increase font size
Hayden Dillon, Crowe Howarth.
With the dairy payout remaining stubbornly low and equity positions becoming more precarious many farmers are seeing more of their bank manager, says Crowe Horwath's head of corporate agribusiness, Hayden Dillon.
Dillon says this increased level of contact isn't always a bad thing and proactive discussions between banker and farmer are an important step to take in dealing with the current financial pressures both parties are facing.
However, it can be intimidating for some and a recent Federated Farmers' survey found that one in 10 farmers were feeling an 'undue' level of pressure from their bank.
Dillon stresses a key factor for a successful banking relationship during these challenging times for the dairy sector is being well prepared with all the relevant information, 'being bank ready' as he calls it.
Dillon encourages farmers to take ownership of the relationship and says he has seen too many bury their heads in the sand and keep dealing with the day-to-day farming jobs, often too scared to look at the bigger picture.
Dillon points out that it's a risky game. "We know banks are being asked to fund another year of losses in many cases. They determine funding by assessing the risk profile of the individuals or business they are lending to. Farmers need to provide them with accurate information to form a clear picture of the farm's position and the confidence they have a plan to get through this.
"While there are a lot of risk factors beyond their control, such as the state of the industry, commodity prices, exchange rates and climatic conditions, there are plenty of risks farmers can mitigate against and thus help control their risk profile or at least provide their bank manager with some comfort," adds Dillon.
"Farmers need to take ownership of the risk factors they can control, and in a financial sense to do this they need to have an accurate picture of where the business sits in real time," Dillon says.
In what can be a rapidly changing market filled with a level of uncertainty, real-time information has become crucial; however, Dillon says in many cases farmers can be presenting their bank with information from 15 months ago, which has become of little use for decision making.
"Real-time cash flow analysis, forecasting and budgeting are vital in today's modern farming business. As things change farmers need to continually adapt their planning, allowing them to mitigate financial risk factors, control costs and make effective business decisions in a timely manner," Dillon adds.
This is where farmers can look to their support team for help, says Dillon. "They should consult their bank manager, business advisor or even an advisory board member to help pull out and make sense of the information they need."
"Farmers should challenge their advisors for help with budgets and forecasting and if they need to they should bring them to their bank meetings for support."
Banks do not want to see farmers out of business, but they do require them to work closely with their bank manager and keep them updated. Dillon also adds, "If your first plan does not work out, make sure you have a back-up plan. This could mean getting more equity from shareholders or selling a run-off block. Everyone will have a different plan, but regardless of what it is, everyone does need to have one."
Central Otago District Council (CODC) has voted against a plan to spread treated sewage sludge from Cromwell and Alexandra on farmland near Lauder, a decision Federated Farmers says reflects strong opposition from rural residents.
Federated Farmers has called on Central Otago District Council (CODC) to drop or vote down a plan to truck sludge from Alexandra and Cromwell to farmland near Lauder, warning it would compound an "outrageous" situation created by a separate council's decision weeks earlier.
Federated Farmers says new legislation replacing the Resource Management Act will cut red tape, unlock investment and help grow New Zealand's export-led economy, after the Planning Bill and Natural Environment Bill passed their third reading in Parliament yesterday.
Leading figures from the major political parties will be questioned on their primary sector policies at the Rural Issues Debate at Mystery Creek Events Centre, Hamilton, on 30 September.
Will the good times last? That's one of the key issues to come out of the latest Federated Farmers confidence survey.
Farmer-owned fertiliser company, Ballance Agri Nutrients is welcoming National’s plan to negotiate security agreements with key supplier countries to protect New Zealand-bound products from export restrictions and greater supply chain certainty.
Carrfields has announced the appointment of Stu Hall to the newly created role of chief operating officer, Carrfields Ltd, reflecting the continued growth of their agribusinesses and the need to ensure the company has the leadership capacity and support in place as it pursues the emerging opportunities ahead.
New Zealand's role is not to compete with Indian growers, according to NZ Apples and Pears.
The potato industry is celebrating the success of two rising stars - James Blair, the 2026 Young Grower of the Year and runner-up and innovation award winner, Amber Davy.
Twenty-eight emerging leaders from across the horticulture sector spent two days last month learning valuable skills and connecting with industry experts.
There are five entrants in this year’s Young Horticulturist of the Year, competing in a series of technical, practical, business and leadership challenges.
OPINION: It seems Canterbury processor Synlait is still in the doldrums.
OPINION: Get offside with New Zealand First leader Winston Peters at your own peril.
