Our Insights

The ‘Gen X’s’ of the Agri Banking Sector Pass Down their Tips

Oct 26, 2023 7:28:30 PM / by Cameron Smith posted in Debt, Action, Planning, Budget, Banking, Strategy


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 article last week on the 'The Agri Banking Sector Through the Eyes of a Young Professional' I mentioned about some of the pearls of wisdom I had gathered from the ‘old Gen X’s’ that have a lot more wisdom than myself!

If you recall, writing this article started when I was asked to prepare an introductory document for our next Graduate to help bring them up to speed as they themselves enter the sector. Upon putting together the document I went to the people of NZAB and asked for their best ‘tip of the trade’ or ‘key piece of advice’ they wished they had when they first started out, and I received some absolute rippers that were too good not to share.

I believe there will be something that will resonate with every reader no matter the stage in your career. I have put them into sections based on some of the key messages that came through below: 


1. Draw on the knowledge of those around you to help assist your growth. 

  •  “Utilise the experience around you – ensure you spend time around those you can learn from, ask to go out on joint visits and the like. See how different people work and process things, and then see what resonates with you and how you can apply that to your own methods and approaches going forward".
  • Don’t think you need too or will learn everything straight away. Ask lots of questions, listen to conversations and try to soak it all in. It will come over time with experience, use the wealth of experience already within your business to help you along the way".
  • “Enjoy the journey. You’ll never get another time in your career to observe and learn from so many different people before having to be accountable for your own clients. Many Grads are tempted to rush to a ‘better job title’ but I often think back fondly on my time as a Grad".
  • “Everyone you work with in your time as a Grad brings their own skills and experiences that others don’t necessarily possess. They’ll also do things in a different way from their peers that will still achieve the outcome they require. Look at all people as a resource to tap into rather than at their job title. You never know when you will need someone’s specialist skills or knowledge at a future time in your career and their preparedness to help you will depend on how you treated them from all the various interactions, they had with you". 

2. Listen and ask lots of questions.

  • “Practice listening and get really good at it".
  • “Never be scared of asking questions if you don’t know the answer, even if it’s multiple questions. Sometimes we’re scared of that, thinking it makes us feel like we don’t know enough and that somehow will make us inferior - but that’s not the case in real life. Asking questions (or simply confirming what you think you’ve heard) shows a curious mind and a focus on getting more accurate information with a better understanding - excellent qualities".
  • You have a free 12 months to ask as many questions as possible about anything and everything. Make sure you use the 12 months wisely and learn as much as you can".
  • “Enjoy. It’s a special time in your career that you will look back on fondly in time to come. Don’t be in a rush. You will get there fast enough and the more you learn now through asking questions, exposure to conversations and meetings where you don’t have to play an active role in will be some of the best learnings you’ll ever get".
  • “Starting off as a Graduate is one of the most privileged positions to be in from the perspective that all you must do is show interest, ask questions, take notes and observe. Other than your colleagues giving you things to do for your development, you are literally there to learn the ropes without external delivery expectations. You have earned the Grad role through your ability to talk (communicate and articulate), your personality and the investment you made into yourself at University. You may have learnt some theory that is relevant to your job, but this next step is about bringing theory and commercial reality together. It’s important to have an opinion, and sometimes demonstrate your understanding of what’s been discussed, but your best position to come from is a place of curiosity rather than knowledge".

3. Always show respect and never be quick to act or judge. 

  • Our business and banking is about people. You can never know what people are juggling or managing that you can’t see. Approach every interaction, whether it’s with clients or the bank with empathy. Always “seek first to understand” before responding".
  • Respect the Customers/Farmers you deal with. We are in a privileged position where these farmers open the door to us and show us their businesses at an operational and financial level. Each and every farmer has earned the right to be where they are today".
  • “I remember getting told when I was first a Relationship Manager to never make assumptions about a deal before you have had the meeting. Super hard to do, but so true".
  • “Never burn bridges - even when dealing with people you don’t see eye to eye with, treat them with respect as you never know who they are either related too or have some level of influence over".
  • “The advisory industry is a lot of fun and a great opportunity to develop lifelong contacts and friendships along the way. We are in a super privileged position to see the good, the bad and the ugly. Remember that we are there to help, not cast judgement. So always be respectful of the fact that despite the challenging situations that some people face, this wasn’t how they saw it panning out and they once warranted all the debt that a bank has provided that now sees them in the position, they are in".

4. Get involved and just give it a go!

  • “Don’t be afraid of giving things a go, the more exposure you have the quicker the learning curve. We all start at the same place but if you apply yourself and put yourself in situations to learn and grow you will accelerate your development. Try to avoid sitting on the sidelines because you don’t feel qualified".
  • “Turn up to work with a good "can do attitude" and a smile. Login to your emails, keep them open all day, and regularly check them".
  • “Have a crack at working things out yourself (look at old papers that have been completed) but also don't be afraid to ask for help".
  • “Make an effort to introduce yourself to the whole team - in all regions, there's a wealth of experience, and everyone is itching to share their knowledge. Relationships with the team help build confidence to build relationships with clients and other intermediaries".
  • “Attitude and intent are the absolute key. As a Grad, you’re not hired because you are expected to know how to do the job, you are hired for your perceived ability to learn and execute. Say "yes" to everything regardless of who’s job it is (above or below you) and put your shoulder in to every chance you have”.
  • “Try first, ask second’. This is the best way to learn. Have a crack at a model, or a review and then ask questions once you’ve done what you can".
  • "Travel and see the country! The best thing you can do as a Grad is move as far away from home and your comfort zone as possible. You meet a ton of new people, build key relationships that may come in useful later in your career, but most importantly if you mess anything up, it’s not in your hometown!!".
  • “I remember coming into the Bank as a Grad, thinking there was expectation on me to know what I was talking about. I don’t recall ever being given the perspective of the fact that nothing was really expected from you, other than to be grateful for the opportunity, be respectful and be eager to learn".
  • “Don’t sit back and wait. The best people in the business are usually too busy to be totally effective mentors (that’s possibly unfair to some, but generally I have found it to be true) so if you want to learn, you’ve got to force your way in by demonstrating some usefulness or value to those high performers. Look for ways to do this, it might be prepping a meeting, or some extra insights etc".

5. Sometimes the basics can be the most important. 

  • “You can be taught banking and technical skills, but the soft skills are more important. Being able to structure meetings and talk to people is most important".
  • “Admit when you don’t know something. It can be a bit intimidating to tell a farmer that you don’t know the answer to their question, but they respect honesty, and can smell bullshit from miles away. If you don’t know, then say so, but offer up a plan to get back to them".
  • "Remember you are now part of your business’s brand. People will affiliate you with that business at any interaction. We’ve all had slip ups, but make sure you are carrying yourself at a level that you would be proud to be talked about".
  • “Get it right - clients pay us a lot of money to get the job done and to do it professionally. It is always a good idea to get someone else to proof your work before sending out to clients/banks etc".

6. Bonus advice.

  • “No good happens after 11pm. Go home. If you do push the boat out a bit far, always front the next day on time".

On that note I’m going to call it a day. No matter the stage of your career there is always something you can do better.

We are involved in a very exciting industry that is constantly evolving which means there is always something to learn. I hope there was something in this article that helped you do just that today!

Thank you to those who responded following my first article, it was great to hear from you and I enjoyed those who challenged my thinking – again please feel free to drop me a line if you have any follow up comments!

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The Agri Banking Sector Through the Eyes of a Young Professional

Oct 13, 2023 10:24:52 AM / by Cameron Smith posted in Debt, Action, Planning, Budget, Banking, Strategy


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.

I have been involved in the financial sector for 18 months now, joining NZAB as their first graduate fresh out of completing my B.Com Ag at Lincoln University.

With our next graduate imminent, the NZAB team asked me to prepare an introductory document to help bring the new grad up to speed as they themselves enter the sector. As part of writing this, I asked the entire NZAB team for for their pearls of wisdom about starting out in Agri Finance (I’ll send these out in a follow-up article). They then encouraged me to write an article on both – we have many young people in our database so they thought it might be useful for those progressing in the industry.

This is my first time writing an article, so please be gentle with your feedback, but would love to hear from you!

It can be a bit overwhelming when first entering the industry, you feel like you don't know anything and that it will take years to learn it all and this is true! However, no one is expecting you to know everything and almost everyone is very willing to share their knowledge and help you along the way.

Approach is everything and with a can-do attitude and a willingness to learn this will take you a long way towards being successful. After 18 months in the industry, I have started to form some key observations, five of which I have outlined below.

So, here are my five key observations since entering the finance industry:


The industry appetite is constantly evolving.

The finance industry is constantly evolving in terms of best practice and appetite. This can be difficult as you must be prepared to make decisions based on the information you currently have on hand but ready for the realisation that everything will have likely changed in 12 months’ time.

This is one of the things I have probably seen as one of the largest challenges as there is a constantly moving ‘target’ that everyone is trying to hit. This changing appetite is usually a direct result of the strength of each industry at the time but overall, it is largely controlled by the bank’s lending appetite at the time which can be based on other factors outside a farmers control.

This changing appetite can become a large challenge for farmers who tend to work around a long-term strategic mindset. Farmers in general enter the industry with a long-term plan set around a 20 plus year strategy, which can be challenging to align with a changing industry appetite.

Bank appetite has a huge effect on a farmer’s availability and cost of funds. This can potentially make it more difficult for a farmer to act on an opportunity or slow down farm development if bank appetite is not aligned at the time these changes are taking place.

However, this evolving appetite within the industry is also what creates so many opportunities. Like any industry there are opportunities at the highs due to good returns and opportunities at the lows due to good deals that might be present. The challenge is to stay informed and to only act when it is smart to do so.


Industry contacts are hugely helpful.

One thing I have found out since entering the financial sector is, it is so much bigger than just your everyday bankers, advisors, and accountants.

There are many smaller niche spaces within the sector. There is also the requirement to deal with and have some understanding of many topics that branch outside of the direct financial sector. In an industry like this, having contacts can be extremely helpful and the best way to educate yourself. Being able to refer to these contacts is a great way to ensure you get accurate information, whilst it also provides the possibility of opening up new opportunities.

Start by getting to know and building good relationships within your own firm. These individuals have likely been where you are and have a wealth of experience so are definitely key people you want to have at your aid.

I would then recommend getting out and about attending industry events wherever possible. This will allow you to meet and start building new relationships within the industry to expand your portfolio of contacts. Stay in contact and this will help to increase your knowledge at a much faster rate moving forward.


There is never a bad time for a good deal.

During my short time in the industry, I have seen that when a sector is having a tough season that it can automatically be perceived as a bad time for anyone to be undertaking a significant growth project. However, this is so far from the truth. Some of these "bad" seasons present the best opportunities for those that are in the right position to act.

Each expansion or farm purchase should always be analysed on a case-by-case basis in order to understand the full story before making a decision on whether it is a good deal and if it’s the right time to act. There are many different elements to a deal that can affect its strength and whether it should be acted upon. For example, the neighbouring block of land may come up for sale. The farmer may not be in an ideal financial position to make a move, however the chance of that block coming up for sale again and the opportunity factor of missing out comes into play.

Sometimes you need to just slow down and attempt to step back and look at it from a wider perspective. What does the future of the farm look like without having this block involved and look at the long-term effects? It will likely strengthen the farm system through scale, security (winter stock in house) and ease of stock movement being located next door.

Unfortunately, there will very rarely be a time when all the moons align for example a deal that takes place in a market with a strong bank appetite, at the right price and when a farmer is in a position to act. This is why the right steps need to be taken to analyse each deal from all angles. There are always opportunities in the industry and deals to be made, it's just about sorting through them to select those worth acting upon.


Barriers to farm ownership are becoming increasingly difficult.

This was often talked about during my time at Lincoln University and I was quietly hoping that I was going to be proven wrong upon entering the financial industry.

However, it has become evident that this statement is very true. While a lot of the bigger players in the industry that have already managed to build a level of scale to their business are in the most part operating very successfully with an opportunity to expand within reach. The path for new players to enter the industry and purchase their first farm is one that is becoming increasingly difficult.

I believe this is a result of multiple factors. Farmers in past generations purchased their first farm and then had the opportunity to buy the neighbouring farm and so on, building scale slowly over time through smaller parcels of land. This has resulted in the size of farms becoming generally larger, but this has also become a requirement for having a profitable business.

Farms have become much more intensive and having scale is almost necessary to allow the business to be viable. Therefore, for new players attempting to enter the industry they are now challenged with purchasing a farm that is larger and more developed than their predecessors.

Chuck in the element of increasing regulations and environmental policies and this first farm now comes with a much larger price tag and can prove to be very difficult to make work.

However, it is not all doom and gloom and at NZAB we help many young farmers into their first farms. I am starting to see many different arrangements for farm purchases filter through the system which I find very exciting as well as necessary for the success of the industry moving forward.

For the industry to carry on, there needs to be younger people coming up through the ranks and having a pathway for this to occur is critical. One of the best methods I have seen is the exiting farm owner leaving equity in the farm with an arrangement for the farm buyer to buy them out over the next 5-10 years. This provides an investment the exiting farmer can get a return on, in an industry they are knowledgeable about and a farm they are familiar with, whilst also providing an achievable pathway for the next generation to come through the ranks.

We’re facilitating more and more transactions like this, and it is a great way to break down these barriers to enter for younger/newcomers to the industry.


Being flexible and bank ready is very powerful.

A business that is flexible and bank ready sits in a very strong place in the market. Business flexibility starts with being active in controlling and monitoring the financials of the business. Farmers who are all over their cashflow are better able to adjust it to suit the current market conditions. This puts them in a flexible position where they can tighten down expenses during tough times. For example cutting back on non core spending and capital expenditure. While also knowing what triggers to pull to boost production/increase returns during periods of good conditions.

For a business, being flexible is a huge strength. When opportunities present themselves this will allow the business to act fast giving it the highest chance of being successful.

Being bank ready refers to a position in which the business has a suitable equity position and a strong cashflow with good business systems and governance. It means the business is in a re-financeable position and would likely be accepted at any bank of its choice.

Having a strong understanding of your business cashflow and financials goes a long way to getting into this position. It has a variety of positive flow on effects. It creates competition in the market to bank the business, which in turn leads to competitive rates and terms offered. It puts the business in a position of power to negotiate terms that suit its needs as well as competitive rates that will decrease the business’s cost of funds. It also puts the business in a position to have a strong availability of funds if it wished to act on an opportunity or carry out some development.


Thanks for reading my first article!

Overall, it is a very exciting industry to be a part of. Just get out there, get stuck in and embrace the journey. At the end of the day, we are all out there to achieve the same outcome, and that is to get the best result for our clients and customers!

I’m still very much learning about the sector, and I probably will never stop. In the meantime, I hope one or two points resonate with you – please feel free to drop me a line if you have any follow up comments.

And look out for part II – where I share some of the time-honored wisdom from the “old Gen X's”!

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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


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


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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Payout Pain: Focusing on what makes a difference!

Aug 22, 2023 1:55:04 PM / by Scott Wishart posted in Debt, Action, Planning, Budget, Banking, Strategy


Following on from our article last week on being proactive around payout, we have been asked to share some of our observations around what has and hasn’t worked in the past. We’ve been here before after all!

Let me reiterate, a good business going into a tough year is still a good business. It’s not so much about getting through (although that is the first priority!), it’s about positioning your business and your mindset to be able to bounce strongly forward when profits return.

They say never let a downturn go to waste, and these environments are opportunities to showcase to your bank how effective your management and governance really is. The banks do a lot of stress testing of what might happen in certain circumstances, and this year may well be one of those years that looks like the stress test scenario.

What works:

  • Facing into the realities of your situation as early as possible.
  • Being honest with your bank and keeping communication lines wide open
  • Challenge everything. Treat each dollar like a prisoner!
  • There is a big difference between being optimistic, pessimistic and realistic. Being realistic is the key. This is not the year to target levels you haven't yet achieved.
  • Go back to basics. Are you using the physical resources around you to the best of your ability?
  • Get positioned for opportunity. What can you do differently if the payout jumps back up later in the season to capture more profit, but also defend the line if that doesn’t happen?
  • If you don’t have experts around you, seek them out. It can be as simple as tapping into a neighbouring farmer who you think does things well.
  • Selling ‘non-core’ assets can help. These are assets that don’t contribute to profit in any way. But there are often lots of reasons why we have these assets other than profit alone, so be realistic!

What doesn’t work:

  • Blaming the bank. Yes, interest rates are back to some of the highest we have seen in recent times, and if they weren’t then we would be likely still making a profit this year, but that’s not something that’s in your control. Yes, interest rates are negotiable, but from a position of strength not weakness. (ie, if you need a lower rate in order to be viable, the bank isn’t likely to see that as a good risk for them).
  • Putting farms or blocks of land up for sale that you don’t intend to sell. We saw a lot of this in 2016/17. It was a strategy to keep the banks happy, and it probably worked for a few for a while. But then the blocks didn’t sell, and the relationship got tougher. If it’s not a genuine option, don’t go there.
  • Setting tight timeframes on assets you do wish to sell. (And this is aimed at the banks as well!) Clearly, the farm real estate market will be slower this year. If funding approvals are based on requiring a farm property sold within this season, there is a very high chance that strategy will fail, so be realistic!
  • Focusing on production over profit. This may well be the year to produce a lot less milk and reduce the loss rather than maximise the output. But the answer to that lies in a clear understanding of your key drivers of profit and longer term strategy.
  • Relying on Farm Debt Mediation as a way to solve any problems. Mediation is not a place to air grievances or negotiate a strategy, despite what you may think. It is a place where a ‘very final’ plan gets negotiated and agreed. You should never go to mediation without a clear plan that is 90% already agreed with the bank, or you’ll find yourself backed into a corner. And for the banks, don’t use mediation as a tool to force a predetermined outcome!

Putting it all in context is important:

Milk price margins do return to average. 

If you need re-assurance on this, take a look at our analysis of the last 20 years milk price margins. Click here to read our recent article on this We have had some great years, some horrible years, but the average is consistent.  

Costs do retreat too!

We are seeing fertiliser in full flight downwards, as are core feed supplies. Take a look at this article where we looked back at where costs retreated after previously high levels brought about by high payout. Farmers are very responsive to managing costs in the light of falling returns.  

Build a medium term forecast.

With the above in mind, once you have dealt with the short term realities its  time to start making a medium term plan for the business. Lean heavily on your advisors to help with this. How will the business return to more normal profit levels? what funding do you need to get there? What changes could you make to how you operate?

Show your working.

One of the best things you can do to gain confidence from your bank is to show them in detail what changes you have considered, especially the ones you didn't think were worth moving forward with. It demonstrates that you are thinking about all of the possibilities, and you are able to make clear decisions.

We are here to help. NZAB has a team of over 30 banking experts ready to help you work through this next period. If you would like to discuss any of the above, please get in touch.

We’d love to help. We’re all about better banking outcomes, so if you want to review your business to understand where you might sit, drop us a line today on 0800 692 212, email us directly, or fill out this form and we’ll be in touch.

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Payout Pain: Get Proactive!

Aug 11, 2023 11:31:31 AM / by Scott Wishart posted in Debt, Action, Planning, Budget, Banking, Strategy


Most of us in the industry are again catching our breath and digesting the impacts of a significant reduction in dairy payout for this season. The impacts of this are quite real.

But we have been here before. Ironically, this has become a bit easier to navigate now, because we have gone from an environment where only a few farmers were struggling to make the budget work, to one where most will require additional financial support. This is now an industry-wide issue.

The Banks are continuing to support their clients but need to see a proactive approach to managing costs and minimising losses. You can assist this by demonstrating that you’re in control and are making quality and timely decisions.

Fundamentally, good businesses will remain good businesses. We’ve already seen significant reductions in costs from where they were earlier in the year, and we expect to see businesses bounce back quickly from this.

But for now, here’s the plan of attack:

  • Face the realities. Reforecast the cashflow now and get a clear understanding of the impacts. The first critical piece of information required is ‘do we have enough cash’? If not, when do you run short, and by how much? Get this in front of the bank as soon as possible. You’re not looking to have all the answers at this point but getting the ‘worst case’ out on the table quickly helps to frame up the size of the challenge in front of you.

  • Make a list of the areas to investigate where you might be able to cut or defer costs. Turn this into an action plan. What are you considering, what could it save in the short term, what are the long-term implications of making these changes? Give this to the bank along with the cashflow above.

  • Keep acting with confidence. We know that the payout and market conditions can change quickly, so you need to keep focusing on the key activities to ensure we are positioned to spring forward out of this situation when the opportunity arises.

  • Once you’ve developed a more detailed plan, sit down with the bank, and review it. The bank will take comfort from this process and will be able to best support you knowing that you’ve considered all the options and developed a logical plan.

  • Keep it all in context. Most dairy farmers have made significant inroads into principal repayments over the last 3 – 4 years. Make sure you outline the cash required this year in the context of your overall progress in the last few years.

We know that these major shifts in payout and profitability are massively unsettling. There’s enough out there in farming right now to challenge us without the overlay of making a loss. The most important thing to do is look after yourself, your family and your fellow farmers. Everyone deals with these challenges differently, but make sure you support each other.

If you’re not sure how to cope, or what you can do to manage this situation, reach out for help. Ultimately, we will get through this and out the other side, and we’ll learn a few new skills along the way.


We’d love to help. We’re all about better banking outcomes, so if you want to review your business to understand where you might sit, drop us a line today on 0800 692 212, email us directly, or fill out this form and we’ll be in touch.

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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

1 Comment

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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Bridging The Gap:  How We Fund The Future

Jul 6, 2023 2:59:20 PM / by Scott Wishart & Andrew Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

1 Comment

Do you have a farming business who has growth aspirations but you’re not sure how to fund this?

Are you a large farming business looking to exit some or all of your assets but want to leave some of your exiting capital in the sector, in a business and sector you know?

Do you have some capital, but not enough and want to make some bigger leaps in the farming sector?

Maybe you’ve got a farming business but feel that your current capital structure isn’t match fit, suited to your business needs or doesn’t allow you to sleep at night?

Are a wholesale investor and you want to invest directly into a farming operation and enjoy returns from both profit and capital growth?

Or, maybe you’re a wholesale investor and want a fixed return by advancing a loan to a first mortgage backed by land?

Are you interested in short- or medium-term loans with enhanced returns where the risk return equation is compelling?

In our last article we wrote about the key drivers of success including the need for deeper capital markets to support and encourage greater prosperity in New Zealand.   We received lots of feedback on this article which demonstrates just how real these needs are.

(If any of the above examples resonate with you, click on this link and fill out the form and we will be in touch).

So, what is NZAB’s role in meeting these needs?


Since we started back in 2017, we’ve been on a mission to help farmers get back in control of their banking.

This means that we work hard to understand their businesses deeply and help them act with confidence so they can focus on what they’re good at, which takes the worry out of the rest.

For the most part, that means working with the farmer and their bank to ensure both sides get what they need.

However, increasingly we are finding more and more need for non-bank funding solutions. This ranges from equity capital to private debt and everything that sits in between.  


 As good as New Zealand banks have been at providing debt capital, its simply not enough to cover the entire spectrum of needs of the Agri sector.

The current regulations in the banking sector have prompted banks to simplify their credit criteria and, as a result, limit the level of risk they are willing to undertake. Consequently, when farmers make a lending request, it often feels like trying to fit a square peg into a round hole. This mismatch can lead to fluctuations in credit appetite and a wavering of confidence within the industry, ultimately impacting returns and asset values.

Whilst there is significant capital in New Zealand and around the world the spectrum of currently available funding solutions for New Zealand Agri is actually quite limited. The reality is that our capital markets in Agri are thin and underdeveloped.   

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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


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


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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