Rewire the Capital System & Make Access to Capital a National Strategy

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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.

Problem Number 1: Wiring

New Zealand’s financial system is wired for property, not productivity. Since the Global Financial Crisis, banking regulation has treated farm lending as riskier than home lending, a small technical difference that has reshaped the entire flow of capital.

Banks must hold 60–100 % more capital for farm loans than mortgages, so they charge significantly higher margins adding $500–$800 m in annual interest costs. Since 2016, home lending has grown $158b while farm lending rose only $6b, even as agriculture’s GDP share increased. The recently proposed changes from RBNZ do little to materially address this.

Given that most deposit money in New Zealand funnels through the main banks or into listed securities it leaves almost no avenue for investors to participate in the country’s most productive sector without buying a farm outright.

There’s virtually no middle ground, no vehicles that let savers or institutions back agricultural returns directly, even though those returns are often similar (and at times stronger) than what’s available in property or equities.

Problem Number 2: Capital Concentration: Where Scale Wins and Innovation Loses

What capital still flows into the sector is increasingly concentrating around the largest and lower-risk operators.

Banks now prioritise scale, collateral and credit history, leaving smaller farmers and new entrants struggling to attract support, regardless of performance.

Because almost all agri lending still comes from the main banks, capital naturally follows mortgage-backed security, rather than the businesses that scale and create enterprise value via increased revenue flows.

That bias channels money into houses and land, not innovation, capability or growth. For agri-tech, processing, or service ventures without land to mortgage, there are limited domestic avenues for growth capital.

This “land-first, size matters” bias dampens innovation and narrows the pathway for the next generation of owners.

A Structural Bottleneck

Farm ownership and capital renewal are slowing at the very moment they need to accelerate. Many established operators have significantly deleveraged (average dairy debt has fallen from about $22 per kg MS in 2017 to $18 per kg MS today and in real terms, this is even greater $30/kgms to $18), but younger or expanding farmers cannot secure the finance to step up.

It’s not a shortage of skill or ambition; it’s a shortage of structured access.

In addition, New Zealand Agritech firms face a chronic capital gap, with limited domestic funds able to support rounds above $5 million. This restricts scaling and global reach. Yet it also presents opportunity with international investors crying out for sustainable food and climate technologies, and New Zealand’s credible on-farm innovation base is an attractive entry point.

The constraint is not profitability or value gain; it’s connectivity in the way capital needs to reach those who can use it best.

Step 1: Make Access to Capital a National Strategic Pillar

Capital allocation determines who owns New Zealand’s productive assets and, ultimately, who shapes our future economy.

Yet for all its importance, capital access remains largely absent from national economic policy for Agriculture and Private Business.

For more than a decade, governments have talked about productivity, value-add, and regional development but said little about the financial infrastructure that makes any of it possible.

To its credit, government has already recognised this need in other sectors: the infrastructure and housing programs now use public-private funding models, risk-sharing vehicles, and guarantees to attract long-term investors. New Zealand has made progress through capital-market reforms led by MBIE and Minister Andrew Bayly, oversight of banking and investment settings by Finance Minister Nicola Willis, and agribusiness investment promotion under Todd McClay. These are positive steps, but no single mandate yet unites them into a coherent national capital-access strategy for agriculture (or even SME).

Meanwhile, major industry bodies have been largely silent on capital access, even though their suppliers depend on it.

To make this shift real, New Zealand must move from discussion to design, establishing formal mechanisms that connect capital with capability. That means building the same institutional pathways that already exist for infrastructure and energy, but tuned for agriculture and agritech:

1. Focus and KPIs - appoint a dedicated Minister for Capital and Enterprise with a clear brief to improve access to productive capital. Measure outcomes such as the number of new agribusinesses formed, export successes achieved, or companies listed, and regularly champion success stories to build confidence and momentum.
   
   
2. Sector-wide advocacy - a clear, unified signal from both policymakers and industry leaders that access to capital is strategic infrastructure. When that signal becomes consistent and loud, private capital follows.
   
   
3. Public–private investment funds - proven international models show how aligned capital accelerates transformation. Denmark’s Agribusiness Fund, jointly backed by government and institutional investors, co-invests in agritech and export-oriented food ventures, while the Danish Growth Fund provides equity and guarantees to SMEs. Together, they bridge private and public capital to scale innovation within Denmark’s primary industries. New Zealand needs a comparable framework to mobilise domestic and offshore investment into productive agriculture
   
   
4. Smarter regulation - risk weightings must reflect reality. Farm loan losses are very low, yet agriculture still carries the heaviest capital weights in the financial system.

Until these signals strengthen, money will continue to pool in property and scale consolidation rather than in the innovation, ownership transition, and post farm gate investment.

Step 2: Rewire the Capital System

Rewiring means designing a capital network that connects investors directly to farm-ready opportunities.

Globally, there is no shortage of money looking for long-term, stable, asset-backed returns. The challenge is to create the vehicles that channel that money efficiently into New Zealand’s productive base.

That bridge can be built through:

1. Specialised capital navigation: independent advisors who help farmers and founders plan, structure and present their business and their strategy so they are “capital ready”.
   
   
2. Private credit and risk-tiered funds participating directly in Agri – specialist lenders partnering with private credit funds can absorb the first layer of credit risk, unlocking further participation from institutional, Iwi, and superannuation investors at scale. These vehicles spread risk more efficiently, bring in new sources of capital, and create options along the risk curve.
   
   
3. Innovative capital instruments: such as hybrid debt/equity notes that sit between debt and equity, providing investors with secure income and optional upside, while giving farmers time to build ownership.
   
   
4. Lease-to-buy and staged-ownership frameworks: allowing capable operators to build equity progressively rather than face an all-or-nothing purchase.
   
   
5. More efficient marketplaces for matching capital and opportunity: Regulated platforms connecting investors seeking real-asset exposure with farmers, agritech founders, and regional businesses needing growth funding. By upping the number of quality opportunities, better due diligence, and risk disclosure, such a marketplace can dramatically lower transaction friction and attract private, Iwi, and offshore capital directly into the sector.
   
   
6. Succession-linked investment models: new structures that let existing owners retain capital in the business, earning a return as the next generation or new entrants step in. These can extend beyond family boundaries, linking retiring farmers and skilled new operators through shared-equity, vendor finance, or managed-transition arrangements. We’re already doing this successfully within NZAB, proving that inter-generational investment can be a capital strategy, not just a family event.

These models already exist in other sectors. Applied to farming, they could bridge the estimated $10–$15 billion gap between what banks can provide and what the sector actually needs.

Why Confidence Is Warranted

Despite these structural limits, the fundamentals of New Zealand farming are sound. Balance sheets are healthier, returns are robust, and operational capability continues to rise. The problem isn’t the farmers or the investors, it’s the missing connection between them.

Once the system is rewired, capital can flow not just from banks but also from domestic investors, private credit funds, Iwi investors and global institutions seeking long-term, real-asset exposure.

The appetite absolutely exists. It just needs structure, leadership, and the signal that agriculture is once again open for investment.

NZAB: Turning Strategy into Action

At NZAB, we’re already putting these principles into practice. We’re bringing multiple funding and equity options to New Zealand farming, creating new ways for capital to reach productive businesses rather than just property.

Our advisory model is built around helping clients become ‘Capital ready’ whether that means securing bank debt, attracting equity partners, or designing hybrid structures that blend both. We’re also focused on improving farmers’ access to competitive capital from the main banks by presenting their businesses in the proper light, highlighting their innovative strategy, management of risk, on farm performance and future wealth creation. This is the practical side of rewiring the capital system turning strategy into execution.

In the meantime, if you’ve got a great idea or a financing need, drop us a line - no one else in the market has the same access, insight, or structuring capability to connect capital with opportunity the way we do, so drop us an email or ring us on 0800 NZAB12