 467,000 tonnes for the last harvest.

Many farmers have said it has been a good means of hedging against production risk, in the absence of a multi-peril insurance product.

AACL managing director Andrew McBain has said that while the product is a great hedge product for farmers, the business does its own risk management by only taking on farmers it thinks will perform well.