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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