Falling dairy prices have been a major problem not only for the industry itself, but other businesses throughout New Zealand. This is the conclusion of the recent MYBO Business Monitor report, which found a fifth of small and medium-sized enterprises (SMEs) have felt the effects of the decline.
- 1,000 SMEs surveyed
- January to February 2016
- 21% of respondents had seen revenues affected
- 25% of respondents believed consumer confidence had been impacted by falling dairy prices.
Slowing consumer spending hits the bottom line
Across the country, it means that approximately 100,000 businesses employing upwards of one million New Zealanders are facing reducing revenue because of the dairy downturn.
"New Zealand is extremely reliant on the agricultural economy," explained MYOB General Manager James Scollay.
"It stands to reason that the rural sector would have taken a hit, but what we are seeing is that the effects of the dairy downturn are filtering through to the cities and other industries, slowing consumer spending and beginning to hit the bottom line of many SMEs."
There doesn’t seem to be much let-up in the coming months with sustained price recovery unlikely to occur until the later part of 2016.
Scenario planning and budgeting are key tools to mitigate the risk of declining revenues.
It may also be worth reviewing your business insurance. If your circumstances change over a period of time as a result of a downturn (or an upturn), your business insurance may need adjusting to take account of:
- Number of employees
- Value of your contracts
- Stock levels
A good insurance broker will work with you to review your business situation regularly and ensure you have the right level of cover. Contact us to talk to an experienced broker today.
About the AuthorName: Greg Greenwood
I'm the South Island Operations Manager at Rothbury Insurance Brokers and live in Christchurch. I have a portfolio of commercial clients, many who have been my clients for years. My experience of earthquake claims and issues is called…
I'm the South Island Operations Manager at Rothbury Insurance Brokers and live in Christchurch. I have a portfolio of commercial clients, many who have been my clients for years. My experience of earthquake claims and issues is called upon frequently to assist clients and those needing insurance advice in the region. I am also the Chairman, Canterbury region for IBANZ (Insurance Brokers Association NZ).Close