With farming in New Zealand changing so rapidly, it's key to know how to safeguard your agribusiness. Fortunately BDO has the solution.
Farming has always been a cornerstone of New Zealand's economy.
We're the world's 12th largest agricultural exporter (by value), with dairy alone accounting for 35 per cent of our nation's commodity export value, according to the Ministry for Primary Industries (MPI).
However, past successes don't future proof any sector, especially at a time of such great transition. The only solution is to adapt.
So what is changing, and how can you safeguard your businesses in this disruptive environment?
The business of farming is becoming more complex
There are four key challenges currently facing farmers in New Zealand:
- Changing consumer demands - Ethical consumerism is on the rise. The public wants to know that farmers are doing the right thing when it comes to food security, animal rights and sustainable practices.
- Rising compliance requirements and costs - Farmers today face more compliance regulations than ever before. Most notably these include environmental, health and safety and human resourcing concerns. Staying on top of these takes time, and comes at a cost.
- Challenges in accessing capital - Banks are also facing more regulations, which has led to capital becoming more constrained. As a result, farmers are being asked to provide more when looking to raise additional funds.
- An ageing demographic - While not a new challenge, this dynamic poses one of the biggest threats to the sector. As with a number of industries, attracting young people into farming is becoming increasingly challenging. The industry needs the next generation to not only take over the running of these operations but to also provide an exit pathway for the retiring farmer.
Kiwi farmers have shown themselves adept at finding innovative solutions to changing circumstances, and the challenges identified above will require energy and the right mind-set to ensure success. There a number of steps you can take to help deliver positive business outcomes in today's climate.
1. Take stock of your business
When deciding how to move forward the first priority is to understand where you are now - and this is true when managing all of the challenges highlighted above.
A firm grasp of the business side of your farm is key to its future success. How else can you expect to keep up with the ever-changing regulations, know where your key growth drivers lie or plan for the succession of your farm?
In practice this means knowing your assets at both holistic and enterprise-by-enterprise levels, and conducting thorough reviews that examine both strengths and weaknesses. By being proactive rather than reactive you will gain an understanding of how your business is placed to tackle upcoming challenges, and what needs to change. BDODrive was created to fulfill this purpose - your BDODrive advisor can help you use data to provide insight on everything from finance and tax obligations to how your business stacks up against opportunities and trends.
2. Find the right technology
There are myriad technological innovations that New Zealand farmers can take advantage of.
As well as apps that enable easy health and safety management, one of the most beneficial areas for agriculturalists lies in cloud-based data collection. Farms produce mountains of measurable information on everything from production and compliance through to payroll and administration. However, this data is only useful when properly collated and analysed.
With so many tech-based solutions, the challenge is finding one that suits your individual business
The cloud does just that, allowing you to bring together key data that gives oversight on both the production and business sides of your farm. By having this at your fingertips, you streamline communications between important personnel including accountants, bankers and agribusiness advisors.
With so many potential tech-based solutions, the real challenge is finding the one that suits your individual business. A large part of BDO New Zealand's agribusiness offering lies in helping our clients filter through the different options to uncover something that tangibly improves the way their information system operates. Doing so lays the groundwork for better and more informed decision making going forward.
3. Seek independent advice
The effects of the three changes we highlighted are already being felt by agribusinesses in New Zealand. However, farmers are generally time-poor so managing these areas can seem like a lot to take on.
This is why BDO is committed to using our years of experience assisting agriculturalists to help Kiwi farmers rise to these new challenges. We can provide farmers with independent, tried and tested advice on how to move forward effectively, and with a solid foundation. For more information on our services, get in touch today.