Primary sector revenues fall but 2015 outlook more positive

Our most recent MYOB Business Monitor survey revealed that revenue for businesses in New Zealand’s primary sector has fallen from last year’s record highs.

The research, which involved interviews with around 150 businesses in agriculture, forestry and fisheries, suggested that the proportion of those businesses reporting an increase in revenue in the 12 months to March was 20%. This figure was a drop from a three-year record of 41% in August 2014. It’s worth noting that the number of small businesses reporting a decline in revenue rose from 21% in August 2014 to 31% in March this year.

Looking ahead over the next 12 months, primary sector business operators are more confident of revenue growth. For example, 33% expect to see revenue improve in the year to March 2016, with just 16% predicting a revenue decline. This is underpinned by performance in the current quarter, in which 30% of rural sector businesses are reporting increased sales in the three months to May, while just 10 per cent have fewer orders in the pipeline.

So while the primary sector has fallen off the record levels of growth achieved in 2014, the industry is both resilient and confident of achieving greater returns in the coming year.

The five years of research we’ve done into the sector through the MYOB Business Monitor bears out what Kiwi farmers and other primary sector business owners have known for generations: returns in the industry can fluctuate a great deal, especially over the short term.

But what we also see is a picture of an industry that is resilient, prudent in its management and confident over the longer term that it can generate the growth the wider economy depends on.

An area where we think the rural community can be better served is in improving rural connectivity. Our latest research shows that business owners in the rural sector are less happy with internet access (speed and reliability) than their city counterparts, with 35 per cent of respondents dissatisfied. We welcome Government moves to extend the Rural Broadband Initiative as it is vital that one of the key sectors in the economy can access the productive benefits of high-speed internet connectivity.

MYOB has worked with primary sector businesses for more than 20 years. We understand how important both good management systems and the right, up-to-the-minute information are to local farmers and other primary sector business owners.

So we’ve invested in ensuring they have the information they need – like accurate bank feeds – to help them manage costs, gain insights into their business performance and use them to plan ahead.

We know business operators in the primary sector are passionate about what they do, with many working to create a lasting legacy for their families. As a business that has worked alongside them for more than two decades, we also understand the importance of building relationships and trust through performance over the long term.