When it comes to farms, how does ANZ view the introduction of new regulations, especially those related to the environment?
All farmers will be aware of the increasing number of regulations that govern their activitivies.
To be able to assess the financial and environmental sustainability of a farming business, banks need to work with farmers and support their efforts to make sure they are taking steps to comply with these regulations.
This is nothing new, but simply reflects an increasing expectation that to have a social licence to operate, all businesses – including banks and farms - must do so in a responsible and environmentally sustainable fashion.
For many years, ANZ has been supporting the sector by helping farmers meet their environmental obligations by lending to them to do this.
ANZ offers low-interest ‘Environment Loans’ to New Zealand farmers, to support their investment in water, waste and energy.
What will the bank now be looking for when considering a funding proposal? Will this be the same for existing lending and new lending?
Every farm is unique in terms of its personal and business goals.
We will want to see the normal financial data - budgets, actuals, cash flow – and any succession plans that demonstrate the long-term sustainability and viability of the business.
Other information may be required depending on your personal and business goals.
As part of our decision to lend, we have always considered on a case-by-case basis the ability of each farmer to operate an effective and sustainable business.
There is an expectation these businesses should be profitable and that farmers should be able to work towards paying back loan principals.
Understanding the current position, outlook and ambitions of each farming business are essential for banks to ensure they lend in a responsible way.
This expectation will be the same for existing and new lending and forms the basis of ANZ’s annual review of the businesses we bank.
Any advice to farmers as they plan for the year ahead?
- Talk to your bank. Ask how it views your business and what it would like to see for the farm to become more financially and environmentally sustainable.
- Be open with your bank about your concerns and needs. Like ANZ, we’d expect all banks view to themselves as partners in their customer’s business and want to have clarity around the things that worry their customers so they can help and be part of the businesses success.
- Ask for advice and work with your farm consultant and accountant to make sure you have access to accurate on-time information on the business and its performance.
- Where possible, pay down debt. Depending on other factors affecting your business, we’d expect this to increase your equity, strengthen your balance sheet and make your business better able to weather the ups and downs of the commodity cycle and deal with costs related to changes in regulation.
- Take time to understand local resource plans and the impact they may have on future spending, especially the potential need to spend on technology and improvements to on-farm assets to meet regulatory and compliance requirements.
- Keep an open mind to new opportunities and technology. In a globalised and connected world there are opportunities to add value by meeting heightened customer expectations over quality, purity and traceability.
For media enquiries contact Siobhan Enright, 021 991 325