KEY POINTS:
Some younger managers struggling with current market conditions may be going through the first real economic slowdown in their career. For a while, it looked as though the good times were going to just keep going, but of course they never do.
A farmer could have told them that. Farmers, at the mercy of the weather, exchange rates and commodity prices, have developed a true understanding of the cyclical nature of business over the generations.
"It's not just an understanding that there will be hard times, but that good times will come too," says Dr Christine Woods, a facilitator for the ICE Bridge Agribusiness programme run by The Icehouse, the Auckland School of Business and Melbourne University.
With farmers' understanding of business cycles comes an intrinsic culture of discipline. And a "stick to your knitting attitude" when things slow down.
"Farmers do understand what their core business is; it's around understanding what you are passionate about, what you are very, very good at," says Woods.
Farming's harsh business cycle is eased by the community spirit which is still going strong on New Zealand farms, and which has been on show amid the recent floods and stormy weather.
National Radio's Rural News, for example, reported on several neighbouring farms that were all sharing the same milking shed at different times of the day, to make maximum use of the generator. You wouldn't get that Blitz spirit among Queen St stores during a power cut.
Ex-banker and returned Hawkes Bay farmer Bruce Wills remembers the 1987 sharemarket crash clearly. Now the chairman of Federated Farmers' Meat and Fibre Committee, Wills was then working as a banker and saw a lot of people go out of business.
It wasn't pretty, but in a city environment you can leave those problems behind at 5pm, until you return at 8am, says Wills. In farming, where most owner-managers live on the property, it is harder to get away from the sound of starving animals, he says.
"You learn some tough lessons. With farming you take two steps forward and three steps backward."
Farmers have a longer-term perspective on business cycles, says the banker of 20 years. "When I think back to banking, it was more about what is happening this quarter."
Farmers would make great mentors for retailers right now, says business adviser Andy Collyer, partner in Bishop Collyer Leadbetter, who recently did the rounds with some of the South Island's farmers.
"What people in New Zealand forget when in their 'glass corporate towers' is that the guy wanting to turn $1 into $2 is going to do all right. And that's a thing that farmers do very well in this situation," says Collyer.
When times get tough, farmers act quickly. "The chequebook goes back in the drawer. They say, 'We are not going to do anything but clear the debt".
"Retailers forget the fundamentals, they go into a spiral of panic when the footfall is not what it was," says Collyer, an experienced retail business consultant. When something shifts outside of a retailer's control, they are likely to do something different, which is not always the right move, he says. "Talk to your customers," says Collyer. Know what people have stopped buying and then remove it.
"Farmers are incredibly smart - if it does not make it, they learn from that," he says. Families in the third or fourth generation of farming don't tend to repeat mistakes made by previous generations.
Farmers, like their small business counterparts, are making more effort to work "on their businesses than in their businesses", says Tony Leggett, managing editor of NZ Farmers Weekly and Country-Wide North and South.
Farmers are incredibly well-read, says Leggett. Their thirst for information is phenomenal - they are reading 30 or 40 different publications a month.
Frank Brenmuhl, vice-president of Federated Farmers and chairman of its Dairy Section, says New Zealand dairy farmers are some of the best-informed businesspeople in the world.
They will keep an eye on what's happening in the retail marketplace too. "One of the things that we were surprised by was, when things were getting tight with high fuel costs and so on, the retailers still stocked their shops up. Next thing you know, you are seeing sales. You could argue why the hell couldn't they have been more conservative?" asks Brenmuhl.
"I think the difference is farmers are pragmatic and take a hit when they need to."
The dairy industry takes people and teaches them how to buy the boss' farm. You don't get that so much in the corporate world, says Brenmuhl.
Farmers love turning low-performing farms to high-performing farms, says Brenmuhl. "If they can do that, they know that they have left something better [behind them]."
Gill South is a freelance business writer based in Auckland
