Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Dairy price effect still hurting NZ SMEs

5 October 2016

Dairy price effect still hurting NZ SMEs

The dairy downturn is still having an impact on small to medium enterprises in many parts of the country, although there are definite green shoots in the economy according to the latest MYOB Colmar Brunton Business Monitor Survey.

More than one third (34 per cent) of all agribusinesses have been affected by low dairy prices in the past six months, with 12 per cent saying the impact is ‘very negative’.

For the many businesses connected to the agricultural economy, that remains a problem. Compared to a national average of 39 per cent, just 25 per cent of rural SMEs saw their revenues improve in the last 12 months, according to the latest Business Monitor, and 24 per cent reported a decline in income over the period.

Looking forward to 2017, fewer rurally-based businesses are also expecting gains, with a third forecasting revenue growth over the next 12 months, compared to 42 per cent of all SMEs

At a national level, 13 per cent of all local SMEs saw a negative effect on revenue from the fall in dairy prices and 17 per cent reported an impact on consumer confidence. While the overall numbers have reduced since the March survey, the recovery is not even – with most main centres bouncing back stronger than the regions and rural areas.

In Auckland, only seven per cent of businesses reported a negative impact on revenue and 10 per cent on consumer confidence from lower dairy prices. In Wellington, just one per cent of local businesses noticed that their revenue was affected.

However, in the dairy producing regions the fall in prices continues to have significant repercussions, with 40 per cent of SMEs in Taranaki, 29 per cent in the Waikato and 19 per cent in Canterbury seeing their revenue hit.

Compared to the other main centres, the influence of the downturn is much more pronounced in Christchurch, with 31 per cent of local businesses saying consumer confidence is down because of low dairy prices.

MYOB Head of SME Ingrid Cronin-Knight says while it is great to see the economy doing well, in the North Island centres in particular, it can be easy to miss the impact low dairy prices are having on local businesses.

“If you’re not directly affected, it can be easy to think that the dairy price problem is coming to an end and that the lingering effects aren’t particularly widespread,” says Ms Cronin-Knight.

“While we’ve recently seen some recovery in dairy prices, it is important to recognise that many farmers are still struggling – and that is still putting pressure on the rural economy in particular.”

“We are extremely fortunate that our economy has diversified with growth in our tourism sector, manufacturing and construction industries underpinning the high levels of performance we are currently seeing in the SME economy.” says Ms Cronin-Knight.

“But we do need to consider what can be done to support the tens of thousands of Kiwi enterprises that depend on the success of the rural economy, and ensure that with good systems, service and support from all the partners, providers and agencies involved in the rural sector, they can be in the best possible shape to weather the downturn and take advantage of any improvements in the market.”

“For any SME owners who are doing it tough, we suggest talking to your advisors and getting good cashflow management solutions in place. A clear view of how your business is tracking will help you make the decisions necessary to get through.”

-ends-


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

New Reports: Flood Risk From Rain And Sea Under Climate Change

One report looks at what would happen when rivers are flooded by heavy rain and storms, while the other examines flooding exposure in coastal and harbour areas and how that might change with sea-level rise. More>>

ALSO:

Super Fund/Canada Bid v NZTA: Tow Preferred Bidders For Auckland Light Rail

The two preferred delivery partners for Auckland light rail have been chosen and a final decision on who will build this transformational infrastructure will be made early next year, Minister of Transport Phil Twyford announced. More>>

ALSO:

9.3 Percent: Gender Pay Gap Unchanged Since 2017

“While it has remained flat since 2017, the gender pay gap has been trending down since the series began in 1998, when it was 16.2 percent,” labour market statistics manager Scott Ussher said. More>>

ALSO:

Ex-KPEX: Stuff Pulls Pin On Media Companies' Joint Ad-Buying Business

A four-way automated advertising collaboration between the country's largest media companies is being wound up after one of the four - Australian-owned Stuff - pulled the pin on its involvement as part of a strategic review of its operations ... More>>