Debt paydown: VFF board liquidates Grains Group’s $9.7m deed poll fund

A large slice of Grain Group members’ holdings will be used to pay down VFF debt, outraging growers.

Former VFF Grain Group president Andrew Weidemann says the board is “selling off the back paddock to pay for daily outgoings”.

The Victorian Farmers Federation board has liquidated its grains group’s $9.7 million deed poll share portfolio, originally set up with proceeds from the 1996 sale of the Grain Elevators Board.

The move has outraged growers, with former VFF Grain Group president Andrew Weidemann saying the board was “selling off the back paddock to pay for daily outgoings”.

The Weekly Times understands the VFF will use a large slice of the money to pay down a $3 million debt facility it had against the fund, plus reduce borrowings against another $5 million facility it had set up with Westpac.

While the VFF has more than halved its staff and cut advocacy, its interest rate bill has more than tripled in 18 months.

Those familiar with the VFF’s finances said Farrer House was also not fully tenanted and it faced paying $150,000 in legal costs, following a failed bid to expel two members, with another case still to be heard.

VFF president Emma Germano denied the federation faced such high legal costs and disputed the deed poll share value.

One insider said the VFF board was using deed poll funds to stave off yet another operating loss on the back of last year’s $927,757 deficit and the loss of 884 members last year.

Grains group members said the board was advised that if the deed poll share portfolio slumped in value in response to a market downturn, there was a real risk the VFF would exceed the debt ratio, cutting off access to more borrowings.

In a communique to members the VFF board stated it “considered the risk of potential losses from the securities in the current investment environment, and determined that to protect valuable VFF assets and prevent losses, the securities be moved to a term deposit.

“This required the pay out of some debt in order to meet the board’s fiduciary responsibilities.”

The board stated it had consulted the Grains Council before making this decision and would consult further with them in identifying a low-risk long-term investment solution for the asset’s future use.

But grains group president Craig Henderson said he was “extremely disappointed” at the decision and would “continue to act in the best interests of grain growers”.

The deed poll was established by VFF grains group members on the back of their three million-share investment in VicGrain, formed from the state government’s 1996 sale of the Grain Elevators Board.

In 2000, these shares were converted to 500,000 GrainCorp shares when the NSW bulk handler took over the smaller Victorian storage and port operator.

The shares were held by the VFF Property Trust for use by the grain group under a deed poll arrangement and eventually evolved into a diverse portfolio.