Business Insights

Investing in the Environment

Investing in the Environment

Farmers are pre-empting signalled changes to environmental regulations by investing in environmental initiatives now, an ANZ survey reveals.

We surveyed 330 dairy, red meat and horticulture/cropping customers from across New Zealand. Of those surveyed, 94% said they were aware of proposed changes to environmental compliance, 51% felt those changes would have a negative effect on business; 26% said it would have a positive effect and 23% felt it would have no impact.

93% had started investing in improved environmental practices, or had a detailed farm environment plan - with 79% saying they had some idea, or a pretty good understanding, of the costs of making the changes detailed in their plan.

To fund the improved environmental practices 58% said they would absorb the cost into total farm expenditure; 45% said costs would reduce overall farm profitability; 23% would reduce spending in other areas and 15% said they would require extra borrowing to cover the cost.

Over the past five years the average-spend on environmental enhancements was $16,000. Of those who had made enhancements; 71% had invested in fencing waterways, 52% in riparian planting, 52% changes to fertiliser management, 38% into irrigation practices and 35% in changes to water use.

Almost half were using technology to help them measure and monitor their environmental footprint.

“We are seeing plenty of great examples of farmers who are preserving and growing the value of their land and businesses through investment in environmental initiatives,” said Mark Hiddleston, Managing Director ANZ Commercial & Agri.

“We need to build economically sustainable, resilient farming businesses that we are confident can farm well into the future within the limits of the environment they sit in.

​“The environment has to sit at the front of a business model - it can’t be growth first, environment second,” Mr Hiddleston said.   “We’re encouraged to see how many of our customers not only have a detailed plan, but also have a good idea of the costs involved in implementing their plan and how they are going to manage that cost.”

ANZ is keen to highlight the positive work being done by people like Waikato dairy farmers John Hayward and Susan O’Regan.

Over the past nine years they have invested an average of $30,000 a year into the environmental sustainability of their farm.   The couple have fenced all their waterways, planted riparian strips, created 11 wetlands and two big sediment dams.  They’ve planted 15 hectares into Manuka and five into pine which they’ve registered for carbon credits and constructed a feed-pad to utilise feed more effectively.

“It’s been a priority for us, and we made the decision that it was going to be an investment rather than a cost,” said Susan O’Regan.

“For us, doing this work over the past nine years has made it a lot easier financially than if we had to catch up now,” said John Hayward.  “If you can create a plan, even if it is going to take you 10 years to achieve it, that is a lot better than finding yourself in a reactive position and needing to do it all at once.”

 

This material is provided as a complimentary service of ANZ.  It is prepared based on information and sources ANZ believes to be reliable.  Its content is for information only, is subject to change and is not a substitute for commercial judgement or professional advice, which should be sought prior to acting in reliance on it.  To the extent permitted by law ANZ disclaims liability or responsibility to any person for any direct or indirect loss or damage that may result from any act or omissions by any person in relation to the material.


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