Know your numbers – that’s the message from ANZ’s head of agribusiness, Mark Bennett, to farmers facing difficult times.
Mr Bennett said lessons could be learned from two New Zealand speakers at the AgriVictoria summit, Dairy Holdings director Colin Armer and FarmRight director Tony Cleland.
“There strong attention to costs and to profit as the prime motivation for being in business - if you carry that kind of mindset, it’s a really good way to go about protecting your business from a period of low commodity prices,” Mr Bennett said.
“These guys truly understand where their numbers are and the cost of production - they know they can’t control price.
“They know if they are going to be leading in their class, on costs, they are going to be better placed, than anyone else, when prices go low.
“But knowing your numbers, first and foremost, is the only way you can really know what you are going to do.”
He said 80 per cent of all Australian farms were small to medium sized operators, which were predominantly family owned and operated.
A quarter of the country’s farms produced more than half of its broadacre output, but more than a third carried no debt. A further 20pc carried less than $100,000 debt.
Mr Bennett said New Zealanders approached debt and equity in a different way to Australian farmers.
“Australian farming families have been quite successful, over a period of time, and so they have worked hard to accumulate a farm enterprise that is profitable and have managed to pay down debt, over time.”
Many were also supported by off farm income, which allowed an alternate revenue stream.
“I don’t think there is an aversion to debt, debt costs far less today, as finance costs are at historic lows - I think confidence might be more an issue, rather than the ability to access debt itself.”
Mr Bennett said negative economic news and seasonal conditions played into the minds of farmers, wanting to take on more debt.
In New Zealand, the sharefarmer model was seen as an avenue towards land ownership.
“The avenue towards equity partnerships, in New Zealand, has been a real key difference - given that the Victorian industry has lacked that feature, it hasn’t happened as quickly or readily.”
Mr Bennett said the Australian industry seemed more determined to “own, hold and control the enterprise, as a way of going forward.”
“The story could still be a better one if we saw a mindset that said, ‘you know what, I don’t have to give it all up’, to share some of that experience with someone else, or invite equity into my business.
He said farmers could look at releasing a portion of equity, teaming up with people with like minded views and outlooks, to try and bring a combination of talent and money together, to start a new enterprise.
“There are actual legitimate ways of getting access to resources more quickly, which creates better outcomes in a short period of time,” Mr Bennett said.
