Farm financing a tougher game

The farm investment market in New Zealand has shifted in tone and challenge in a few short years, to become a tougher, more constrained version of itself.

The heady optimism that pervaded dairying’s expansive days through the first decade of the millennium resulted in farm debt for expansion and conversion growing at a brisk 25% a year from 2000 to 2012, largely on the back of that dairy expansion. But well into the second decade, the agri-sector faces tougher benchmarks to meet bankers’ requirements, with stricter expectations around farm budget discipline and principal repayment expectations clearly defined.

Reality is, bank lending is currently tougher to come by for some farm deals. However, there are finance options available that address expectations around equity, cashflow and debt. Lateral thinking goes a long way in the farm finance arena.

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