Kerre Woodham: Are farmers in the position to invest in new technology?

The largest agricultural expo in the Southern Hemisphere, one of the largest business expos in the Southern Hemisphere, has opened its gates this morning, and exhibitors are ready to do business.  

That hasn't always been the case in Fieldays’ 57 year history – the rural economy has had its ebbs and flows over the years, and Fieldays in Hamilton has felt them. Confidence has waxed and waned, but not this year. This year, you've got the Massey Ferg’s descending on the Tron in their droves. This year the feeling is bullish, according to Richard Lindroos, the CEO of the National Fieldays.  

“They say down here it's a bit of a positive vibe going on. Everything's going the right direction. We have certainty now in terms of where the prices are and the forecasts are pretty good, so we expect the rural community to open up the wallets at Fieldays. I think you're going to see those large capital expenditure, and the more certainty you have from the farming community, the better it will be. So our exhibitors down here, and we have over 1200, are looking forward to gates opening at 8am today. We go right through to Saturday. Saturday is Super Saturday, so I'm looking forward to even the townies coming down.” 

Absolutely. It's an amazing event. I've had the privilege of going a couple of times —working and as a spectator— and it’s enormous amounts of fun, and enormous amounts of business is done in the good years. And as Richard referred to when he was talking to Mike Hosking this morning, he's expecting the wallets to be open, because there have been good prices in the agricultural sector for the farmers, and also one of the big ticket items in the Government's 2025 Budget was ‘Investment boost’. The facility that allows businesses to deduct 20% of a new assets value from that year's taxable income on top of normal depreciation.  

There was a good example in the Herald: let's say a company invests in a machine worth $100,000, or a farmer if you will, that depreciates over 10 years, assuming a 10% straight line depreciation rate. Previously the company would have been able to deduct $10,000 worth of depreciation each year from its taxable income. Under investment boost, it could make a $20,000 upfront deduction, followed by $8,000 in depreciation deductions each year, including in year one. So you can see that that would have an impact. The Government hopes the change will significantly increase productivity by encouraging businesses to invest in new assets now, rather than waiting for the economy to improve.  

You might have heard that yesterday when we were talking the solar power interest-free loan from ASB for farmers to invest in solar power technology. We had a farmer who rang in, he had actually got his loan through ANZ, but he said he'd been looking at solar power for a while and he just wasn't in a position to make that kind of upfront investment. This year he can and has.  

So there's more money going on farm and into farmer's pockets. The investment boost, it is hoped, will see farmers and other businesses investing in new technology to allow for increased productivity. Is that what's going to happen? If you're heading to Fieldays, are you going there with the express aim to invest in new technology, technology you might have had your eye on for a while but you haven't been in a position to do anything about it until prices improved, and until you gets a commitment from the government like investment boost. Does investment boost, now you've had time to let it settle, mean that you are going to be investing in the kind of technology that's going to boost your productivity? 

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Kerrywood and Mornings podcast from News Talks.

Speaker 2 (00:10):
He'd be so the largest agricultural expo in the Southern Hemisphere,
one of the largest business expos in the Southern Hemisphere,
has opened its gates this morning. Exhibitors are ready to
do business. That It hasn't always been the case in
Field Day's fifty seven year history. The rural economy has

(00:32):
had its ebbs and flows over the years, and Field
Days in Hamilton has felt them. Confidence has waxed and waned,
but not this year. This year you've got the massy
Fergs descending on the tron in their droves. This year,
the feeling is bullish. According to Richard linderis the CEO
of the National.

Speaker 3 (00:52):
Field Days, they say down here, it's a bit of
a positive vibe going on. Everything's gone the right direction.
We have certainty now in terms of where the prices
are in. The forecasts are pretty good, so we expect
the real community to open up the wallets at field Days.
You're going to see those large capital expenses and this
more certain you have from the farming community, the better
it will be. So exhibit is down here and we

(01:13):
have over twelve hundred are looking forward to gates only
at eight o'clock today we go right through the Saturday
sad as super sad day, so looking forward to even
the town is coming down.

Speaker 2 (01:23):
Absolutely, it's an amazing event. I've had the privilege of
going a couple of times working and as a spectator,
and its enormous amounts of fun and enormous amounts of
business is done in the good years. And as Richard
referred to when he was talking to Mike Hoskin this morning,
he's expecting the wallets to be open because there have

(01:46):
been good prices in the agricultural sector for the farmers.
And also one of the big ticket items in the
government's twenty five budget was Investment Boost, the facility that
allows businesses to deduct twenty percent of a new asset's
value from that year's taxable income on top of normal depreciation.

(02:07):
So there was a good example in the Herald. Let's
say a company invests in a machine with one hundred
thousand dollars or a farmer, if you will, that depreciates
over ten years, assuming a ten percent straight line depreciation rate. Previously,
the company would have been able to deduct ten thousand
dollars worth of depreciation each year from its taxable income.

(02:31):
Under investment boost, that could make a twenty thousand dollars
upfront deduction followed by eight thousand in depreciation deductions each year,
including in year one, So you can see that that
would have an impact. The government hopes the change will
significantly increase productivity by encouraging businesses to invest in new

(02:55):
assets now rather than waiting for the economy to improve.
I mean you might have heard that yesterday if you
were listening yesterday. We were talking the solar power interest
free loan from a for farmers to invest in solar
power technology, and we had a farmer who rang in.
He had actually got his loan through an Z but

(03:16):
he said he'd been looking at solar power for a
while but he just wasn't in a position to make
that kind of upfront investment. This year he can and has,
so there's more money going on farm and into farmers pockets.
The investment boost, it is hoped, will see farmers and

(03:40):
other businesses investing in new technology to allow for increased productivity.
Is that what's going to happen If you're heading to
field days right now? Are you going there with the
express aim to invest in new technology. Technology you might
have had your eye on for a while, but you

(04:02):
haven't been in a position to do anything about it
until prices improved and until you get a commitment from
the government like Investment Boost. And I'd love to ask
other businesses as well. You know, we talked a little
bit about small business owners yesterday, and you know set

(04:26):
times are tough, But does Investment Boost give you the
confidence and the wherewithal because it is actually about money
and pockets once the tax returns are filed, does it
give you the confidence and the wherewithal to be able
to invest in new technology that you just haven't been
in a position to invest in over the last couple

(04:49):
of years. So farmers specifically, when it comes to the
Field Days, are you feeling as bollish as Richard Linders?
Of course he has to. I mean he's the CEO
of Field Days. You know he's always going to be positive.
But he was protected ularly positive this year. He said,
everything's you know, all the auspices are showing positive signs,

(05:16):
all the planets are in alignment. They believe the government's
on the right track. They're getting good export prices. They've
got initiatives like investment boosts that allow them to make
a commitment. And I'd like to ask other businesses as well.
Does investment boost now you've had time to let it settle,

(05:36):
mean that you are going to be investing in the
kind of technology that's going to boost your productivity.

Speaker 1 (05:42):
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