Swings and roundabouts farming communities

26 March 2020

Fortunes have certainly changed in the Central Hawke’s Bay farming community from three months ago. Up until the end of November 2019, I had been saying to clients that looking forward, there was nothing obvious out there that was going to affect the excellent livestock prices being achieved. We had low interest rates, high schedules, market demand was excellent (particularly in China), and the Brexit mess had almost been sorted out.

It’s quite sobering how a few months have changed this picture.

Now, we’re in drought mode. Beef and sheep schedules are dropping, killing space is tight and the COVID-19 pandemic is making the global community very nervous. And while COVID-19 is showing signs of stabilising in some countries, it demonstrates how susceptible the New Zealand economy is to problems affecting overseas markets.

With all of this going on, 2020 looks like it is going to be a mixed bag and the ability to go into drought mode and plan accordingly will be paramount to a farm’s survival. For farmers who have been able to kill early and lighten livestock numbers, it is still likely to be a reasonable year. For those later in the production cycle, things will not be so rosy.

Fortunately, there is plenty of good advice available out there from farm advisors, livestock agents and local support groups for the farming community to draw on. And with the amount of baleage and hay currently being fed out that has possibly been stored for some time, a clean out of sheds is one small positive.

Being proactive with the financial management of your farm is also paramount. My suggestions are:

  • Discuss with your accountant how you can reduce provisional tax payments in 2020. Budget revisions need to be completed by the end of June and this can have a positive impact on cash flow.
  • There has been a lot of tax paid over the last two years when cash flow has been good – the time for a reset is now so seek early advice as to what your options are.

If you have a farming business in the catchment area and would like tailored advice for your agricultural business, contact the Business Advisory team.

Findex has developed a Government Stimulus Health Check and free Business Wellbeing Toolkit to help businesses manage potential risks and take full advantage of eligible stimulus assistance. Book your Health Check here.

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