Saturday, March 30, 2024

PULPIT: Farms perform better with a plan

Avatar photo
ANZ continues to support the rural community as the biggest farm and agribusiness banker and is the largest private sector contributor to the Red Meat Profit Partnership. Its commercial and agriculture managing director Mark Hiddleston and agribusiness general manager Ross Verry explain why it has confidence in the sector and wants to help farmers gain more confidence too.
Reading Time: 3 minutes

New Zealand’s red meat sector has been a vital part of our economy for almost 150 years but, as the Red Meat Sector survey clearly highlighted in 2011, it has long struggled with inconsistent profitability.

This has become more critical in recent years.

We remain one of the world’s leading red meat exporters yet the sector performs well below its potential with many sheep and beef farmers not reaping the benefits they could.

The Red Meat Profit Partnership (RMPP) Primary Growth Partnership presents an opportunity to address that, to identify the differentiating factors that see some farmers achieving far better outcomes than others, to drive sustainable productivity improvements in the sector and deliver higher onfarm profitability.

As the largest banker of the agricultural sector, with tens of thousands of rural sector customers and nearly 40% of all NZ agribusinesses, ANZ does extensive red meat industry research.

We invest heavily in improving management skills and development of best practices across the sector.

However, the collaborative nature of the RMPP, between the Government, Beef +Lamb NZ, banks and red meat processors, presents different and exciting opportunities.

RMPP has brought together these parties with passion for the sector to work in support of farmers.

The partnership is primarily focused behind the farmgate.

It’s not about structural change in the industry but what is within farmers’ control.

RMPP identifies the key issues and shares a breadth of expertise that would never have been driven by individual companies.

It provides a platform and focus for doing things that would not happen without that access to intellectual and monetary horsepower.

It provides the opportunity to use scale and information to help the sector better understand the market and help individual farmers gain a much better understanding of what good really looks like in the context of their region and the country, not just conversations across the fence.

We know from our research, including our Business Barometer, how wide the range of profit performance is among red meat farmers and felt we were well placed to help as the largest private sector contributor to RMPP.

That includes providing access to research, development of key information tools and our Business of Farming red meat planning workshops – we are currently running a series of these across the country.

These are extension facilities led by top level farming advisers with good knowledge of the challenges of farming in relevant regions.

They focus strongly on business and financial management and outcomes and information as a key tool.

We have developed a business plan template and guide for red meat farmers because research shows businesses with a business plan perform better. We are also developing a meat and fibre calculator.

RMPP identifies the key issues and shares a breadth of expertise that would never have been driven by individual companies.

Our research on what success looks like in the red meat sector has found that high performers have confidence in the future of the industry and invest in improvements that deliver superior returns – like scanning and new pasture.

They use proven management information systems, onfarm financial analysis and strategic operating plans and they measure and adapt for better performance.

There are good opportunities for more farmers to perform at these levels but to have confidence to invest in their business they need to understand the outcomes.

Building confidence is one of the sector’s major challenges.

Other barriers to realising opportunities include the low rate of succession in the sector. At 60, you might not be very incentivised to make an investment to get a 10-year return so you’re perhaps not driving the best performance out of your asset.

These are just some of the things we can address through RMPP – for instance, our workshops are throwing up ideas about how older farmers can share the risk and benefits of improving performance.

There is no silver bullet but RMPP is working to develop ways to support sheep and beef farmers to achieve success through better management, access to better information, attracting more talent into the sector and responding more effectively to market needs.

It can drive better business planning, better analysis and better onfarm returns to encourage more capital into the industry.

This is all the more important because, despite the volatility in the market, the future is positive and the sector has a great opportunity.

The pendulum is swinging back towards red meat in terms of its lower environmental impact.

Food safety is increasingly important as part of that price point and NZ has huge advantages in terms of the way we produce protein – strong animal welfare and husbandry and very little additives.

The reality is the real competition is not with one another but competition on the world stage.

We cannot compete with the volumes of cheap meat internationally but ours is a different product and a confident, business-aware industry has great opportunities to tell that story well and further target the premium market.

Total
0
Shares
People are also reading