The buy now, pay later (BNPL) revolution has arrived for the agriculture industry, but opinions are split over the benefits of buying sheep or hay with deferred payments.
Australian Securities and Investments Commission (ASIC) research in 2020 found one in five customers were missing payments.
Social media advertisements by one company, DelayPay, promise easy money to purchase "sheep, lambs, or stud stock" for agribusinesses that are "cashflow tight".
The website of another company, AgPay, says it brings together agricultural skills with "deep expertise in finance".
AgPay managing director Ben Edney said the business was aimed at cropping farmers, with capital between $50,000 and $1 million approved within 48 hours.
BNPL arrangements allow consumers to buy and receive goods immediately from a merchant and repay the financial provider, such as AgPay, over six to 12 months.
"Banks are bureaucratic beasts. It takes a very long time to get approvals from banks, particularly regarding agricultural working capital," Mr Edney said.
The loans are generally short term to allow for the purchase of inputs and must be paid back within 12 months.
BNPL schemes have been blamed for sending some Australians into a debt spiral.
But Mr Edney said his service did not put unknowing farmers at risk.
"We have no desire to create problems, in fact quite the contrary," he said.
"There are a number of applications we've had to decline because [they did not have] what we view as reasonable credit requirements."
Through artificial intelligence and other systems, approvals are made on the basis of the primary producer's balance sheets and their cropping plans and history.
DelayPay can approve loans for stock, machinery, and feed within 24 hours, which must be repaid in six months.
The ABC contacted DelayPay for comment.
Rising industry
David Galloway is the executive officer of the NSW Rural Financial Counselling Service, which covers central, western, and northern parts of the state.
With livestock prices sky high and commodities surging, he said some farmers and small businesses were struggling to re-enter the market following years of drought and other disasters like the mouse plague and floods.
He described BNPL as a new player in the agriculture industry, which is dominated by banks and government-backed schemes like the Regional Investment Corporation and NSW Rural Assistance Authority.
The financial counselling service already has clients who have been caught out by BNPL.
While debt was common for agricultural enterprises, he cautioned producers before diving headfirst into the BNPL revolution, especially for assets such as stockfeed or animals.
"It adds another element of risk," he said.
"You're not only dealing with interest rates, penalty payments, you're then also hoping the livestock price holds.
Increased risk
RMIT economist Angel Zhong said, like any service, there appeared to be pros and cons.
The pros included "getting rid of a lot of paperwork and making the receipt of these payments seamless" but Dr Zhong said, "We do need to have some regulation in place to protect the farmers".
She warned these forms of loans could become riskier in the face of climate change.
In the case of AgPay, those penalty interest rates are anything up to 8 per cent.
The transparency of those figures has come under fire by Dr Zhong, who wants the BNPL industry better regulated by ASIC.
Providers are generally considered not to be regulated under the federal law that ASIC administers to set out obligations for responsible lending.
Many banks do not currently include BNPL obligations when approving loans "so you can easily increase your liability", Dr Zhong said.
Mr Edney supported the call for greater consumer protection.
