“Survive till ‘25” has been the mantra we have all come to know and dread. Well, ’25 is almost here, and the good news is – it is looking like there will be plenty of opportunities to help businesses thrive!
Looking ahead to the new year, we’ve identified a number of opportunities for New Zealand businesses to prepare for and seize with both hands. Below, we will share some of these opportunities to help you get your business prepared for 2025.
An Improved Dairy Industry Outlook
After having an extremely difficult two years with a triple hit from decreasing farm gate milk price, and increased interest rates along with record on farm inflation, Dairy Farmers can now look forward to improved cash flow in 2025. This is great news for our farmers, and it is also a positive for those businesses in our region that support or are linked to our agriculture sector.
Examples of the potential positive impacts:
Increased Dairy Payout: The higher payout for the current season means that the average sized farm in Taranaki can currently expect to see an additional ~$175,000 cash over the next 12 months.* And current global dairy trade auctions show positive movement in dairy prices which could see payout increase further.
Lower Interest Rates: With interest rates decreasing, a dairy farmer with a debt of $3,000,000 who has been on floating interest rates could see an extra $30,000 free up in their cash flow
In the example above, once you have accounted for tax payments, the average farm would be looking at a combined total of ~$135,000 more cash available as a result of the above changes.
While the likely focus will be on paying down debt initially (which may have been paused over the last 2 years), the likely next steps will be investing in deferred farm maintenance, operating improvements, and equipment investment – benefitting local suppliers and service providers who offer goods and services in this market.
*Based on the average herd size in Taranaki and the average milk solids produced per cow
Home Loan Interest Rate Relief
For individuals, the lowering of personal interest rates is another positive development. Take, for example, a household with a $550,000 home loan– with a fixed rate of 7.64% making a monthly mortgage payment of $3,899.
If their fixed rate expired in September 2024 and they refixed for 18 months at 6.46% - they would be looking at an additional $437 in household cash flow a month, with a total saving of $7,866 over the next 18 months.
While exact figures will vary depending on loan terms, this freeing up of thousands of dollars per year, will encourage consumer spending and provide a boost to various industries, including hospitality and retail as people celebrate their newly discovered disposable income.
Major Projects Unlocked: Government's Resource Management Act (RMA) Fast-Track Bill
The Government’s new RMA Fast-Track Bill aims to help accelerate infrastructure and development projects across the country, with 149 projects being fast-tracked for consideration. The first wave of projects includes developments in Taranaki and surrounding regions:
You need to be mindful that these projects will take some time (likely 18-24 months) to come to fruition for most contractors, who are not directly involved in the planning stages. However, they present a wealth of opportunities for local businesses, contractors, and service providers who are positioned to get a foot in the door as early as possible.
Businesses involved in construction, logistics, engineering, and consultancy can position themselves to benefit from this new project approval process by staying informed about the status and key decision makers of these projects and being proactive in approaching and developing relationships with relevant stakeholders.
The full list of projects can be found here.
Fonterra’s $150 Million Cool Store Expansion
Another exciting project for the region is Fonterra’s announcement of a $150 million cool store expansion project. This project signifies continued growth in the dairy sector and offers numerous business opportunities. Whether your business supplies building materials, and equipment or provides services related to logistics or project management, there’s plenty of potential to tap into this significant investment.
Key Planning Tips for 2025
Looking at the upcoming cash flow improvement in the region, as well as the new projects materialising – we can see that there is an opportunity for many local businesses to thrive and grow after a number of years spent consolidating and holding steady.
Those who have prepared themselves, and developed solid scenario plans for the next 18+ months, will have the greatest possibility for success
Some key tips for readying your business for success include:
Review Cash Flow and Capital Allocation: With opportunities ahead, it’s important to assess your business’s financial health. Ensure your cash flow is well-managed so that you can take advantage of new growth opportunities as they arise.
Monitor Regional Developments & Key Stakeholders: Stay up to date with the progress of the fast-tracked projects in the region/neighbouring regions and develop relationships with stakeholders within these projects. Early involvement can position your business as a key player.
Foster Strong Relationships with Farmers: With dairy farmers expected to have greater financial flexibility next year, now is the time to strengthen your relationships with this sector. Consider how your products or services could cater to their evolving needs and follow up with customers who have deferred work over the past couple of years.
Be Ready to Scale: Assess your capacity and capability to scale and ensure you have the resources needed to meet growing demands. Ensure you have a plan in place to take advantage of growth opportunities.
If you would like our support to undertake your annual planning get in touch or download a copy of our free Business Planning toolkit here.
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