Let us hope the Government keeps a steady hand in the wash up from the South Canterbury debacle. Wholesale disposal of the many farm assets in a fire sale approach would severely damage agriculture and the economy.
The public must remember that it has been agriculture, or more importantly dairying that has allowed NZ to weather the worlds economic storm as well as it has.
What are the lessons that could be learnt from this situation? The main one is indebtedness, with a small % of agriculture carrying a big % of the debt, some farms were always going to be at risk in these times.
The future goals have to be profit driven, as managers can no longer put up with a low profit and boost it with capital growth. It will be interesting to see how many dairy conversions are now being contemplated, as financial meltdowns like this, focus the risk taking decisions more keenly.
Other alternative land uses could again be more competitive, if the risks of increased debt are to be valued properly.
Seasonal finance is the biggest issue for farmers following the announcement that a significant rural lender South Canterbury Finance has gone into receivership, Fed Farmers says.
Farmers should seek trusted and credible advice to ensure seasonal finance continued, President Don Nicolson said.
Land was the genesis of the economy and if farmers did not secure seasonal finance there would be a "significant" impact, he said.
Nicolson said that while receivership was tough for all involved, receivers could find "a lot of salvageable parts".
"I'm still calling for calm and patience today because you actually need to get a better understanding of the ramifications of what receivership means."
Nicolson this morning wrote to Finance Minister Bill English and Agricultural Minister David Carter, suggesting some farmer support systems be put in place.
He also suggested rural debt mediation guidelines, such as those used in Canada and Australia.
"(Because) when you (the farmer) are faced with going to the wire or the wall, you'll have a proper process being embarked upon by your lenders and you as a borrower have some way of ... exiting with dignity."