Farming in Canterbury is very diverse with every farm and agribusiness being unique. It is important that any advice is customised to meet the individuals personal and business objectives. Kevin’s aim is to work with and complement the existing professional team and add value after gaining agreement with all involved.
- Arbitration and mediation
- Strategic Planning
- Financial planning
- Business Planning
- Risk Management
- Property appraisal
- Succession Planning
- Farm Supervision
- Equity Partnership formation
Arbitration and Mediation
Kevin’s interest in mediation grew following experience gained in the late 1980’s when Mid Canterbury farmers attended creditors meetings with their financiers and loan discount meetings with the Rural Bank. He worked with young farmers and their families to assist in getting a successful outcome in their negotiations which enabled them to continue farming.
Arbitration and mediation are almost synonyms. Arbitration is the settlement of a dispute between parties to a contract by a neutral third party (the arbitrator) without resorting to court action. Arbitration is usually voluntary but sometimes it is required by law.
Mediation (the process of mediating) – intervention between conflicting parties to promote reconciliation, settlement, or compromise. Mediation, as used in law, is a form of alternative dispute resolution (ADR), a way of resolving disputes between two or more parties with concrete effects. Typically, a third party, the mediator, assists the parties to negotiate a settlement.
Kevin gained further experience in mediation and dispute resolution during two separate company mergers where in senior management roles disestablishment of a number of employment positions was required.
‘The system by which businesses and companies are directed and controlled.’
Identifying the needs of an individual business. Defining management and governance roles. The governance roles have ethical, commercial and legal obligations. The governance role also involves making decisions based on values, principles and practices. Values guide the performance of the directors. Kevin can offer integrity, enterprise, fairness, transparency, accountability and efficiency.
Advisory groups can be set up to complement an existing board. Meeting processes can be formalised to increase efficiency and define outcomes. In a company situation it is important to ensure that the board adds value.
As a director Kevin also recognises the four pillars of governance best practice as defined by the NZIOD:
- Determining purpose
- An effective governance culture
- Holding to account
- Effective compliance
In a family farming or SME situation (maybe just a husband and wife) often adding to the advisory team can enable them to focus on management and running the business with an outside advisor (or director) bringing fresh thinking and a new perspective. In times of adversity the advisory team can provide needed support and positive endorsement to farmers who are often working on their own.
Strong governance along with competent management enables the optimisation of the inputs of land, labour and capital.
Creating long term objectives based on personal and business goals. (The Big Picture)
1) Where are we now?
Evaluate the current business strategy and direction. Use of the SWOT matrix to look at your business in detail. Strengths, weaknesses, opportunities and threats.
2) Where do we want to be?
Using vision with clear goals.
3) How do we get there?
This is still about strategic thinking, not management and not tactical things.
4) How will we know when we get there?
What are you going to measure? (Aim for a maximum of six KPI’s)
Establishing the differentiation of the business and the personalisation of the goals can ensure long term success.
Integral with the strategic plan is the creation of budgets and cashflows along with regular monitoring and review. An updated current budget and cashflow forecast is paramount in enabling accurate financial decision making and also keeps the farms bankers updated of banking facility requirements. Good communication with the business bankers and timely preparation of the Annual Accounts by the accountant is always essential.
Investment analysis is also important in looking at decisions such as additional land purchase or off farm investment.
Establish realistic performance targets and annual financial Key Performance Indicators (KPI’s). There may be a separate plan for plant replacement and how that is financed.
Sensitivity analysis to look at the implications of fluctuations in performance and prices (eg changes in yield and movements in prices)
Working with the customer, their bankers and other financial advisors to review current loans and lending products, on line banking and current software products enabling actual monthly figures to be compared with budget YTD. Many programmes allow the preparation of trial balances during the year if required.
Failure to plan is often a plan to fail. Business Planning facilitates utilising the existing resources to achieve the goals defined in the Strategic Plan. This planning is normally on an annual or short term basis. It is more of the hands on operational requirements necessary to meet the agreed KPI’s and to ensure the sustainability of the business.
The plan needs to be flexible and monitored so that decisions are made to keep the business operating within approved banking credit facility limits. It probably involves documenting what the business is currently achieving and using this as a benchmark.
Production and other targets agreed on in the plan need to specific, measureable and achievable. These then must be constantly reviewed. Prior planning avoids poor performance!
In larger operations the plan will define staff areas of responsibility, accountability and performance measurement. The individual employment contracts should be reviewed annually in terms of remuneration and performance review. Also the Health and Safety plan requires constant updating by the owner or manager responsible.
Links in with Financial and Business Planning. Risk needs to be prioritised then mitigated, minimised or eliminated. An important part of managing your business is having a plan in place to ensure your business can survive a mishap or disaster.
Risk can be financial, personal, market or environmental. Risk review is an ongoing process.
Creating a business continuity plan involves identifying, assessing and managing risks. Develop a risk management plan, communicate this to staff and train for recovery.
Establish an Action Plan for each identifiable risk, establish what needs to be done by who and by when.
Having an annual update with your insurance company or broker can help to eliminate risk from fire, theft and burglary. Often there are other areas such as crop insurance, business interruption or loss of income / rent that should also be addressed. Key man insurance, life insurance, health and safety training etc. all need to be considered.
The main trading banks can also offer products and services to mitigate risk eg. fixed rate loans and specialist products such as foreign exchange forward cover.
If you employ staff and wish to manage the associated risk be aware of:
- Health and Safety at Work Act 2015
- Employment Relations Act 2000
- Holidays Act 2003
- Minimum Wage Act 1983
- Parental Leave and Employment Protection Act 1987
- Immigration Act 1987
As farmers and land owners there are a number of relevant Acts:
- Resource Management Act 1991
- Building Act 2004
- Property Law Act 2007
- Income Tax Act 2007 and related legislation
- Human Rights Act 1993
If you are contracting or selling direct to the public you are regulated by these Acts:
- Consumer Guarantees Act 1993 – now includes goods sold at auction and tender
- Fair Trading Act 1986
- Privacy Act 1993
- Personal Property Securities Act 1999
- Commerce Act 1986-
Risk is a part everyday business but the important thing is how it is managed and how the planning mitigates a loss to ensure minimal disruption and financial loss.
Kevin has gained a unique amount of experience from inspecting and valuing rural property while in the banking industry which also included six years managing Chatham Islands accounts. As a spraying contractor covering Ashburton and Malvern counties he was also involved with many differing property types and farming systems.
In the real estate and banking industries he has been involved in the sale and leasing of some of Canterbury’s iconic properties.
- Buying or selling rural property.
- Feasibility analysis
- Farm development and expansion
- Leasing – of additional land or leasing out an existing farm
At the core of farm ownership in New Zealand is still the family farm and it is now more important than ever to have an exit strategy. If family members wish to take over a property long term plans need to be established in the very early stages of business set up. This then enables the evolution of the family business and may satisfy the goals and objectives of parents and children with a planned asset disbursement that protects relationships and property.
Succession planning is a significant issue for around half of all New Zealand farmers, according to the ANZ Privately-Owned Business Barometer.
There has been a tendency to focus on the specific transaction enabling the farm to be physically transferred from one generation to the next. Provisions may need to be made in wills and formal family agreements signed. The real ground work happens years earlier when the family agrees on a vision for the business and formalises a long-term strategic plan for an amicable change of ownership.
Family members who know they can become involved in the family business help drive the succession plan. There is often a transition from management to ownership. The biggest problem for many families is implementing a succession plan that is fair to all siblings. In the past many farmers adopted the attitude that the son (or daughter) farming had preference in any succession plan with some siblings (particularly the daughters) receiving no assistance from their parents.
It is more than a transfer of assets. It is also a transfer of responsibility and decision making. Often it may require the farm to invest in additional housing as part of the transfer process. Or, in the case of parents leaving the farm, there may be additional loan finance required to enable the purchase of off- farm assets and an allowance made to provide regular income for them.
Kevin personally has been through a family succession programme and as a banker was involved in many succession plans enabling farmers to assist their family into farms or expand their operations to take family into larger scale businesses.
For twelve years Kevin grew small seeds, cereals and legumes on a mixed cropping farm. He also ran a contract harvesting business in partnership with his father. Ewes were lambed down and later there was a move to trading dry stock and dairy grazing.
As a spraying contractor he gained an in depth knowledge of vegetable seed crops, process crops, potatoes, fodder beet, maize, onions and squash. During his time in agribusiness banking he was involved in managing all types of farms including (at the time) New Zealand’s largest dairy farming company. For the last ten years he has gained extensive knowledge as a director of a large scale dairy farm along with grazing dairy heifers for twenty years.
Kevin has judged The Dairy Excellence Awards in Canterbury and Southland for Westpac, The Sharemilker of the Year for BNZ and The National Ewe Hogget competition for National Bank.
Kevin is able to use this considerable knowledge and experience to supervise, monitor and report on a property for an absentee owner, lessor or retired farmer. He has supervised and assisted in the project management of a dairy conversion for an overseas owner.
Equity Partnership formation
As a banker Kevin was involved in equity partnership formation. At the time Loss Attributing Qualifying Companies (LAQC’s) were allowed and these were incorporated in a partnership structure. Many of the Equity Partnerships he was involved with are still operating and have continually expanded by leveraging off increased equity or by bringing in new investors.
Some with sunset clauses have been wound up and some have allowed the investors to go their separate ways with farm ownership. Equity partnerships are still an option for a retiring farmer to retain an investment in his farm and bring in a partner when there is no family succession requirements.
Often the introduction of capital along with younger equity managers allows the properties to lift to new levels of production and performance. In the past this has also enabled farmers to have options like converting to dairying or to intensify with irrigation development while still having involvement from them.