Agribusiness: Changes on horizon may help dispel SME's gloom

Low dairy prices are negatively affecting returns for 43 per cent of primary industry respondents. Photo / David Acker

Small and medium-sized businesses operating in primary industries are more pessimistic about New Zealand's economy than their contemporaries in other sectors.

MYOB's latest Business Monitor reported 51 per cent of small and medium enterprises (SMEs) in the primary industries believed New Zealand's economy as a whole will decline in the next 12 months.

That compared with an average of 32 per cent across all SMEs.

The monitor surveys more than 1000 SME owners and managers throughout the country.

Looking back on the year to March 2016, 43 per cent of primary industry respondents said their own revenues declined compared with the same period in 2015. And 33 per cent of the respondents expected further decline in the 2016/17 financial year.

The source of such pessimism seems to be spread widely, with factors including the high NZ dollar, low dairy price and support from government (or lack of it).

Low dairy prices are negatively affecting revenue returns for 43 per cent of primary industry respondents, compared with 21 per cent across all SMEs.

Some responsibility appeared to be laid at the Government's door: 34 per cent of SMEs within the primary industries said they were dissatisfied with the Government's current level of support for businesses like their's in terms of helping them succeed -- compared with an average of 25 per cent across the board.

Local government fared even worse, with 46 per cent of primary industry SMEs expressing dissatisfaction with the level of support offered by their local council. Just 9 per cent indicated they were satisfied.

If government support is required, where might it be found?

The most supported policies among Business Monitor respondents from primary industries included reducing the ACC levy paid by businesses, simplifying provisional tax rules and processes, and exempting small businesses from requiring a health and safety representative and committee. Many of these have been incorporated into Government proposals of late.

"When you look at specific policies the Government has progressed, there is strong support for much of the programme," says James Scollay, MYOB General Manager SMEs.

The good news is that looking ahead there is something of an improvement in the primary industry on the horizon.

"The Health and Safety Reform Bill that came into effect at the beginning of April exempted small businesses from the requirement to set up a health and safety committee.

"Recent announcements on the simplification of the provisional tax system will also be welcome," he says.

Ensuring the Trans-Pacific Partnership comes into force (rather than stalling because of overseas political issues) will also bring joy to those in the export-heavy primary industry.

Pulling New Zealand out of the TTPA ranked fourth highest on a list of policies primary industries respondents would vote against.

Some positive commercial signals may also be found amongst the gloom.

Despite the high proportion expecting revenues to fall (33 per cent), an increasing number within the primary industry (28 per cent in March 2016 versus 16 per cent in July 2015) do expect income to rise. The balance was made up by falling numbers expecting revenues to remain about the same.

"The good news is that looking ahead there is something of an improvement in the primary industry on the horizon," says Scollay.