By Nick Hume, BFA – Client Advisor
Things have clearly changed in the past two months since we started planning for that seminar. New Zealand has been thrown a drought, which appears not just to be regionalised but country wide with only a few pockets that have escaped.
The ‘Black Swan’ event none of us saw coming is of course Coronavirus (Covid-19). Add this to the drought and the impact is huge. We couldn’t have stopped these events, nor could New Zealand and our Government influence the outcome. The real question is what you can do today to help your business. The topics remain the same now as we had planned for AGRI TALK 2020. Here are some of my thoughts and suggestions:
- Have a plan: The most important thing you can do today is document a plan. In that plan you might list the strategies below.
- List your current risks and rank them. Know what will have the largest impact on your business today and should include drought management, Covid-19, commodity price movements, banking sector changes.
- Make sure you and your staff remain safe.
They will be stressed and worried about the current developments. Assure them they are still needed to help run the farm. Worried staff lead to distracted staff and key tasks can be overlooked.
- Build a plan with your team to ensure they reduce the risk of exposure to Covid-19. Make sure they are aware of the Health Ministry guidelines. Have a plan if one of the team does become infected - how will key tasks on farm get completed?
- Build an animal welfare plan in case you or your team become infected. Your stock will still need looking after.
- Connect with your neighbours and include them in on the above. They may need you or you need them to look after stock should people take ill.
- Prepare a feed budget for the next six months. Know what feed is needed. React to the holes in your feed budget. Hoping the hole will fill is not a strategy.
- Update your financial models – update your budgets and make sure you have a 2021 and a status quo budget out to five years. Know what your balance sheet will look like.
- Understand your tax position, many farmers have the requirement to pay large amounts of provisional tax. Reality is this might not need paying and there are tools available to defer these payments.
- Talk with your bank now and know what levers they can pull for you. Interest only or facility extensions might be required. Talk with your key suppliers and understand what deferred payment terms they may offer (do remember it is only a deferment of the payment you will still need the cash to pay the account in the future).
One thing that is clear to me though is that the world does need to eat. There will be ongoing demand for our protein and the long-term fundamentals for NZ farming are strong. People will look carefully in the future at what they eat, and they will want protein that they know where it comes from and NZ has a strong reputation in the markets.
We as an industry need to work together to help one another through these tough times. You are the backbone of our economy.
Nick Hume is a Client Advisor at BFA in Taupo. He’s a Chartered Accountant with a postgraduate in Accounting, as well as Bachelor of Business studies from Massey University. Much of his 17 year career has been spent working with Agribusiness clients and he has some thoughts for those concerned about what major changes in the industry will mean for their profitability, and livelihoods.