THE ramifications of the recent Banking Royal Commission (BRC) have profound significance for everyone involved in agriculture, according to Ag Institute Australia (AIA) chair Turlough Guerin.
Mr Guerin said agricultural organisations, including AIA and its directors and members, needed to recognise and learn from the BRC findings.
“The BRC has been a reminder that director’s duties should focus on the interests of the organisations which will be more than just a focus on members benefits (proxy for shareholder returns),” he said.
“It should also include what would be good for an organisation more broadly such as growth, repositioning, and showing leadership to the wider profession.”
Mr Guerin said the BRC findings highlighted the importance of AIA’s recently launched professional accreditation scheme for agriculture, the Chartered Agriculturalist (CAg) program, which directly tackled ethical issues raised by the BRC.
These issues have wide-reaching ramifications for consultants, advisors and other professionals working in services sectors such as agriculture and natural resource management.
“The industry-first CAg scheme sets a new mark of professionalism for people working in, and supporting, the agricultural sector, allowing individuals to demonstrate their level of skills and experience to industry,” Mr Guerin said.
AIA member Paul Guertson, who is active in the irrigation sector, said he could see banks and financial institutions introducing a requirement for more accredited advisers in the farming community to ensure greater trust and confidence in planning and risk mitigation.
Mr Geurtson believes there will be more focus on the type and quality of advice being received by customers.
“The AIA CAg chartered scheme allows banks and financial institutions to be more comfortable with the advice and assistance the farming community and individuals are receiving,” he said.
“The BRC will have a flow-on effect to other industries to ensure best practises on ethics and standards are being applied across the industry. This could carry through to rural supply from fertiliser, chemicals and irrigation systems where free advice is being provided in return for sales.
“The findings from the BRC could see greater transparency between advisers and rural business suppliers. Being a CAg will help provide confidence in the ethics and standards being applied by the advisor.”
Implications of the BRC recommendations are also going to have a direct impact on agriculture.
These include no default interest charges on land affected by natural disasters, introduction of farm debt mediation, and placing the onus on insurers to obtain all relevant information (rather than the insured being penalised for inadvertent failure to disclose).
AIA director Sarah Hunter said many banks involved in agribusiness already had bankers with a level of expertise in agriculture, however the requirement for independent valuation brought transparency to the process.
“In the same vein, and considering the CAg accreditation scheme, we are building a structure which will foster the growth of a cohort of independent experts in agriculture able to bring that value to the sector,” she said.
“I have always believed that the best way to do business is to put the needs of your customer first, even if it means forgoing your own advantage. Sound relationships are built on transparency and trust, and your reputation is everything.”