Preparing your farming business for the future

By BNZ Head of Agribusiness, Colin Mansbridge

The debate around Mycoplasma Bovis currently focusses on the efficacy of the eradication programme and whether the costs of the program will outweigh the benefits. Not long ago the dialogue was about the emotional stress of farmers watching their whole herds being slaughtered, some with generations of genetic improvement invested in them. Continue reading…

World Dairy Prices 101 with Tony Alexander

We’ve heard about Greece and China. This time, in a Q+A session, we asked BNZ Chief Economist Tony Alexander to explain why international dairy prices are so low, whether farmers should be able to farm through them, and what it means for the New Zealand economy. Here are his answers. Continue reading…

Resilience in business: 5 steps to get started

“Resilience” is a buzz word that farmers will be hearing a lot of at this year’s Fieldays. But what exactly is resilience? We asked Resilient Farmer founder Doug Avery (2010 South Island Farmer of the Year and 2013 Landcorp Agricultural Communicator of the Year) for his point of view.

Continue reading…

Planning for an uncertain future

Simon Pickering is a BNZ Asset Finance Specialist with an interest in agribusiness. 

One of the overriding themes of any lending decision we make is that all the deals are done with an eye on the future — the idea being the minimisation of undue risk. When we’re setting up a loan structure, the time frames involved mean we’re setting up repayment schedules for periods that are usually years down the track. Predicting the future is hard. But if we take a look at some of the issues the agribusiness sector is facing, we can make some very well informed decisions all the same.

For farmers or agricultural contractors, the ability to plan ahead is often hindered by things outside of their control. The most obvious example of this come thanks to two poor seasons in a row for dairy farmers who’ll likely be squeezed for cashflow as a result. The trick is to build this uncertainty into your plans, and asset finance is a great tool for helping deal with the ups and downs of our industry.

But the future-pains aren’t the exclusive domain of dairying, we’re seeing farmers in other parts of the agribusiness sector who are finding it increasingly difficult to employ skilled machinery operators for three months of the year. This points to a real need for simplified processes when it comes to bringing in foreign operators to fill the gap. If you’re a contractor, this applies to you too.

Health and safety considerations are another aspect of the future that everyone in the agribusiness sector need to plan for. Law changes and the formation of Workplace NZ are both changing the landscape in which we’re doing business. People need to be aware of all the different aspects of the health and safety regulations lest you fall foul of some heavy fines that are now handed out within the industry for injuries that happen at work.

Believe it or not, BNZ can also help in this regard. BNZ has a strong association with the Rural Contractors Federation and we’re heavily involved in various industry discussions. So if you’re an agribusiness contractor who’s struggling with all of this and you’re not in the federation, we can put you in touch with people who are so they can share best practices.

Come talk to us about all parts of your business and find out how we can help you plan for the future with the right lending facility, the right products and, above all, the right people.

Smart agriculture: What resilient farmers do differently

Falling milk prices have seen renewed discussion about the tough times ahead for those in the dairy sector, and as such it seems a timely opportunity to share some insights into how farmers can put themselves into the best possible position to overcome the challenges ahead.

Adaptability and resilience have become critical to successful agribusiness ventures and we see time and again that the most profitable and resilient businesses are the ones where the decision-making over a period of time has been of a high standard.

It’s important to respond with reassurance and agility in times of stress and our bankers are empowered to do what is right for customers; however it is obvious that there are some fundamental actions that separate those farmers who are always affected negatively and the ones next door who grow and prosper through all conditions.

There are five key things they do differently. They:

  • Have a clear strategy and execute on it quickly.
    They know the impacts of adding or taking away costs and have already budgeted both feed and cash so that they are in a position to fill shortages before they happen.
  • Know what the long term impact of short term decisions were.
    Decisions like drying off, keeping cows home from grazing, how many cows to milk, what you do with surpluses in good years, all have an impact and it’s important to know what it is for your business.
  • Involve their professionals in their process.
    They don’t try to solve problems all by themselves. This is important for your mental state as well as your business. Resilience is not staunchly dealing with things on your own.Your advisers (banker, farm adviser, accountant, fertiliser rep) are in the information market every day and the earlier we can discuss financial and farming pressures with clients and work through their action plan with them, the earlier we are able to consider what assistance we can provide. Don’t leave things until the last minute.
  • Have a farming structure that adapts and has some redundancy-flexibility in it to cope with, and potentially profit from, adverse events.
    If you don’t have a reliable irrigation, there is the possibility that you will face some sort of dry event, and in some cases on a regular basis. The best farmers embrace this fact and have systems in place to ensure that dry conditions are considered as part of the farming system.
  • Recognise that there are a lot of things they cannot control and focus on controlling the ones they can.
    You can’t control the weather or stock-milk prices or the exchange rate or floating interest rates. But you can control your farming system, what pasture species you have, what your stocking rate is at various times of the year.

Act now

We found that while support packages for things like extreme weather and other events are important to assist those who are struggling, using them once these events have been announced is really leaving it too late.

It has become clear that building adaptability and resilience is the key differentiator in hard times and some new skills need to be learned and applied where unforeseen pricing and weather events can create stress for farm owners and their families. Farming is tough enough already. If you’re under stress mentally or financially then it’s time to act, because there is probably a better way.

The key is acting before the event takes place, having plans and budget in place and keeping your advisers in the loop. And remember above all, you’re not on your own.

John Janssen is BNZ’s Head of Agribusiness.