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

 

Rural areas feeling agricultural sector slowdown

Rural areas feeling agricultural sector slowdown

Almost a third of businesses in regions see revenues fall

Three quarters of agricultural businesses expect economy to decline

Businesses in New Zealand’s rural areas are already feeling the effects of a significant slowdown for the agricultural sector, according the latest MYOB Business Monitor survey of over 1000 businesses nationwide, which includes over 200 rural SMEs.

Over the last 12 months, just 18 per cent of rurally-based SME operators have seen their revenue rise, compared to the SME average of 31 per cent. Almost a third (32 per cent) have seen revenue decline in the year to August 2015 (25 per cent SME average).

The slowdown in the regions reflects an even worse performance among businesses in the agriculture, forestry and fisheries sector, with only 14 per cent recording a revenue increase in the last year and 38 per cent reporting falling income.

MYOB New Zealand national sales manager SME Solutions Scott Gardiner says the challenges seen in the agricultural sector, especially with the collapse of dairy prices, have reverberated quickly through the regions.

“These latest results are a good indicator of how quickly a downturn at the farm gate can have an impact on businesses in communities throughout rural New Zealand,” says Scott Gardiner.

“While the effects of instability in international markets, especially China, a slow down in Australia, and the fall in dairy prices have been well widely recognised as putting pressure on New Zealand’s farmers, it is troubling to see how fast that has rippled out through our rural business communities.”

“The sector is also highlighting that the effects are unlikely to be short term, with forecasts for the year ahead well below the SME average.”

Only 20 per cent of business operators in rural areas are forecasting growth in revenue over the next year, while only 16 per cent of those in the agricultural sector are expecting their revenue to improve in the next 12 months. Twenty-eight per cent of rural businesses are expecting a revenue fall, and 35 per cent of SMEs in the agricultural industry.

Pipeline work is also constrained in rural areas, with 21 per cent saying they have more work booked in the next three months and 17 per cent less. For agricultural businesses, 16 per cent have more work in the pipeline (compared to the SME average of 31 per cent).

Rural gloom puts dampener on confidence

Falling revenue in the rural sector is also reflected in significantly lower confidence in the overall economy. While half (51%) of all SME operators expect the economy to decline in the next year, 69 per cent of rural business operators and 76 per cent of agricultural businesses are forecasting a deterioration in conditions for the whole economy.

Fewer jobs, less likelihood of pay increases

In response to tightening conditions, there will be fewer new jobs in rural New Zealand this year. Just five per cent of operators say they will hire more full time staff and six per cent will take on more part timers – equal to the number who say they will reduce staff in both categories.

Only 15 per cent of rural sector businesses, and 14 per cent of agricultural operators plan to increase pay rates this year, well below the 20 per cent SME average.

Mounting pressures

Agricultural business operators are also feeling key pressures more keenly, with fuel (32 per cent), price margins (30 per cent) and exchange rates (27 per cent) the top three pressures expected for SMEs in the sector in the next year.

“Unfortunately, businesses in rural New Zealand, and particularly those in agricultural industries, are facing a tough time of it at the moment,” says Scott Gardiner.

“What is perhaps surprising about this data is how quickly SMEs based in rural New Zealand have seen the farm downturn hit their earnings.

“What we have seen in surveying the sector since the GFC though, is that businesses in the sector tend to understand the cyclical nature of their industry very well, and move quickly themselves to consolidate where necessary.

“This is the time when businesses need to focus on the fundamentals: get the systems right, keep an eye on both debt levels and the credit you’ve extended, work for the best deals from your suppliers, and keep in close touch with your financial advisors.

“It can be pretty lonely working in a rural business, and the important thing to recognise is that there is a lot of help and support available to help you mange through the tough periods, and get ready for the inevitable upswing.”

ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

TradeMe: Property Prices In Every Region Hit New High For The Very First Time

Property prices experienced their hottest month on record in December, with record highs in every region, according to the latest Trade Me Property Price Index.\ Trade Me Property spokesperson Logan Mudge said the property market ended the year with ... More>>

Motor Industry Association: 2020 New Vehicle Registrations Suffer From Covid-19

Chief Executive David Crawford says that like some other sectors of the New Zealand economy, the new vehicle sector suffered from a case of Covid-19. Confirmed figures for December 2020 show registrations of 8,383 were 25% ... More>>

CTU 2021 Work Life Survey: COVID And Bullying Hit Workplaces Hard, Huge Support For Increased Sick Leave

New data from the CTU’s annual work life survey shows a snapshot of working people’s experiences and outlook heading out of 2020 and into the new year. Concerningly 42% of respondents cite workplace bullying as an issue in their workplace - a number ... More>>

Smelter: Tiwai Deal Gives Time For Managed Transition

Today’s deal between Meridian and Rio Tinto for the Tiwai smelter to remain open another four years provides time for a managed transition for Southland. “The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future. The Government is committed to working on a managed transition with the local community,” Grant Robertson said. More>>

ALSO:

Real Estate: Auckland’s Rental Market Ends Year Near $600 Per Week Mark

The average weekly rent in Auckland reached a new high of $595 at the end of 2020, just shy of a long-anticipated $600 per week. More>>

University of Auckland: Pest-Free Goal Won’t Be Achieved Without New And Better Tools

New Zealand’s goal to become predator free by 2050 will remain an unrealised dream unless new technologies and advances in social engagement continue to be developed, researchers who first promoted it say. A team from the University of Auckland has ... More>>

OECD: Area Employment Rate Rose By 1.9 Percentage Points In The Third Quarter Of 2020

OECD area employment rate rose by 1.9 percentage points in the third quarter of 2020, but remained 2.5 percentage points below its pre-pandemic level The OECD area [1] employment rate – the share of the working-age population with jobs – rose ... More>>

Economy: Strong Job Ad Performance In Quarter Four

SEEK Quarterly Employment Report data shows a positive q/q performance with a 19% national growth in jobs advertised during Q4 2020, which includes October, November and December. Comparing quarter 4, 2020, with the same quarter in 2019 shows that job ad volumes are 7% lower...More>>