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Andrew Laming


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Southland Dairy Private Debt or Equity Opportunity

Mar 4, 2024 4:15:44 PM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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9 Things To Get Excited About This Year

Jan 26, 2024 1:30:52 PM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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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.

Let’s be honest, last year was a bit tough.  

Expectations of dairy payout dropped to very low levels, lamb prices kept going lower than expected and interest rates went higher on the back of inflation that was stickier than ever. On top of that we started the year with a devastating cyclone that ripped the heart out of a major horticulture area, and we had a government that very few farmers thought was in their corner.    

It wasn’t just farming either – homeowners and business owners alike all got a collective feeling of malaise as recession started to spread its tentacles. Confidence surveys in both farming and non-farming sectors alike plumbed new depths.  

But, for this article, it’s a new year and let’s sweep the broom a bit for 2024, because there’s some things that farmers can start feeling more optimistic about as we head into the year.

 

1. Interest rates have leveled off and look likely to fall. 

It’s hard to imagine that a little over 12 months ago (pre-xmas 2022), we were at an OCR of 3.5% which was then lifted to 4.25% in Dec 2022. Very few (read: nil!) commentators were predicting that we would end up as high as 5.5% before the job on squashing inflation appeared done.  

But the story has changed.

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With Bank Profits Falling, Be Very Wary of the 2024 Response.

Dec 8, 2023 8:26:16 AM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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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 of the main banks have just finished their full year reporting releases and their profits are again hitting high levels on the back of record net interest margins and lowering operating costs.

The New Zealand divisions are all performing handsomely on the back of the ongoing expansionary lending to the home loan sectors in the earlier part of the financial year plus record margins on the back of the open supply of cheaper funds.

However, it’s worth paying particular attention to the near identical messaging coming from the Banks about their first half performances being much better than the second half.

Here’s some statements they’ve made:

ANZ, in its press release noted that “it was a game of two halves. The good performance of the bank in the first half of the 2022/23 final year reflected the tailwinds of the Covid fiscal stimulus in the economy..”   and “but in the second half of the year our performance slowed due to the more difficult environment NZ is entering”.

BNZ’s CEO Dan Huggins, who recorded a record rise in profit, noted that “BNZ's profit fell 12.5% in the second half-year versus the first-half to $704 million reflecting a broader economic slowdown in New Zealand” and “The second-half net interest margin dropped nine basis points to 2.36% from 2.45% in the first-half.

 

Let us interpret this for you.

Home lending growth has stalled, and deposit rates have climbed higher than expected, reducing the record margins banks were otherwise enjoying when there was excess cash floating around New Zealand, a result of the record stimulus provided by the government and RBNZ at the time. The Banks’ increase in profit is a result of extra lending volume multiplied by any additional margin increase between cost of deposits and return on loans.

We noted this starting to appear when we opined that Banks were increasing their business and agri margins at a greater rate than needed due to fixed rate home loans dragging on their returns

 

At this point, it’s worth remembering how Banks think when it comes to setting performance targets for their profits for their upcoming year.

Typically, cyclical considerations (i.e higher profits at times where market conditions allow, lower profits when not) are largely ignored. Instead, a newly minted, higher profit target is sought for the upcoming year, regardless of how good the prior year was.  

Typically, this “ask” will range between 5-10% increase on the prior year. This will need to come from either greater lending, better margins or lower costs. In most cases, all of these categories are targeted.

The Bank is a business and businesses increase profit by either selling more at better margins and at lower costs of operation. For Banks, this is largely a function of more lending growth (volume) x better lending margin (the gap between costs of deposits and lending rates) less business operating costs (people, branches and systems).  

Now let’s overlay that with the current speed of the economy. The back half of 2023 has seen a sluggish economy with low lending volumes.

Flowing into at least the first half of 2024, the forecast is for more of the same with persistently higher interest rates continuing to stifle credit growth.

 

With this backdrop in mind, we see the following things becoming evident in the Agri lending market as we go through 2024.

 

1. New transactions or customers that fit neatly* (*see point 4 below) into Banks’ Agri lending appetite, and in particular those from new customers, will remain strong and possibly get stronger.

Despite much lower commodity product prices and much higher interest rates, demand for new Agri transactions will remain strong where they fit into tight banking criteria.

This is the volume part of the increasing profit equation, a simple rationale of needing to continue to grow the balance sheet against a backdrop of lowering demand. The need for volume will be exacerbated by low lending volumes in the housing market.

If the deal fits neatly into Bank criteria, expect to see most main Banks lining up to bank it, with strong appetite and with very strong competition with pricing.

 

2. Conversely, look for Banks to increase margin on existing customers, or be slow to pass on reductions in deposits costs.  

This is where we will really see a two-step market.

The need to deliver profits against a backdrop of low lending volumes means that there will be increased focus on the margin multiplier of the profit equation. This will be in the form of portfolio wide increases in margin for “funding” or “liquidity” premiums and will become more evident when underlying base rates (30-80 day bills and swaps) begin to fall.

Equally, whilst Bank deposit costs have been increasing for the last two years, these are now starting to reach their peak and will eventually start falling. How quickly or slowly this is passed on is a strong profit determinant for the Bank.

You will also see a stringent focus on “pricing to the risk curve” – this means that those customers that have higher credit risk will ultimately be charged more as Banks look closely at each customers’ credit rating and ensure they are getting an “efficient” return on their capital. This will feel particularly difficult for those customers who are already under profit pressure.

 

3. Look out for further Bank “head count” reductions to lower operating costs.

The final lever that Bank’s will be examining is their ability to earn the same, but with less operating costs.

Ultimately this means working their business towards a “lower cost to serve” with more accounts per bank staff member or a greater use of technology to make non-human decisions. Either way means that the average banker will be having to do more, with less.

Having the necessary time to understand your credit proposal will come under pressure, particularly if it’s not presented well or not perfectly “in the box”.

 

4. The “swift and easy” credit approval “box” will continue to get smaller, leading to the need to present transactions even more carefully and consider non-main Bank capital solutions.

This is the double-edged sword from the above point- less time from bankers to consider applications and in general, less desire to consider transactions that don’t meet strict bank underwriting criteria or spend time on transactions that have been prepared to a sub-par level.

More than ever, if a Bank does not show appetite with a transaction, it does not mean that the farmer's strategy is flawed, its just that the Bank’s credit underwriting criteria is getting tighter, or possibly the credit risk is not presented in the right manner. And that’s a very important distinction.  

This will mean farmers will need to think carefully about how they present the transaction, plus consider other, more suitable forms of capital, including equity or non-main bank debt capital to better achieve or execute on their strategy.

 

So, what should you do with all this?

First, none of this is new, but here are some things that will become really important for you in 2024.

1. Ensure that your strategy and credit proposal is well presented.  

The banking process is equal parts objective (financials, balance sheet etc) and equal parts subjective (judgement on quality of decision making, advisors, strategy, rationale for past performance etc).

Knowing how to present your business in line with how a Bank assesses credit risk is vital for a yes or no, plus also for how your credit rating lands. This is doubly important where bankers have less time to understand what you’re trying to achieve/ask for.

 

2. Create a market for your loan.

This doesn’t mean taking your loan to all the Banks and asking for the best rate. This means ensuring that your business is of a sufficient quality that multiple Banks would want to have you as a customer.    In other words, create something that a bank would like to buy.

Don’t let your business get to a place where you are “marooned” with one Bank. But also, don’t worry if you’re in this camp - many farmers will be right now – but careful navigation around the current situation and creating a plan to move into a better level of credit risk over time is important.

 

3. If all of this feels like the Agri Debt market is pulling in different directions, all at once – you’re right.  

The Agri market for banking requires a very specific set of skills to navigate successfully. 2024 may well throw up the most “imperfect market” for Agri loans that we’ve seen yet.   The difference between yes or no, or the vast range in interest rate that the market will deliver will have significant ramifications on your business.

 

And if all of this seems a little too hard, drop NZAB a line.

NZAB was created to bridge the gap between farmers and their Bank.

New Zealand has some of the best farmers in the world. In a highly regulated and complex finance industry that continuously evolves, we ensure our farmers are informed and empowered to ensure they stay at the top of their game.

We’d be happy to show you why we’re the leading provider of Agri Finance advice across New Zealand. We use our scale, influence and experience to get our farmers the most competitive finance solutions they deserve.

 

Go to our website at www.nzab.co.nz for more, fill out this form, or call/email us direct on 0800 692 212 and info@nzab.co.nz

 

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Why Doesn’t Kiwibank Lend to NZ Farmers?

Nov 15, 2023 1:12:25 PM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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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.

Kiwibank has been nothing short of a success.

It was initially set up in 2002 as a brainchild of the Alliance MP Jim Anderton, who was in a coalition government with Labour at the time, with a purpose of establishing a locally owned bank with profits that stayed in New Zealand, rather than headed overseas.

A quick tour of its history shows that from day dot, it launched over 200 branches nationwide, partnering with (and ultimately owned by) NZ Post. By 2008 it had grown to 600,000 customers, campaigning on “joining the movement” (i.e., away from Australian owned banks) and winning new customers on stronger customer satisfaction.

It continued to grow and in 2016, NZ Post sold 47% of it to NZ Super and ACC.   Fast forward to 2022, and the entire business was purchased from the syndicate by the New Zealand Government for an estimated $2.1bn.

As of June 2023, Kiwibank has total assets (loans) of $29.7bn, giving them a 5.62% share (on a "dollars lent” basis) of all New Zealand main bank lending. It also continues to head in the right direction, up from 4.39% five years ago. That’s impressive growth.    

Profitability is OK, but not as good as the Australian banks. Return on equity of 6-7% lags the main other banks who typically average about 12-15% (Return on equity (ROE) is the ratio of profit after tax to average equity).

Interestingly, their net interest margin is slightly higher than most banks at 2.5%, meaning they’re highly effective at using deposits to earn income (the net interest margin (NIM) is the ratio of net interest income to average interest-bearing assets, where net interest income is income received less income paid).

Why their profitability of their business lags versus others (on a ROE basis) is probably due to the operating expenditure being much higher at 65% of total income, versus their peers at 40-50%.   This may be symptomatic of a growing business and a larger number of smaller accounts.

Home loans are the biggest part of Kiwibank, but Business banking is rocketing up.

 

Below is the makeup of Kiwibank’s assets (loans) – from five years ago until today.

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We Need to Have a Serious Chat About Foreign Direct Investment into New Zealand Agriculture

Nov 3, 2023 8:39:08 AM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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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.

Foreign direct investment (“FDI”) into New Zealand agriculture has been a political hot potato since it became a significant election issue in 2017, leading to material changes in OIO regulations, materially restricting FDI into New Zealand farmland on the back of it.   The regulations enacted at the time had the effect of restricting any investment into New Zealand land that was >5ha in size, with exceptions carved out for minority stakes in entities that hold land (<25%) and also those that deliver significant economic benefit to New Zealand (something that has been subsequently difficult to obtain as an exception).

However, the majority of economic data suggests that foreign direct investment (FDI) is advantageous to those countries that receive it. FDI promotes efficiency by enabling the allocation of resources to their most valuable purpose and introducing innovative technology and managerial methods that stimulate competition for resources, increase business revenues and enhance productivity growth.

In short, it creates more economic prosperity.

With the imminent change of government, plus the growing need to ensure New Zealand remains a high value economy in the future and funds all its necessary infrastructure upgrades, the discussion on FDI is about to amplify.

Let’s start this discussion with a graph. Below is all foreign direct investment since 1990 into New Zealand as a percentage of GDP compared to our nearest neighbour, Australia.  

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The NZAB Banking Dashboard: To June 2023

Oct 5, 2023 11:42:07 AM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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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 - all the changes in lending, who’s winning market share and who’s losing it in both the Agri and Business Lending Sectors.

In this Issue:

  • The big slowdown in credit growth continues with half the lending growth over the last 12 months than we saw in 2021 and 2022.
  • A turnaround for Agri lending with over a $1Bn in new lending to the sector over the last six months on the back of stronger bank appetite, but also the build up of overdrafts with falling payout and increasing costs.
  • ASB and Rabo continue to grow their market share strongly, with ANZ's endless march downwards continues, shedding a whopping 80bps of lost market share over the last 12 months.
  • And on performing loans still quite low, a sign of relatively good credit in the sector. However, we would expect these to grow significantly over the next 12 months. There's now also one bank whose non-performing loans in Agri are actually lower than their total book as a whole, this could be a sign of too weak credit appetite or are they simply are well prepared?

As always, please sing out if you have any questions or would like to use the data in your own presentations or engagement with customers.  

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A Further Look at Agri Interest Rate Margins

Sep 6, 2023 11:56:34 AM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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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 thought we should follow up on an article we wrote recently about the banks subsidising their shrinking home loan margins by expanding Agri and Business margins to maintain (and even grow) their profit. Indirectly, those actions lead to a profitability drag on the Agri and Business sectors – all to the benefit of ensuring that home loan activity remains more buoyant, which is an easier place for the banks to lend.

The article was featured in The Farmers Weekly with some comments from banks offering divergent views on this.

We were then fascinated to subsequently see two main banks, when reporting their results, talking about the intense competition driving home loan margins in New Zealand to unsustainable levels.  

One direct quote was that ‘pricing conduct in the New Zealand home loan market is “difficult to reconcile” and offers “unsustainable returns’

Also“[the] margin on new home loans is currently less than half of what [the bank] gets in Australia”.

What’s really interesting is now taking those comments in the context of overall bank margins in New Zealand.   See the graph below, which is taken from RBNZ data showing the total “net interest margin” for all banks' loans over the last three years. This is the combined margin for all lending that banks do – Agri, Business and Home Lending.

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Farming The Farmers - Are Banks Using The Productive Sector to Subsidise Housing Loans?

Jul 20, 2023 7:40:56 PM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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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.

Take a look at the below graph.

The underlying data is sourced from RBNZ, and in particular data that compares the interest income earned by New Zealand banks on residential mortgage loans verse business loans. These values are represented as percentages of the value of their loans.

In other words, this is the average interest rate paid by the average home loan borrower verse a business borrower (which includes Agri).

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Stop Cutting Down the Wonderful NZ Tall Poppies

Jun 1, 2023 1:22:40 PM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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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 considerable debate recently in the media about the fairness of the current tax system and in particular how the very wealthy in New Zealand should be taxed.   It has led to a quite emotional debate about the “fairness” of the relative contribution of taxation as a percentage of total earnings whether the be realised or unrealised.

As I explored the competing views, it just ended up saddening me. Listening to the debate, the framing of the topic of “fairness” was only in terms of the split of a tax burden – instead of a future based and more aspirational debate on how we might educate and share the fundamental traits of success – which is how wealthy people got to where they are in the first place.

In other words, it was an all-consuming discussion about the division of the outcomes of wealth without any consideration to the building blocks of wealth or success or how those things could be fostered to increase prosperity.    

In this sense, the greatest unfairness today is that only some parts of society are fortunate enough to be ingrained with and/or educated on the traits of business success (and therefore learn and emulate them with wealth often flowing) -  and a fair chunk of the New Zealand population is not.

 

To start this discussion, I want to share my observations of the traits of successfully wealthy people – typically business owners.

After being in the finance sector for almost 25 years I have been privileged to work alongside some very successful people and see first-hand what makes them tick.   My experiences come from seeing first-hand how these people flourish and grow during both economic boom and economic fortitude.  

 (Please note that as a reader you might not find all of these traits “good” given we all have differing values and everyone has a different version of “success”, hence they are observations not endorsements).

  1. They work exceptionally hard.   They are not 9-5 people, five days a week. They work long hours and weekends but don’t even realise they’re working.  They step in when required to get things done, often sacrificing other aspects of life to achieve it.
  2. They focus on what they are good at (in most cases, what they enjoy doing) and they made a business around it.   This is also the reason that they work exceptionally hard. They’re not really interested in working for other people – they have a strong desire to create something themselves.
  3. They put all their eggs in one basket, initially.   This is a financial advisors “no-no” but the reality is that they didn’t get to the position of wealth by “diversifying their investments”.   They backed themselves on one business or one asset class and stuck to what they knew best.  At times, their apparent lack of appreciation of the risk of their single business approach (or conversely their utter belief in what they are doing) can be startling.  This also meant that some of these people failed.   (Note: you will see wealthy people having quite diversified investments but that was typically after they’d created their wealth in one enterprise).
  4. However, they are nearly always “operationally excellent” in their one business – producing a good or service better or cheaper than most of their peers or innovating to produce something different or develop their asset to greater levels of productivity. This allowed them to attract more capital, whether it was bank debt or other investors wanting to participate with them. They didn’t get very wealthy because they simply had a heap of one asset class waiting to go up in value.
  5. Their mindset is neither optimistic nor pessimistic but realistic. They have a great ability to step back from a problem or challenge with a laser sharp focus on understanding the issue and solving it.
  6. They have excellent market and business relationships in their wider sector and really enjoy connecting with other suppliers and producers to learn and share. This nearly always builds deep trust that enables further business down the track.
  7. More likely than not they are not “super intelligent” in the academic sense of the word Instead they have strong intuition and belief in a certain pathway forged on past or observed success. They don’t spend days analysing the upside and downside of a potential investment.   In their minds, many a good idea died in the depths of a spreadsheet.
  8. Because they enjoy what they’re doing and are playing to their strengths, they have long term investment horizons. They don’t chop and change out of a market but stick to something over a long period and enjoy the benefits when others drop out.
  9. They are humble and often talk about their failures first, well before their success.
  10. They look to maximise their access to external capital to support their strong belief in their business and growth strategy.
  11. They have great partners.   Mostly, I mean this to be their husband or their wife but this also includes non-family business partners.   They often have quite different strengths and complement and support each other in business and life.  
  12. They are not motivated by money but are motivated by growth. They don’t set a target around a certain wealth figure they want to achieve – instead the wealth is a by-product of playing to their strengths and doing their business very well.
  13. They surround themselves with great advisors, but still make the decisions themselves and own them deeply.   They don’t seek to blame others when things don’t go as planned.
  14. They seek to control as much of the risk in their business as possible, by owning all the uncertain parts of their supply chain but not necessarily “control freaks” with their people.
  15. They are typically very normal, highly respectful and down to earth people.

So, let’s get back to the topic of fairness in the context of wealth in New Zealand. What I don’t think is fair, is only a small section of New Zealand actually understands these traits. Not enough of New Zealand gets exposure to what really makes and creates business and/or wealth.

And that pool is shrinking further.

 

So how could we rectify this?

Let’s not think that these are just the traits of the super wealthy either- they are also the traits of plenty of smaller local successful businesspeople who put considerable risk and capital on the line to create something a little bit better for themselves, their family and their communities.

 

Firstly, let’s celebrate them better and learn from them.

We need to change the New Zealand ethos so that these people actually feel willing to share what’s made them successful. At the moment and particularly following this tax debate there is little incentive for any of these people to engage in this discussion – instead it has only served to drive anyone who has been remotely successful further from the spotlight.

We need to create a New Zealand wide and eventually ingrained culture of celebrating success.

“Celebration” doesn’t mean that we’re throwing street parades, it means listening to their stories, understanding what drives them, asking them questions and trying to understand more deeply what got them to where they are.  

Let’s feature their stories more prominently in the media on a regular basis or go one step further and set up a TV program via New Zealand on air that charts their growth stories.

From a school perspective, wouldn’t it be neat that the local school was able to hear from a local businessperson on a regular basis so they could listen, get inspired, build connections and eventually emulate those traits if they found it resonated with them.   This could even lead to a nationwide set up of a business mentoring type program where secondary school children can learn from an existing business owner.

 

Government has a role to play – by not being the blockage.

How can New Zealand obtain greater prosperity if we continue to frame the discussion around fairness in the context of distribution of the outputs of wealth- instead of encouraging the wider distribution of the knowledge and drivers of success?    

This doesn’t mean that the taxation system doesn’t need an overhaul; but where are the policies and ethos alongside that create incentives and/or provide education and learning for people to get into enterprise and have a go?

Both NZTE (NZ Trade and Enterprise) and the Icehouse do an excellent job of coaching and connecting businesses with both skill and capital. But they have limited resources – how could we turbocharge these entities to create a much greater suite of new and more successful enterprises in New Zealand?

Ironically, with greater regulations and conditions designed to improve prosperity for the worker, this unintentionally means that larger or more corporate businesses are more likely to thrive, rather than smaller ones, due to burdening regulatory overhead costs and complexity that can only be carried at scale.  

Middle ground needs to be found.

 

We need to deepen our capital markets beyond the main trading banks.

Current access to capital comes largely from the main New Zealand trading banks that are set up mostly to support mortgage lending. The required depth to support growth businesses is simply not available in New Zealand. Therefore, we require more suitable capital via a greater depth of equity capital and investment funds dedicated to this purpose.

I note the government’s earlier commitment in 2022 to establish a $100m growth fund was a good start but it has quietly disappeared off the radar without any execution.  This was to emulate the Australian version that has a $540m fund created by Government and the main trading banks that take minority stakes in businesses to support their growth.   Imagine if NZ went large and put a billion dollars together to turbocharge the process?  

The unsurprising thing about capital investment in any one sector is that it is self-perpetuating as more capital is made available, other participants enter the fray, creating a functioning market where people feel confident to invest.

NZAB has a role to play here as we widen the network and connect with more capital providers that want to get access to investment and funding opportunities in the Agri sector.  And at the same time educate the wider market on the very compelling risk and return that the sector provides for participants with capital.   You’ll see more from us on this topic soon.

 

Drop us a line at any time - whether you want to chat more about your own success, access to capital or maybe you’ve also got your own pillars of success to share. Please feel free to reach out on 0800 692 212 or info@nzab.co.nz

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Don’t Get Sucked Into a “One Year Mindset”

May 9, 2023 4:43:17 PM / by Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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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.

Last week we penned an article about how hard budgeting will be this year given the falling milk price, costs remaining stubbornly high and lots of macro forces that could pull both factors either up or down over the next 12 months.

Within that, one of our key points is that farm operating margins in any one year are very rarely “average”, they always shift from being great to being very poor.   We went further and said that looking at those operating margins over a longer period of time (3-5 years) is critical when dealing with your own mindset and also that of your bank.

Reflexive decisions due to apparent near-term financial stress felt by farmers and/or their capital providers can have a detrimental impact on farmers mindsets.   They can impact their confidence in their own well established and proven operating systems and their confidence to invest in productivity.     Both farmers and banks know that margins can swing and things average out over a longer period, but sometimes it’s a good idea to put this topic up in lights and support with actual data to ensure stability with mid-term strategy.  

With that in mind, this article summarises some actual dairy farm margin data over both the last two years and then against the last 20+ years to support that point.

First up below is a bar representation of the last two years of average financial performance plus FY 24 forecasted and then all three years averaged in the final column.  

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