Opportunity in economic downturn

Pay attention to what you can control while keeping one eye on what you can't, say economists and farm advisers in light of the ongoing global financial troubles reports the Rural News. While tight cost control is essential there will be opportunities for prudent investment and it is not all doom a gloom. "˜More than ever, good farmers need to be multi-skilled, informed, good communicators, good business managers, and, as always, hard working and technically competent,' says Andy Macfarlane of Ashburton-based Macfarlane Rural Business. There is an increased need for sensible risk management, cost and cashflow control, as well as communication with financiers. "˜Banks are less likely to have uncommitted funds just lying around waiting for your last minute overdraft extension!' Meat & Wool NZ senior economist Con Williams says keeping a lid on unnecessary expenditure is key, though sheep and beef farmers should have that discipline well practised following several seasons of tight returns, he notes. "˜Expenditure really needs to be targeted on things that will produce cash within the next year when margins are tight.' That does not rule out capital spending, but investments need to start generating cashflow quickly. "˜If you can lock in finance at a low interest rate it could be a good time for capital expenditure.' Dairy NZ strategy and investment leader Bruce Thorrold says there are three key things for farmers to remember in the current climate. Firstly, it is a cyclical business, and while payout forecasts are down, there is good news on costs. "˜Feed, interest and fertiliser are all coming back. Just as it doesn't pay to get too excited at $7/kg, it doesn't pay to get too glum now.' His second point is communication and good advice."˜It's easy when the going gets tough to pull into your shell. Keep talking to your family, advisers, bankers and staff.' Thirdly, concentrate on profit.