Business

Farmers aren’t paying enough attention to human capital risk planning, says Hastings-based Crowe Horwath Risk Adviser Tim Ewen. Although the intellectual property underpinning the farm’s wealth was often tied up with the owner, too little focus was placed on the “what-if?” factor, he said. In the event of a farmer becoming either temporarily or totally disabled, or passing away, planning was essential to make sure the farm business could continue to provide for family members. “Farms rely on key people to make the business work,” said Mr Ewen. “Farmers need to take account of the human capital risk and ensure they have appropriate planning in place so the right money goes to the right people at the right time.” Crowe Horwath cited a recent Financial Services Council survey, which found only 20 per cent of New Zealanders have income protection insurance, compared with 95 per cent who have their car and home covered. It also noted a recent Kelloggs Rural Leadership research paper by Michelle Wilson, which found that while 80 per cent of farm widows have life insurance, in hindsight only 20 per cent found it was sufficient. Meanwhile, 40 per cent said they should have had enough insurance to provide for a farm manager for 12 months. In addition, insurers typically pay out much less than is claimed. Mr Ewen said farm owners should also be aware there could be advantages in altering their ACC structure. “ACC will only pay 80 per cent of your pre-disability income, less tax,” he said. “And farm incomes can fluctuate markedly. In some instances the books may show little if any profit after all expenses are allocated, so it makes sense to lock-in an agreed value cover that will also cover the farmer for sickness as well as accident, regardless of how […]

Farmers facing financial stress and mounting pressure on-farm and exacerbated by the increasingly dry weather, should reach out for help as should agricultural contractors, advises Rural Contractors New Zealand.  RCNZ President, Steve Levet says with the on-going dry in many areas around the country – on top of the lower forecast milk price –could see some farmers feeling overwhelmed and under huge pressure. “However, there are things on farm that have to be done – no matter what – such as supplementary feed and crop harvesting,” Mr Levet explains. “Contractors are professionals and are especially set up to help out when these jobs need to be done on-farm.” He also encourages farmers who may be having trouble or struggling, due to the dry conditions and/or prospect of a lower payout, to acknowledge that there is a problem and to talk to someone.  “The same goes for contractors who are feeling under the pump. It is crucial that in times of stress they communicate with support networks— including advisors, rural professionals, other farmers and contractors as well as family about what’s going on.” Mr Levet reiterates advice given recently by others – including the Rural Health Alliance and Federated Farmers – that dealing with stress and feelings of helplessness on your own will only make it worse.  It is also important that those in the rural sector keep an eye out for others who may be suffering from stress and if appropriate, see if they can help in any way or encourage that person to seek help. “If possible, take some time off the farm and/or contracting to get a different perspective on life and remove yourself from what is causing you stress.” He says reviewing where you are at with your business regularly is important. As is communicating regularly with […]