ANZ Barometer challenges farmers to think beyond approaching ‘growth wave’

ANZ Private Owned Business Barometer 2013New Zealand’s most in-depth business survey has highlighted the need for farmers to look beyond an approaching ‘growth wave’ and build a business that is also fit for future economic cycles.

Agriculture insights from ANZ’s 2013 Privately-Owned Business Barometer point to three key areas of focus for farmers in building a sustainable platform for long-term growth: profitability and scale; people and planning; and investment.

“Global demand for protein and fresh produce is translating into better earnings for most agribusiness producers, which has boosted confidence for the coming season. There’s now a wider wave of growth coming that could make New Zealand the envy of most developed countries,” says ANZ managing director, commercial and agriculture, Graham Turley.

“The test for agribusinesses now will be in planning the best response to this opportunity for the longer term.

“We know Kiwi farmers are flexible, adaptable and practical people. They’re used to taking their business through changes of season and occasional extremes of droughts and floods. Many have also made major changes to deal with upheaval from the global financial crisis.

“The challenge now is to ready their business for the coming growth wave in a way that will also position them better to ride out future peaks and troughs. The key to leveraging this new growth for the future is to act now to build a growth platform that’s sustainable,” Turley says.

The ANZ Privately-Owned Business Barometer gives critical insights into a key sector of the economy. The results are widely used by businesses, organisations working with the private sector, and key decision-makers in government. Now in its seventh year, it questioned farmers and business owners from across the country on the issues affecting them and their views on the future.

Key agri-findings of the ANZ Privately-Owned Business Barometer 2013

  • 81 percent of respondents are slightly to very optimistic about growth in their agribusiness over the next year (up from 72 percent in 2012)
  • 68 percent are looking to increase farm production to improve their financial position, 23 percent are looking to invest in farm infrastructure to improve their position
  • One in five is considering acquiring more farm land; 11 percent are looking at equity partnerships or joint ventures; and seven percent at buying farm businesses or assets
  • 46 percent of businesses say they follow best practice with planning and decision-making; 11 percent of respondents involve their staff in goal setting
  • 72 percent of those looking to lift production want to invest in pasture/forage species
  • Over half use market research or financial analysis tools to help make big decisions; 43 percent would like advice on how to lift productivity

“An emerging focus on profitability represents a shift in thinking that’s driving the decision-making of leaders across all sectors of agribusiness,” says Turley.

This signals a move from farming for capital gain, based on land acquisition, to decision-making focused more on investment. This new model is more concerned with cashflow and sustainable growth and careful consideration of return on investment.

“More farmers across all agri-sectors are now talking about profit performance, where before they talked about hectares, stock numbers and production numbers.

“Having said that, scale and productivity still have a role. Lack of scale in red meat, wool, vegetable and some horticultural sectors is restraining growth, partly because smaller businesses have less opportunity to introduce broader skills. Great collaboration and learning from the success of others can unlock potential,” Graham Turley says.

The evolving focus on profitability means having the right people in the right roles is more important than ever, the survey notes, along with succession planning remaining a significant issue. Robust planning and a focus on long-term, sustainable growth are identified as key factors in overcoming issues such as conflicting shareholder or family visions.

The ANZ Barometer survey report can be seen at anzbarometer.co.nz.

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