Agri Industry Update
We recently attended an Agri Industry update hosted by BakerAg, where the overall sentiment reflected challenging times ahead for the sector. Below is a detailed look at the current state of the industry and the necessary steps forward.
Dairy Sector
The dairy sector is currently performing better than other agricultural sectors. However, increased costs, including higher input prices (insurance, rates, etc.) and rising interest rates, are putting pressure on cashflow. The projected dairy payout remains high, but careful management of expenses is critical to maintaining profitability.
Sheep and Beef Sector
The sheep and beef sector has been hit hard by adverse weather conditions, including floods followed by drought. This has resulted in significant challenges:
- Forecasting Losses: expect losses over the next couple of years
- Cost Control: a critical need to manage and reduce expenses
- Off-Farm Income: exploring additional income sources outside traditional farming
- Alternative Finance: considering different financing options to support operations.
These factors have also led to a subdued rural property market, with sales taking longer to complete and fewer transactions occurring.
General Observations
- Budget Announcements: the recent Budget did not provide major, new initiatives or relief for the agricultural sector.
- Cashflow Focus: across all agricultural sectors, a renewed emphasis on cashflow management is essential.
- Rural Property Market: the market is experiencing longer sales periods due to the current economic climate.
Steps Forward
Given the current situation, it is essential to re-focus on the basics and increase oversight on business cashflow and forecasting. Key actions include:
- Enhanced Cashflow Management: regularly monitor cashflow to ensure financial stability.
- Expense Control: identify areas where costs can be reduced without compromising operations.
- Diversified Income Streams: explore opportunities for generating additional income outside traditional farming activities.
- Financial Planning: engage in thorough financial planning and consider alternative financing options.
Get in Touch
If you would like to discuss how these changes may impact you, or need assistance with adapting to the new regulations, please get in touch with our team. We are here to help you navigate these updates and ensure your financial strategies remain robust and compliant.
