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Land access – some recent thoughts

I recently attended the Rural Law Conference in Canterbury, and a John Aspen from Federated Farmers addressed the conference on some of the following issues, which I found really interesting. The land access has become a key political issue. Mr Sutton, under pressure from his colleagues and society, has backed away from pushing increased access to farmland back onto the backburner, but be assured that once the elections are over they will come straight back up again. Some of the issues are a...

November 8, 2016

Public access to your farmland – the continuing discussion……

The debate rages over public access to farmland. This debate has been temporarily silenced by the Labour government, as they go into the election. They have realised that the landowners don't want public access to their land. The government have quietened it down, but it will be back on the agenda as soon as they go back into power, if they do - watch this space. The government talk about a consultative process, where they will talk to the farmers, and everyone will have their say. So how do...

November 8, 2016

Stock getting out – some of the legal issues

As New Zealand goes into more legislation for everything, legal issues around stock getting out, roaming on the road, causing accidents and damage to peoples' property, will come under close scrutiny. A colleague of mine, sadly passed away, but he was an expert witness in these cases, and he was highly sought after to give his professional opinion on just these issues. There are clear definitions of fencing from a legal point of view, and it is obvious that cattle grazing behind a single wir...

November 8, 2016

Farming Companies & Liquidation by Banks – BE AWARE!

Companies are great ownership structures for farms and farmers. But the rub comes when the Bank decides to foreclose. Recently I was out assisting some farmers who had all their assets in a company. The Bank had been annoying them for some considerable time, but clearly had lost patience and decided to act without further advising the clients. As I drove out the gate the Receivers drove in and the company was put into liquidation. The Receivers had a farm consultant with them to cover animal w...

November 8, 2016

Risk assessed interest rates

Down on the farm interest rates are now linked to your balance sheet results! It has become clear that banks are now completing a risk assessment on every farming business. I have identified the following four points as being key issues the banks consider : 1. Analysis of your Annual accounts profit and loss statements, for the last three years. Losses will mean a higher interest rate. Moving from a loss to a profit will result in an improved interest rate. Large loans no longer attract a ...

November 8, 2016

Managing Money in a Difficult Environment

We have probably all spent the last 9 booming years maximising our income and chasing tax free capital gains and not been too bothered about cash flow and profit. We probably thought the more we owned and owed, the better off we would be. I would often get asked why the neighbours had three farms and they only had one. The answer was that they took on more risk and more debt. That phase is well and truly over. Credit is tight, the commodity boom has crashed and many will be licking their wounds....

November 8, 2016

Your Rural Bank Manager needs to be your new ‘Best Friend’

After nine years of unprecedented good times, where everything was only going one way, and that was 'UP', we now need to regroup and re think. The good times meant that Banks were happy to lend against equity and poor cash flow, presuming that everything would be worth more, and that there would be a keen buyer out there, for the security that they had just lent money on. There was plenty of money sloshing around in the world, and in the banks and it seemed that the good times would never en...

November 8, 2016

Focus on the Earnings Side of Your Business

We need to go back to the earnings side of our business and away from the asset building side. In other words, go for cash and income generation (i.e. make your true profit) and away from trying to grow our assets and getting free capital gains. At a recent excellent presentation by Cameron Bagrie, economist for the ANZ National Bank, he gave an objective but very realistic overview of the New Zealand economy and how it might play out in the current world economic rebalancing. Rebalancing is...

November 8, 2016

Fonterra Dairy Shares simplified

Much is written, a lot is talked but many people still do not really understand the issues around Fonterra Dairy Shares, their surrender, contract supply, and so on. Having been brave enough to write the philosophy on "Dairy Equities Simplified" it is time to tackle "Fonterra Dairy Shares Simplified". To supply Fonterra you need one share per kilogram of production. Fully shared supply means you have enough shares, fully paid up, to supply your milk to Fonterra. Now you can also supply Fo...

November 8, 2016

Commercial Property - Revisited

Commercial and industrial property as an investment is probably one of the best kept secrets. Largely, you are buying property with a tenant and the tenant looks after your building, pays all the outgoings and pays you the rent. It is 'inflation-proof' investing in commercial property, compared to having money sitting in the bank depreciating. Advantages of Commercial Property Some of the issues that we never think about are as follows: The investment is inflation-proof. That is to say that ...

November 8, 2016

Some Action for the Summer Dry

According to some of my clients the dry is about three weeks earlier than usual, or normal. What's normal anyway? Having been through a number of very dry seasons and watched the industry closely, there a number of do's and don'ts when you get an early dry summer. The dust clouds that are following the cows down the race to the cow shed are a sure indicator it is getting very dry. It is summer, and it does get hot and dry. Probably not much hotter, or much drier than many seasons before, but...

November 8, 2016

Reverse Loans – could reverse all over you!

Recently, on 29th December 2007, The Law Society had a publication in the Herald reminding us just how expensive and dangerous Reverse Annuity Mortgages can really be. Unfortunately, the 29 th of December would see a lot of people at the beach or hung-over after a good Christmas and not likely to read such an important report. Whilst not against the companies and providers of Reverse Annuity Mortgages, I do think the peddling of them as a panacea and easy cash by some financial providers will so...

November 8, 2016

Insurance simplified

As a rural financier and advisor I am increasingly seeing disasters as a result of insufficient life cover and insufficient risk cover being in place. We at Fraser Farm Finance have studied insurance matters but find that it is a specialist area and strongly advise all our clients to seek independent risk assessment from a suitably qualified insurance agent. We, as farmers, have traditionally put insurance in the 'too hard basket' because we don't fully understand and more than that we don't s...

November 8, 2016

25% Leasing

Given the recent predictable and relatively long term increase in pay-out for dairy farms it must be an opportune time to look at how rentals are calculated and charged. Under a fixed price lease all the benefits of an increased pay-out goes to the lessee or the tenant. This has been the model that has been in existence for many years and of course the landlord is unable to get an increase in rent until the rent review date. More than that, it does not give an equitable return to the land owne...

November 8, 2016

So you’re in trouble financially: what do you do?

Here are 5 steps to help you You can easily get into financial trouble if your finances are not managed effectively. Here are 5 steps that you can take to help you through. Money is the life blood of any economy. It can create its own problems as well, particularly the rural sector. The rural economy is subject to ups and downs, high pay-outs, low pay-outs, good lamb prices and poor. The costs just keep on rising and it is difficult to reduce these costs. Once you build a cost of running the...

November 8, 2016

Fonterra - time to support New Zealand’s largest company!

After recently attending a presentation by Mark Townsend to rural professionals, I was prompted to think about Fonterra, a large and key player in not only the rural, but New Zealand's total economy. It is always easy to find fault; to criticise and suggest that Fonterra is too big, no longer caring and has lost its co-operative feeling. While many may find fault, we are all co-dependent on its continued success. As I tell my team in the office, if you are criticising somebody behind their bac...

November 8, 2016

Farm leasing – more detail is better than less

Following my first article on farm leasing 'The New Land Tenure' we have been inundated with enquires for help. This is of little surprise to me as there is now land being leased everywhere, although one farmer telephoned me to say he didn't believe this was true as he couldn't find a suitable dry stock farm to lease!! When it comes to documentation it is really important to get all the issues out in the open and discuss them. The lease is a binding agreement and there is no way back once it i...

November 8, 2016

Do you understand the three C’s of lending?

How many farmers understand the three C's of lending? The purpose of this article is to enlighten potential borrowers what goes on in the mind of a lender and is designed to create a positive attitude. How often do you hear of farmers that have been turned down for funding to buy the neighbour's farm? Some farming borrowers cannot understand why, when they believe they have the equity, the deposit or income to acquire a new farm property. Lending is mostly based on fact; however there can al...

November 8, 2016

Rental assessments for farm leases

The IRD have made it very clear that all rentals between family trusts and partnerships have to be independently assessed. So, what are the issues around this and how are they assessed? Given my background in valuation, farm management, farm finance, succession planning and rental assessments, I have set out the following points: Farm rents vary according to many issues. Broad brush rentals are around $350.00 per acre, or $865.00 per hectare for dairy land with no shares. Rents increase t...

November 8, 2016

Farm leasing - the emerging land tenure

As land becomes more expensive and less available, there is an increasing amount of land leasing. Farm owners who may be looking for a change and less work, are considering the option of leasing their farms. Emerging young farmers see leasing as an opportunity to build assets and stock by natural increments as well as repay debt. Leasing gives a fixed term opportunity to get stuck in and make some progress. Leasing also sets very clear boundaries for both the farmer and the tenant. Clear bou...

November 8, 2016

Do we oscillate between greed and fear?

The world has been through an unprecedented period of growth. This has spun off into the New Zealand economy and culture. We have all been oscillating between greed and fear. We all want to make a fortune, but are fearful of getting it wrong. We say we will buy something, get all keen, do the research, complete the due diligence and yes it is all go, then fear creeps in – what if we get it wrong?, what if we can't meet the holding costs?, what if the IRD want tax? … Fear is made worse by ...

November 8, 2016

Are New Zealand farmers really wealthy?

Farmers, we are in the land business. It may not seem like it, but most New Zealand farmers are wealthy or potentially so, particularly if you compare them with their cousins in town. Wealth is all about owning property and the business of farming is about owning land and managing livestock, whereby effective management of both property and livestock ensures you get the maximum return. Many dairy farmers start out 50/50 sharemilking, and then buy a small farm, then a bigger one. Those who ar...

November 8, 2016

Dairy equities simplified

Much has been published about Dairy Equities and it is not that easy to understand. We as farmers like things simple. Edward deBono wrote a book called "Simple". So how does it all look, when put simply? Dairy Equities purchase the "Beneficial Ownership" of your shares. That means that we still own the legal interest in the shares. We can still vote, have the right to supply Fonterra and we keep the Commodity Milk Price as our income stream. Our neighbours will not know that we have sold ou...

November 8, 2016

Thinking of going bankrupt?

Not a good idea really. A number of farmers along with 3,000 other New Zealanders declare Bankruptcy every year. Some people see bankruptcy as an easy solution to a mounting tide of debt and worry. They think it will solve all their problems and life will be easy. Well it may not be, it could be worse and the stigma may hang with you for years, not to mention the implications both personally and professionally. A recent article in the Bay of Plenty Times by a Rebekah Webby was a chilling rem...

November 8, 2016

So you have sold your farm - what do you do with your money?

One of the key problems for farmers is what to do with their money once the farm is sold. There will be a lot of farmers exiting the industry over the next few years given the average age of farmers is now closer to 60 than it is to 50. There are a number of options available, but they are all relatively confusing if you are not used to that sort of thing. When you are investing money, one of the key things that I think you need to do, is look at the agenda of the people who are advising you, ...

November 8, 2016 Posts 126-150 of 184 | Page prev next
 

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