Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

Recent geopolitical tension involving Iran has reintroduced volatility into global energy and commodity markets. For New Zealand farmers, the exposure is both direct and indirect and likely to be material, flowing through fuel, fertiliser, freight, and imported inputs.

This article focuses specifically on operating cost-side budgeting. It does not address product pricing (milk, meat, grain) or interest rate movements, both of which will remain volatile and require separate analysis. The intent here is to help farmers build cost structures that remain workable under uncertainty and to manage their funding facilities, operating decisions and strategies accordingly.

Where Cost Pressure Will Emerge

Global shocks tend to concentrate into a small number of cost lines. These are not theoretical risks; they have moved sharply in this disruption and will likely do so again if instability persists. An important point to note here is that they can move not only up but also down.

We’ve extracted the diesel fuel price data from MBIE and created the graph below to remind ourselves that we have been here before and to show how volatile this expense can be.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

There is no point pretending the pressure on New Zealand’s arable sector is one-off, because a meaningful part of it is real, structural, and unlikely to disappear quickly.

Feed grains continue to operate under a pricing ceiling set not just by domestic demand but by imported alternatives, with PKE or imported grains anchoring the economics of locally grown feed wheat and barley. At the same time, fertiliser, labour, energy, compliance, and finance costs have all reset higher than they were five or six years ago.

Growers are also coming off a tough season in parts of the country, which reinforced a familiar but uncomfortable truth: a good crop in the paddock and a good financial result in the bank account are not always the same thing.

But it would be just as misleading to conclude that arable farming is in decline, because that is not what is actually happening on the ground.

What the 2025/26 season has really exposed is a sector under tension, where the spread between strong outcomes and poor ones has widened materially. Increasingly, success is not just about yield and price, but about how well the business manages the intersection of multiple variables including structure, timing, quality, climate, crop mix, and markets.

This is not a story about one difficult harvest. It is a story about what type of arable business will remain resilient in a more volatile environment.

Why this matters more than it appears

It is important to step back and understand what is actually at stake.

The "arable industry" (which excludes vegetables such as potatoes, carrots, and onions) is a significant part of New Zealand agriculture. While its export profile, at around $350 million, appears modest compared to dairy or meat, that understates its true economic contribution.

Arable production feeds directly into both the human food chain and the livestock sector. When domestic grain is displaced by imports, that value leaves the country rather than circulating within it.

In total, the sector contributes close to $1 billion to GDP, supports more than 11,000 jobs, and drives over $2 billion in direct and indirect economic activity.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

There has been no shortage of noise in agriculture over the last few years- interest rates, regulation, climate, politics and whipsawing commodity prices. But when you strip that away and look at the fundamentals, 2026 is shaping up as the start of one of the most interesting periods for farming businesses in more than a decade.

Balance sheets are stronger than most realise. The cost of capital has materially reset. Bank appetite is back. Non-bank capital is finally paying attention. And succession, long considered one of the most challenging issues in farming, is starting to be solved with better tools and innovative thinking.

Here are some of our key reasons for optimism:

1. Balance sheets are getting seriously strong.

From a dairy perspective, the last 3–5 years have generated substantial cash across most systems. Dairy debt has fallen to around $18.50/kgMS, down from a peak of approximately $22/kgMS. Adjusted for inflation, the reduction in real leverage is even more pronounced.

We are excited to present an opportunity to invest in Good Guise Group - a vertically integrated Southland dairy farming and fresh-cheese manufacturing business producing premium paneer, queso fresco and emerging specialty cheeses.

This investment offers strong asset backing from a well run dairy unit with identified upside potential, alongside exposure to a growing business in one of the fastest-growing fresh-protein categories in Australasia.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

We’ve dived back into the RBNZ data to see all the main bank movements over the last six months (to 30 June 2025) - all the changes in lending, who’s winning market share and who’s losing it - in both the Agri and Business Lending Sectors.

This dashboard summarises lending trends across New Zealand’s registered banks to 30 June 2025, based on RBNZ  data and NZAB’s market intelligence. It provides a comparative view of total, agri, and business credit movements, market share shifts, and provisioning patterns.

The 12-month period to June 2025 marked a stabilisation phase following two years of sharp monetary tightening. Aggregate bank lending grew by nearly 4% , but that growth was uneven across sectors and lenders. Housing continued to dominate system expansion, while agricultural credit remained flat and business lending advanced modestly.

For agriculture, a slight rebound in dairy and horticultural lending during the second half of the year masked a full-year contraction, reflecting both seasonal working-capital cycles and ongoing deleveraging on the back of strong sector performance. Meanwhile, Westpac and ANZ continued to retreat from agri exposure, with BNZ, ASB, and Rabobank filling the gap.

In business lending, Kiwibank and ASB were the most aggressive lenders, each gaining about half a percent in market share, reinforcing Kiwbank’s ongoing challenger moniker.

Overall, the data highlights a system still cautious on productive-sector credit despite improving farm profitability and moderating risk indicators. Provisioning levels across the agri portfolios declined, consistent with stronger commodity prices and stable repayment behaviour.

This report builds on NZAB’s prior dashboards and provides a factual base for ongoing commentary on capital allocation, bank behaviour, and funding conditions across New Zealand’s rural economy.

With this version, we've also included all of the respective banks' "group" exposures- additional lending that the banks complete in NZ directly from their parent entities.    

As always, if you have any questions, or would like a full digital copy of the data, please email me directly.  

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

A few weeks ago, I wrote an article called What Denmark Got Right, comparing how Denmark built an economic powerhouse on the back of their Agriculture industry (their clear strength) and what New Zealand could learn from it.

It generated a lot of positive feedback, clearly the topic struck a chord with many readers asking the same question: how do we actually make those ideas happen here?

This piece continues that conversation by focusing on the first two of the six shifts I outlined, rewiring the capital system and making access to capital a national strategic pillar.

Because until we fix how money flows, everything else we want to achieve in farming and agri-business will remain constrained.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

Commodity prices are lifting. Farmgate returns are improving. And since mid-2024 the Reserve Bank has aggressively cut the OCR from 5.5% to 3.25%.

So why does the economy still feel like it’s stuck in neutral?

This one graph explains it.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

There’s been a lot of talk lately about why New Zealand should be more like Denmark. So, I went and did some research to find out why.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

Succession is back in the headlines—and this time it's louder than ever. As Rabobank NZ CEO Todd Charteris emphasised recently, “succession is not a moment in time – it’s a process that takes years of planning, conversation and adaptation”. 

 Meanwhile, Agri Undergraduate Georgia Checkley – writing an opinion piece in the Farmers Weekly from the perspective of a young farmer rightly warns that “without clear succession plans nationwide we look to see a decline in productivity across the agriculture sector” 

The data reveals the urgency: 23% of families have a well thought out succession plan for the farm, 17% have spoken of the topic and  50% of families have not even mentioned succession.

With over $150 billion in farm assets set to transfer in the coming decade, the stakes couldn’t be higher. 

Too often, succession is framed as a single event or a handover moment. In reality, it’s a strategic process that starts years in advance.

We wrote this article “If You’re Thinking About Succession, Start by Redefining It” – a few years ago as a framework for how NZAB helps their farmers in this space, and it's become even more relevant today - so please make some time to read it. 

We see succession not as a single transaction, but a multi-year journey which starts with creating a strong business in the first instance. The article reshapes the narrative around four vital shifts:

1. Redefine succession as building a great business

Succession isn't just about dividing assets—it's about building a high-performing, value-driven business that the next generation wants to be part of. A great business naturally attracts family engagement, capital, and talent. Start here, not with spreadsheets.

2. Purpose, vision, and strategy comes first

Successful intergenerational farms start with a clear “why,” a compelling vision, and a simple, focused strategy. This clarity unites the family, aligns decisions, and gives everyone from shareholders to staff a reason to buy-in.

3. Set the business up to perform, then structure it around this

Strong operating performance, clear roles, and a future-facing organisational structure makes a farm business investable and sustainable. Succession planning should grow from this foundation not the other way around.

4. Get independent help and make it continuous

This isn’t a one-off event, it’s an evolving strategic process that needs independent facilitation. Bring in outside expertise, embed succession into regular governance, and treat it as a standing agenda item and not a retirement trigger.

After you’ve read the article, drop us a line for a no obligation chat.  Feel free to call one of our local team members in Southland, Canterbury, Manawatu, Taranaki or Waikato  (or flick us a quick email here)

NZAB helps farming families build businesses worth succeeding into. We combine financial insight, strategy, and governance experience to support multi-generational transitions that work. If you're thinking about succession, let’s talk about making your farm business one the next generation wants to run—not just inherit.   

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

In our previous article, What a Decade of Floating Rates Tells Us About Agri Finance Confidence, we explored how floating interest rates have behaved over time and how bank appetite has shifted in response to rising rates. The core message was this: while interest rates have moved in cycles, the bigger issue has been how confidence—both from banks and farmers—has fluctuated alongside them.

Now, we want to take that discussion a step further.

Same graph. One big addition.

This time, we’ve layered in a second line—the red one. This represents the non-competitive floating rate, or in plain terms, the rate paid by a farmer whose credit wasn’t quite as good (or wasn’t articulated well enough) and hasn't actively engaged in a competitive lending process. It’s someone who, for whatever reason, hasn't negotiated, hasn’t benchmarked, and hasn’t brought an advocate like NZAB to the table.

The green line, as before, is the competitive rate—what’s available when a farmer actively shops their deal, presents a strong case, and gets support to navigate the lending environment.