Tom Laming, Client  Director, NZAB

If you are anything like most businesses – farming or otherwise – you will be hearing the word “strategy” a lot at the moment. Your Bank is probably looking for one, you might need one for your fertiliser company or to meet regulatory requirements, or you might just be wrestling with how to develop a strategy for your own family and business.

Whatever the circumstances, you may well be asking “where do I start?” What exactly is a strategy, what is the process to develop one and what should it look like once I’m done? And most importantly, why will a strategy benefit my business? Why should I get excited about the process?

From the biggest corporate on down, businesses through the generations have attempted to develop strategies that clearly capture the needs and aspirations of all key stakeholders – from the biggest shareholder to the family who own and operate the business.

Some become clearly defined. I have recently finished a book by Bob Iger, the current CEO of Disney. For context, Disney had revenue of nearly USD70 billion in 2019! His strategy for the business however was simple and was captured in only three key focuses – to increase the amount of branded content the company created, embrace and advance technology, and be a truly global player. Under his leadership Disney has doubled it’s revenue, and cemented a dominant position in the media landscape.

Andrew Laming, Director, NZAB

There’s no debating farmers are a vital part of the economic recovery journey for New Zealand, so it’s time they get the lowered interest rates they deserve.

Firstly, a bit of background.

The Reserve Bank of New Zealand (RBNZ) regulations stipulate that banks have to hold significantly more of their own capital in a farm loan than they do in a home loan. They put this differentiator in place after the significant run up in Agri debt prior to the Global Financial Crises (GFC) - as this, combined with the subsequent retraction in commodity prices, caused a near meltdown of the system.

Rightfully so, they wanted to prevent this from happening again.   However, in hindsight, things never really panned out to be as bad as what they thought; whilst non-performing loans ran very high post GFC – they have improved considerably to where they sit today. Banks also didn’t experience the losses they all thought they might.  

Sure, things aren’t perfect out there, but the risk that each bank was facing back in GFC times, versus in real time today is considerably different.  

This graph below is a good illustration of the relative change in risk for the Agri lending sector over this period.

Scott Wishart, Managing Director, NZAB

I came across this the other day: