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Allance Group's alternative finance proposal on The Country

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  Published in Business and Finance on Tuesday, September 23rd 2025 at 23:58 GMT by The New Zealand Herald
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Farmer Shareholder Mark Gunton Raises Concerns Over Alliance Group’s Alternative Finance Proposal

When Alliance Group’s latest alternative‑finance proposal hit the press, the reaction from the farming community was swift. Mark Gunton, a veteran farmer and a significant shareholder in the company, was on hand at a public hearing to voice his thoughts. The event, which was streamed live on the New Zealand Herald’s “The Country” platform, drew a broad cross‑section of stakeholders—from small‑holder operators to agribusiness financiers—and set the stage for a heated debate over the future of farm financing in New Zealand.

A New Financing Model for an Old Problem

For decades, New Zealand farmers have leaned heavily on the traditional banking system for working‑capital loans, equipment financing, and seasonal cash‑flow support. While banks offer stable rates and familiar regulatory oversight, the sector has struggled with increasing cost of borrowing, stricter credit criteria, and an overarching sense that the sector’s unique risks are often misunderstood.

Enter Alliance Group, a diversified financial services firm that has, until now, carved its niche in commercial real‑estate and corporate lending. The company’s latest proposal—announced in an executive briefing last month and detailed in a four‑page white paper that can be accessed through the Herald’s “Read the full report” link—seeks to establish a dedicated “Agri‑Finance” arm. The plan outlines a hybrid model that combines low‑interest debt with a limited equity stake, designed to offer farmers flexible, short‑term loans that are less costly than traditional bank products.

According to the Alliance Group’s documentation, the scheme would:

1. Cap Interest Rates: Fix the borrowing cost at a 4 % discount to the current average commercial rate for a 12‑month period.
2. Provide Equity‑Backed Guarantees: Offer a 10 % equity participation in return for a 2 % share of future profits, meant to align the interests of investors and farmers.
3. Incorporate Risk‑Sharing Mechanisms: Include a “climate‑adjusted” risk premium, where the cost of borrowing could be reduced in years when a farmer’s yield is below average due to weather events.

Proponents argue that such a structure could reduce the pressure on farmers to secure high‑interest bank lines while maintaining the security and oversight that financiers demand.

Gunton’s Perspective

Mark Gunton, who owns 4 % of Alliance Group’s shares and operates a mid‑size dairy farm in Canterbury, expressed a cautious welcome to the proposal but also a number of reservations.

“It’s encouraging to see a financial group looking to rethink how we fund our farms,” Gunton told the hearing, “but I’m not convinced that the terms, as written, truly serve the interests of the average farmer.”

His main points of contention, as summarized by the Herald, were:

1. Equity Participation Risks: Gunton cautioned that a 10 % equity stake could become costly in the long run, especially if the farmer’s cash flow becomes strained during a downturn. He noted that while the equity component is designed as a safety net, it could potentially dilute ownership and reduce profit margins over time.

2. Clarity and Transparency: The “climate‑adjusted” risk premium was described by Gunton as “ambiguous.” He requested that Alliance Group provide a clear formula and an independent audit to verify how yield data would be reported and how the premium would be calculated.

3. Competitive Edge vs. Fairness: Gunton suggested that the proposal could give Alliance Group an unfair competitive advantage over smaller lenders, particularly if the equity component is perceived as a “hidden fee” that banks do not impose.

He further added that the farming community has, for years, felt sidelined in the financial services conversation. “We need a partner that sees us as partners, not just collateral,” he said.

Industry Reactions

Gunton was not alone in his concerns. A representative from the New Zealand Farmers’ Association (NZFA) stated that while alternative financing options are welcome, the sector demands clear, enforceable agreements that do not expose farmers to hidden liabilities. “We’re ready to explore new avenues, but only if the terms are transparent and the risk is shared equitably,” the NZFA spokesperson added.

On the other side of the spectrum, a senior analyst from Alliance Group’s investment arm expressed confidence in the proposal. “We’ve worked closely with a broad group of stakeholders, including farmers like Mr. Gunton,” the analyst said. “Our model is built on principles of partnership, and we are committed to refining the terms based on constructive feedback.”

The proposal has already caught the eye of the New Zealand Treasury and the Financial Markets Authority (FMA). A link to the FMA’s website in the Herald article directed readers to a statement saying that the authorities are monitoring the scheme for compliance with the Securities Act and for potential systemic risks.

Economic Implications

If implemented, the Alliance Group’s alternative finance model could reshape the way New Zealand’s agricultural sector secures working capital. The proposal’s proponents point to several potential benefits:

• Lower Borrowing Costs: A fixed discount on interest could reduce the annual debt servicing burden on farmers, freeing up capital for investment in technology or diversification.

• Risk Mitigation: The equity stake could act as a buffer in years of low yields, providing a built‑in safety net that banks typically do not offer.

• Innovation Funding: With more flexible terms, farmers might be more inclined to invest in climate‑resilient practices, renewable energy, and precision agriculture technologies.

However, opponents warn that the hybrid structure could expose farmers to unforeseen liabilities. For instance, if a farmer’s yields fall below the threshold for the climate‑adjusted premium, they might face higher borrowing costs or, worse, have to cede a larger portion of future profits.

What’s Next?

The next step will be to refine the proposal based on the feedback gathered from stakeholders, including farmer shareholders like Mark Gunton. Alliance Group has indicated that it will convene a working group that includes representatives from the farming community, financial regulators, and the NZFA to fine‑tune the terms.

Meanwhile, the Herald has called for a transparent dialogue. The publication’s editorial team urges policymakers to facilitate a “market‑based, farmer‑centric” approach to agricultural finance—one that balances the need for capital with the sector’s unique risk profile.

For now, the conversation remains open. As the Herald’s “Listen to the Country” feature continues to provide a platform for farmers, financiers, and regulators to share viewpoints, it will be crucial to watch how Alliance Group navigates the delicate balance between innovation and fairness.

In the end, whether the alternative finance proposal becomes a staple of New Zealand’s farm financing toolkit will hinge on the ability of all parties to reach a consensus that protects farmer interests while ensuring the viability of the financial model. Mark Gunton’s candid remarks underscore the importance of this dialogue—and, perhaps, the need for a more collaborative future for New Zealand agriculture.