Financial literacy key issue

Upper South Island Rabobank Client Council chairman Mark Hawkins wants farmers to lift their...
Upper South Island Rabobank Client Council chairman Mark Hawkins wants farmers to lift their financial effort. He runs a beef and cropping farm at Pleasant Point. PHOTO: RABOBANK
South Island farmers are being urged to get a tight grip on the financial internals of their farm businesses.

That is the message going out to them as they deal with market fluctuations from Covid-19 and geopolitical tensions that are disrupting the production and supply of agricultural products.

A series of financial skills workshops in Timaru, Christchurch, Ashburton and Nelson run by Rabobank’s Client Council was well attended last week.

Farmers and young professionals were taken through sessions on financial skills, reading financial statements, key ratios and calculations and what banks are looking for when assessing a farm business.

Upper South Island Client Council chairman Mark Hawkins said there was a real need for farmers to improve their financial literacy.

He said it was not enough for farmers to go to their accountants once a year and ask how much tax they had to pay.

"We trade cattle and just at the moment everything is up in the air," the Pleasant Point beef and cropping farmer said.

"We have issues with shipping, the works are battling with Covid-19, there’s drought in Southland and flooding on the east coast of the North Island. There is so much variation and you just have to keep your finger on the financial pulse."

Mr Hawkins said farm values had gone up and farmers were now running quite large businesses.

"You also have to be bankable. If you want someone to invest in your business you have to be able to run that business ... The clients’ financial literacy will affect how attractive you are to the bank."

Farmers had to know their balance sheet, profit and loss position, stock reconciliation and business basics. Even farmers who had commerce degrees could get into bad habits and needed to refresh their financial skills, he said.

The Client Council runs other programmes such as Growing Future Farmers — a two-year educational course for graduates with specialised agricultural industry training and development.

Others initiatives include Ag Pathways workshops for young people and the Horowhenua Taste Trail to help close the urban and rural divide.

Until Covid-19 arrived, the Upper South Island branch focused on a Food X initiative to encourage children — particularly those in cities — to enter an agribusiness career. Young children would stay at Lincoln University for four days and visit farms and agricultural businesses.

Mr Hawkins said these programmes and other community projects were funded by the bank, including a $50,000 donation towards the recovery of those affected by the May floods last year.

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