Food agri sector
29 Rabobank Group Annual Report 2005
Core activities: domestic retail banking
Investing in entrepreneurship
At the end of 2005, Rabobank launched a new advertising campaign for
corporates. Its message is: Rabobank invests in entrepreneurship.
Rabobank's vision is that success in the longer term rather than short
term profit is key. Forward-looking and continually adjusting enterprises
stand a better chance of healthy and sustained development. By offering
a comprehensive service package and extra financial support, the local
Rabobanks aim at giving these entrepreneurs an opportunity to realise
their ambitions. In addition, Rabobank invests in creative entrepreneurs
via (innovative) funds and business prizes such as the Herman Wijffels
Innovation Award.
Focus on start-ups
The number of start-up businesses grew in 2005, in spite of the unfa
vourable economic conditions. Almost half of these start-ups set up
business in the large cities. Starting up an enterprise successfully is no
easy thing, and a helping hand is always welcome. Rabobank is pleased
to lend that helping hand, not only financially, for example by means of
micro-credits and its springboard mortgage, but also by opening up its
network. Rabobank Amsterdam, together with District Southeast
(Stadsdeel Zuidoost) and the Municipality of Amsterdam, has established
a micro-credit fund for the District Southeast. Small businesses from this
district often are not eligible for regular financing because they are
considered a risk group. With the aid of this fund, they can obtain small
loans with a maximum term of 5 years. Various local Rabobanks have
meanwhile joined this initiative.
The Rabobank branch in Geldrop Heeze-Leende helps start-ups by
organising regular meetings and workshops where they meet experien
ced (former) entrepreneurs. The exchange of knowledge, contacts and
experience gives start-ups a greater chance of success. The response to
this start-up network is very positive and earned Rabobank Geldrop
Heeze-Leende the title of Member Bank of the year 2005.
Lending up 5%
In the year under review, lending in the trade, industry and services
sector grew by 5% to EUR 37.5 (35.6) billion. The increase in lending to
the transport, healthcare, recreation and real estate sectors was higher
than average, whereas lending to wholesaling and construction enter
prises declined. Due to customers grew slightly, partly as a result of a
prudent investment policy.
Rabobank is originally a bank of and for farmers and horticulturists and
the food agri sector remains of great importance to Rabobank. This
sector comprises primary agriculture and horticulture as well as the
associated supply and processing industries. Currently, there is a consoli
dation cycle in the food agri sector that is leading to an increased scale
of operations and extensive automation. In the primary sector, large-
scale and highly specialised businesses will account for an ever-growing
part of food and flower production. The supply and processing elements
in the chain are experiencing the same trend.
For the local Rabobanks, this means that the number of food agri
clients will continue to decline but that average financing per enterprise
will grow. A noticeable trend is that besides the more standard services,
demand for risk-bearing products and hedge instruments is increasing.
Sale leaseback constructions are becoming household words in glass
house horticulture and pig farming, as are interest rate derivatives.
The bank is increasingly and more urgently requested to respond to and
participate in assessing various developments. Business relocations and
large investments ('spronginvesteringen') are increasing in number.
The growing volatility in revenues requires tailor-made products.
It is anticipated that many agriculturists will end their business activities
in the next few years. In order to retain these clients for Rabobank, we are
working closely with Private Banking. The young agriculturists that are
taking over businesses are another group that is important for the bank
and the sector. Rabobank is the main sponsor of the Nederlands Agrarisch
Jongeren Kontakt (Dutch Agricultural Young People's Association).
The Rabo Land Value Plan has been developed for young clients with a
sound strategy for the future and for clients wishing to phase out their
activities. Under this form of financing, agricultural entrepreneurs with
land of their own can get redemption-free loans secured by the land.
Food agri expertise
In order to keep abreast of developments in the agricultural sector,
Rabobank Nederland has a special Food Agri department where all
expertise has been bundled. Clients, local Rabobanks and Rabobank's
international network can benefit from this knowledge centre. Its know
ledge is shared by means of, for example, presentations and studies on
diverse subjects. Trade flows are illustrated in the Flower Map, which
was presented at the Hortifair. The study for the Dutch dairy farming
sector, entitled Between Passion and Pressure, was a central element at
many seminars throughout the country. Another example is the analysis
of the effects of the sugar regime revision. Via presentations in various
European countries, clients have been informed of the consequences
of this revision.
Naturally, bird flu also received a great deal of attention. A risk analysis
showed which risks clients - but also the local Rabobanks themselves -
may be exposed to should bird flu spread in the Netherlands and which
options are at hand to minimise those risks.
