Rural areas feeling ag slowdown

The survey of over 1000 businesses nationwide, including at least 200 rural SMEs, found that in the last 12 months only 18% of rural SMEs have seen revenues rise; the SME average for rising revenues is 31%. Almost one third (32%) have seen revenue decline in the year to August 2015 (25% SME average).

MYOB New Zealand national sales manager Scott Gardiner says the challenges in the agricultural sector, especially with the fall in dairy prices, have reverberated quickly in the regions.

"These latest results are a good indicator of how quickly a downturn at the farmgate can have an impact on businesses in communities throughout rural NZ," says Gardiner.

"While the effects of instability in international markets, especially China, a slowdown in Australia, and the fall in dairy prices are widely recognised as having pressured NZ farmers, it is troubling to see how fast that has rippled through rural business communities."

Meanwhile, only 20% of business operators surveyed in rural areas are forecasting revenue growth in the next year, and only 16% of those in the agricultural sector forsee improving revenue in the next 12 months.

Gardiner says the survey also found that 28% of rural businesses are expecting a revenue fall and 35% of SMEs in the agricultural industry.

Falling revenue in the rural sector is also reflected in much lower confidence in the overall economy. While half (51%) of all SME operators expect the economy to decline in the next year, 69% of rural business operators and 76% of agricultural businesses are forecasting a deterioration in the whole economy.