Finance with Don Fraser Fraser Farm Finance

To be rich, or not to be, that is the question.

I have recently come across a number of farmers who have modest wealth with modest farms – and who are, by and large, very happy. Are they more so that the other farmers referred to below?
These modest farmers say their farm has been good to them, and are usually debt free or with low debt.
On the other hand there are farmers with huge operations, commensurate debt and a lot of pressures that go with such an enterprise.
I thought I might dig down a bit and have a think about some of the issues surrounding this thought.
Modest farmers
These farmers often are conservative and have paid off debt. I notice most purchased their farms many years ago and generally have been influenced by wise words from their fathers who went through the 1930s when things were incredibly tough.
They have also worked hard to repay debt.
They frequently have 'off-farm” investments, are involved the community, and play sport such as golf. They are not generally favoured by the banks as with no debt it is difficult for the banks to make any money out of them.
They are not normally 'early adopters” or risk takers. They would have gone through the boom focussing on hanging onto their assets and not borrowing any money. Now – because they have no debt – they often have cash reserves and, or, off-farm deposits or investments.
Most importantly, they seem to be happy with a pretty objective view on life and try to keep a good work/life balance.
They are often leasing their debt-free farm to a neighbour or running a simple farming system, which by now may not include them milking the cows. Many of them own 40 to 60-plus hectares.
These are also the farmers who were calling me in the boom times asking me how their neighbours could afford to buy more land and farms when they could or would not. My standard answer was that it was all done with debt – and unless they wanted to take on a lot more debt they should stay as they were.
Risk takers/early adopters
At the other end of the scale to these 'conservative” farmers are the early adopters, risk takers, entrepreneurs and 'progressive” people.
They generally have large operations, employing family, staff, contract milkers to run their businesses. They may have quite substantial debts. They might also be having staffing issues. Often they are not 'hands-on” farmers and become a people manager.
They also seem to have more contact with other professionals, particularly lawyers, accountants, bankers, advisors etc. They may have beach houses and good annual holidays.
The questions now beg – are they any better off and happier? Is their image of themselves what they perceive others think of them?
Do they have a better life?
Do they have more disposable income at the end of the day?
Are they more 'A” type people?
And the answer!
Nothing is clear, but I feel from my experience with a variety of farmers across the board, covering a huge cross section of New Zealand's rural people, that the low-or-no debt consolidated farmers of modest size (at the end of the day), seem to have an edge.
It may be reflected in being happier, more settled, with more community involvement.
They seem to have more humour and less stress and health issues. They do not seem to be under so much pressure, and give the impression of having a better life.
So, this simple thinking maybe age-related, but it tells it how I see it.
'To be or not to be, that is the question”, Shakespeare.

These are the opinions of Don Fraser of Fraser Farm Finance. Any decisions made should not be based on this article alone and appropriate professional assistance should be sought. Don Fraser is the Principal of Fraser Farm Finance and a consultant to the Farming Industry. Contact him on 0800 777 675 or 021 777 675.
A disclosure document is available on request.