There are now 25,000 healthy and productive examples of how dairy farmers have unlocked capital by leasing dairy cows. 

Leading dairy cow leasing business, Cowbank, recently leased its 25,000th dairy cow to Gippsland dairy farmers John and Sue Scott, who have been able to accelerate their recovery from drought without using their own capital – often an unfortunate reality when purchasing livestock.

"We’re just coming out of the worst drought we’ve ever seen, and through leasing, rather than buying stock, our production levels are nearly back to normal," Mr Scott said. 

"We couldn’t afford to wait two or three years to get back to our production levels; now we’re able to get stuck into any debt and interest incurred during the drought. 

"If you can’t quickly recover production levels and repay debt, it can become a downward spiral." 

While the 25,000th cow, leased to the Wonthaggi-based dairy farmers was blissfully unaware of her impact, the achievement was not lost on the team at Cowbank, which includes experienced and regionally-based field officers. 

"While it is important to us at Cowbank that we work with dairy farmers who can grow grass, who love their cows and who are good people, we all need to remain profitable – reality says that cows are for harvesting grass and turning it into cash," says Rod Banks, founding Director. 

"Many dairy farmers have now experienced that leasing can be a pathway to increased profitability by freeing up capital usually poured into buying livestock. 

"It’s a viable option and consistent with one of our business aims, which is to challenge the herd mentality." 

The Scotts were introduced to the "Cowbank idea" by their accountant Glenn Stagg who identified leasing from Cowbank as an effective way of funding a herd. 

If the herd is maintained and normal calving rates are achieved, the lease can actually pay for itself in five years. 

The lease keeps the stock - and the associated ‘debt’ - off the balance sheet and classified as an operating lease, thereby attracting all the associated tax benefits according to Mr Scott. 

"Through leasing we have been able to grow our business rather than waiting to accumulate the funds; we’re making progress all the time rather than waiting," he said. 

Leasing is an alternative that many dairy farmers are familiar with; however, the Cowbank option has opened many eyes to the full benefit of this financial arrangement. 

Operating in southeast Australia, Mr Banks says one of the advantages of Cowbank is that livestock are not mortgaged. 

"One of the many benefits that Cowbank offers is that we are the only company to provide the market with the opportunity to lease livestock, rather than finance it through a livestock mortgage. 

"Cowbank’s lease can be for the full purchase price of the animal, is not linked to mortgages to land, and the full lease payment is a tax deductible expense to the lessee."