Research consultancy VantagePoint asked nearly 200 businesses to describe what made them successful and how they could improve.
The results, compiled in GrowthGuide Agri Suppliers 2013, revealed some bullishness out there.
Almost all the 178 agribusinesses that completed the survey were optimistic about the future of the sector, in the near term and looking three years and beyond, VantagePoint managing director Dave Lewis said in launching GrowthGuide.
Agri-based companies recording strong revenue and profit were more optimistic than any other comparable business VantagePoint had surveyed, he said.
There was a good cross-section of businesses involved in the agriculture survey, ranging from manufacturers to service providers such as vets and farm consultants to those selling direct to the farmer or grower.
The size and history of businesses was also diverse, although VantagePoint had been surprised to find the agricultural sector had a higher proportion of large and long-established businesses than other sectors.
Lewis said perhaps that was to be expected in such a traditional sector.
“This may also account for the positive outlook. Many of these companies have ridden out a good number of recessions and difficult financial times.”
It was also evident many of the younger businesses were growing the most aggressively, he said.
A period of financial recession and drought wouldn’t appear to be ingredients for this confident approach but VantagePoint’s survey produced some unusual results.
An industry that looked to be under severe pressure responded in a manner that was anything but depressed.
When businesses were asked how they had performed in terms of growth in the past 12 months, 31% considered themselves to be top-quartile achievers.
The businesses that VantagePoint labelled high-growth were standouts in margin and attitude.
Nearly two-thirds of the high-growth companies had increased profit margins in the survey period. They were also optimistic about the year ahead, with more than half expecting double-digit growth.
That was more than double the rate expected by other businesses in the agricultural sector, Lewis said.
More than a third of the high-growth businesses had been operating fewer than 10 years. The young companies said they were still striving to grow their customer base, often because their products were newer and market penetration was more difficult.
They didn’t see the struggle as a negative. Instead, they seemed to believe there were plenty of opportunities for expansion, he said.
Manufacturers were the best represented in the group of high-growth traders, probably because of their product mix.
Many local manufacturers were involved in a more specialist niche making high-performing products.
Specialisation tended to favour local businesses, because many NZ manufacturers found it hard to scale up and compete internationally, Lewis said.
Specialisation generally appeared to protect local production, the survey showed.
“You could say that NZ’s No.8 fencing wire mentality has been key to innovation for some of our leading agricultural sector manufacturers and has enabled them to be competitive in markets where high-volume, low-margin, more generic products simply aren’t economical,” he said.
A culture of innovation had allowed businesses such as Gallagher – cited as a case study of excellence in the GrowthGuide report – to not just be a leading manufacturer in NZ but also to export worldwide.
