The situation is not one that has happened overnight but changing influences such as banking policy, pressure exacerbated by social media, new environmental demands and regulations and increasingly irregular weather patterns are changing the world farmers operate in so they need to adapt.
Massicks has spoken to his peers around the country and though the problem is not widespread it exists.
“There are some farmers out there who are in untenable situations while there are others in situations that while still tenable are precarious.”
Some have borrowed too much and have been riding the capital gains horse.
But now that horse is in bad shape they need help to get off before it’s too late.
One of the problems is some farmers putting off making informed, timely decisions, hoping their situation will change.
Another is not spending the time and taking a proper look to analyse their financial performance and talk about it with family and their advisers.
Massicks is aware of farmers putting off decisions, resulting in decisions and costs that, had they been prepared to make an informed judgment earlier, wouldn’t have been necessary.
“It’s not easy when your business is backed into a corner. By that time the options are limited.”
The issue is not affecting only the dairy sector but is having an impact on sheep and beef businesses as well.
“Understanding the level of equity in the business is really important, especially with changes in property and livestock values and new requirements to meet environmental regulation.
“In addition, banks are focusing more on the levels of equity in the business and the ability of the business to service its debt as well as maintain a level of security in the business to safeguard borrowings.”
He is aware some farmers might not want to hear his message but it’s time to talk about what is and what isn’t going on.
Covering up the problem and pretending it’s not there will not help. Sometimes the plaster has to come off.
“It might look a bit messy underneath at the start but what’s needed for it to heal is some air and a bit of a clean.”
From a farm consultant’s perspective it’s important to be honest and not be a cheerleader.
“It’s not always what people want to hear but we have to be honest and support our clients.
“Cheerleading is not healthy. Cheerleading just papers over the cracks.”
He does not see the Debt Mediation Act, which passed its final reading in Parliament in December and comes into effect this year, as a saviour for every farming business that is struggling.
“It’s potentially positive in that it allows for a period of up to 60 working days to allow for the farmer and their banker to work with an independent mediator to work on a solution but I do wonder that if people get the right team around them, do the analysis and get the right advice then will they need the Act?
“Having said that, mediation may help if it is the farmer that asks for the meeting but it would be great if action was taken by the farmer before mediation became necessary.
“So, it’s not going to be the solution to the majority of problems.
“It’s not going to help people make good business decisions,” he said.
