Farmers paying off debt - but spending, too

Farmers are paying off debt, say the banks, but their suppliers report they are also spending.

Financiers and other traders reported a successful and busy Field days at Mystery Creek, which enjoyed near record crowds.

The four-day agricultural show, which featured 1000 trade stands, ended at the weekend with reported a 128, 271 attendance, 9% up on last year.

Saturday’s event, which tends to attract townies, saw 30,292 turn up, 40% up on last year, while Friday saw a near-record 40,244 attend, 10.4% up on last year, despite mild rain.

ANZ Bank, which was a key sponsor, released its Agri Insights Privately-owned Business Barometer during the event, revealing 71% of farmers expect to increase agricultural production this year.

“They recognise they are coming off very high prices and they see challenges around volatility of exchange rates and commodity prices. They are frustrated by compliance costs and access to people and skills is a big issue,” general manger of agribusiness and strategy Ross Verry told NBR ONLINE.

Rabobank reported farmers were looking to develop their farms rather than buy property.

“The farms have done well over the past couple of years but there’s a few clouds on the horizon in the Fonterra forecasts but lamb is still looking good,” Waikato-King Country regional manager Paul Lamont said.

He said his stand attracted more than 2000 clients over the first three days as the bank aims to build on its increase in market share from 15% to 17% of the rural market over the past two years.

Westpac also reported a busy few days, noting farmers feel “apprehensive but attitudes are positive”.

“There are people who are borrowing more but most are still paying off and consolidating at the moment. We have been refinancing people more than (carrying out) property transactions,” said Dave Seymour, NZ area manager of Westpac agribusiness.

Insurance company FMG last week reported an 8% increase in client numbers and annual profits remaining at $8.5 million.

Chairman Greg Gent, a former Fonterra director, says farming is “really good” right now, thanks to high prices and a good growing season. But farmers are “nervous about that will hold up”.

Farms were coming off fixed-term loans and locking in to lower rates.

“There’s a lot of debt reduction, balance sheets are in better health. The first priority for farmers has been to sort out their balance sheets,” he said.

“They are still spending - it about how aggressively. If commodity prices hold up, by Christmas expect to see farmers open their wallets again. Like everyone else, they are part of the wider economy and are taking a conservative view.”

Ford New Zealand reported a “successful” Fieldays, attending the event as a branding exercise rather than selling cars.

“We have quite a substantial number of names we will pass on to the dealerships from Dunedin to Kaitaia,” national sales manager Melissa Rushton said.

Merv Carr, manager of Jim Wright Nissan of Otorohonga, also reported a “successful Fieldays”, saying farmers and the wider population are “pretty positive”, claiming much interest in double cab four-wheel drives and SUVs.

At Waikato Tractors, parts technician Joseph Gordon, in charge of the merchandise stand, said people had more money to spend this year.

The sales staff, who were too busy to talk on Saturday, had sold a few tractors at the show, which is “rare” as Fieldays is more about attracting inquiries.

“On Wednesday we had enquiry after enquiry and the sales staff did not have time to eat,” he told NBR Online.

Finally, clothing supplier Swanndri claimed record sales, as it cleared off stock at its stand on Saturday.

“We have had a very good Field days. We had a record day on Wednesday, we broke it on Thursday, we smashed it on Friday and basically we are on track to achieve the same today [Saturday]. We are getting a better share of the market,” said sales general manager Nick Flood.

“When times are tough people look for value for money. The market is very tough and we have to work for every sale, but at the end of the day, people still require clothing.” 

Field days returns to Mystery Creek during on June 12-15 next year.