Global factories see tiny growth; HSBC makes Q4 loss; iron ore price rises on China demand; UST 10yr yield 1.76%; oil up, gold down; NZ$1 = 67.2 US¢, TWI-5 = 71.8

Thanks Henry, paying off the farm has always been a bit of a mission, something often best left to the next generation.
Which gets to the bit where he say's ;

“You load up with debt, you go hell for leather to pay that off, you don’t pay much tax along the way"

My experience has been the opposite, I purchased a farm and borrowed 600k, we decided to pay it off over 6 years at 100K a year plus interest, thats when I got heavily involved with the IRD, I kept getting these massive tax bills so it took 10 years and some fiscal discipline. I had a decent farm and it was a big deal, all that tax on the capital I needed to pay down debt.
Anyway a few years later at a party with my friend, he mentions his 4mill + debt and how he wasn't too worried, however when I said you forgot the 2 mill in tax that you need to add to it as it's capital and it has to be tax paid not like the interest which is deductible, and that he actually needed to earn 6 million to pay it back, there was a decidedly cold chill that entered the room and things have never been quiet the some since.

I'm hearing what you're saying Henry. My husband and I went through the 1980's where the lessons were ruthless, harsh and gruesome for anyone in farming. But what happens is a new generation soon follows and they never had those experiences and think that it will never happen again as it is different this time etc.....some of these new players have had the guidance of previous generations but if you have a young accountant and bank manager who have not much experience then you could well of thought the world of dairying is a one way ticket up.

Some people will exit the industry and that cannot be helped it is just where they are in the cycle. The only light I can see is China's 2 child policy.

but it is what it is for some.

one almost needs bare witness at the kitchen table to see how the relationship is portrayed (established and first function)..
there is a core group that still think in terms of a brighter higher place (if I can get the bank to back me.....) and this falls in line with sales and marketing pitches (may be not be legal docs).

I wonder what constructive thing the bank brings to the table now it's not going well. Boltcutters for the farmers toes perhaps ?

It's all in the advertising
As a BNZ Partners customer, you get a core dedicated Partner who can provide tailored banking advice on how to build and grow your business — and put you in touch with finance and industry specialists.
For medium to large businesses with a turnover over $1 million.

Let’s talk: 0800 273 916

The banks are proud to peddle the claim that they understand business, that they are knowledgeable business partners for their farming customers. If their security was in the business – in the farming operation – this would need to be true. They would need to be knowledgeable. They would, in effect, be like shareholders in any business. But their security is not in the business; it’s in the assets, primarily the land.

The patter is that they believe in the particular farmer, the farming operation and its future. It’s why they’re happy to lend - to put their knowledge and commitment on the table to enable the next step, help expansion, fund development, capital expenditure, and the rest. The implicit claim is that they know as much or more about business – managing the financial side of the business – than the farming customer. And thus they win respect – and a respect curiously greater than given to most other equally fallible business entities, all of whom would love to be accepted as your partner in this or that. That's marketing nirvana.

The actuality is that their investment is less in the business than in its physical assets. Revenue covers a part. If the business fails, they trust their risk will be covered. If they’re all piling into the same assets – land values – the picture looks even better to them, the reward looks secure. This is the essence of speculation – the belief that there’s sufficient support somewhere, somehow, among unknown but consistent buyers, for asset prices to rise. This is idiocy in any sector. It's a kind of madness among banks.

So the focus of the banks on land valuations (a focus shared by many farmers in capital gains), has fed an extreme distortion of values, to the point where they have little or no relation to revenue and profitability – which are the fundamentals of business. At this point, it is surely clear that the bank’s focus is not on the business of farming, but in asset values.

When the tide goes out, and revenue stalls, the banks may hang in there for a while. But if asset prices fizzle out, the supposed business partnership goes with them. It vanishes like the idea it always was, the work of marketing teams, brand managers, corporate communications professionals, public relations experts.

Remember the banking advertising - they wanted their customers to see them as business partners, not a lender. And thus they actively encouraged the current mess.

possibly didn't start at $2.
but your point is a good one, and goes to the accuracy of farm gate forecasts

for 8 years now....it is a ponzi scheme IMHO with greed as the drug of choice supplied by a banker.