ANZ Insights Paper: Building a profitable farming business

Farming is about more than producing food – it’s about creating wealth, sustaining a way of life, and maximising financial and environmental returns over the long-term. In the pursuit of these goals, is there a formula that can help the average farming business catch up to the best?

In this paper, we examine the financial performance of five key agri sectors to understand what the top performers – those in the top 25% – do differently. Across every sector, there are farmers and growers achieving results that rival other investment classes, even before accounting for non-financial returns.

No single playbook fits every farm or orchard. To determine the financial drivers behind performance, we’ve used simple benchmarks to build a picture of how each sector performs and to highlight where we see the strongest opportunities for growth.

We analysed the financial performance of more than 4,000— ANZ customers across dairy, kiwifruit, red meat, arable, and pipfruit sectors.

Recognising that each season brings its own challenges, we took a long-term perspective. Looking at the period 2020-2024, we compared this to the preceding five years, 2015-2019. This approach smooths out cyclical fluctuations and provides a more accurate, long-term view of overall performance. It also gives us some insight into how each sector has performed in a pre-and post-COVID global economy.

Examining the data, we identified a number of insights and considerations between (and within) farm systems to help guide decision-making. Here are three key takeaways.

1. Production gains matter more than price
   Farmers and growers have limited control over product prices. With cost pressures continuing to rise, even the best operators cannot depend on price movements alone. Productivity improvements and efficiencies, alongside smart operational decision-making, are top of mind for each sector. That makes sense, because these are the factors that ultimately drive profit – and most are within farmers’ control.
   
   
2. Managing costs is not simply about spending less
   More intensive land uses come with higher variable costs – but a singular focus on costs does not necessarily materialise into better returns. Higher performing businesses often demonstrate an ability to sequence their input costs with production (stock and crop yields) and price.
   
   High performers typically spend where it improves production and have a history of cost management that supports difficult periods like climatic events or sectorial change. High performing farmers also tend to be good at matching discretionary spending with earnings.
   
   
3. Cash is king
   Strong cashflow supports a higher degree of confidence to invest in new capital, technology or system change, which in turn underpins income growth. In most sectors, the average performer closed the performance gap (Earnings before interest, tax and rent/Income), while the top performers continued to deliver higher earnings in nominal terms – in turn, providing options to invest to grow income or reduce costs. 

Across all sectors, we see a consistent pattern: a clear gap between the average and top performers, representing a significant opportunity for sustainable growth in the years ahead. The relationship between revenue growth, cost control, and delivery of profit are critical to closing this performance gap.

Most farms and orchards have a sound use case for investing within their existing boundary, as incremental returns show potential for material payback. For those already operating in the top quartile, benchmarking against other land uses can provide insight into where growth opportunities lie.

Every farm is different. Your ANZ Relationship Manager can provide tailored benchmarking to help you understand where you currently sit within your sector to support informed decision-making.

ANZ Agri Focus provides a bi-monthly overview of current topics and developments in the rural sector from ANZ’s Agricultural Economist.

Explore financial insights from New Zealand’s leading agri sectors, discover key learnings from our top performers, and take away practical considerations across – and within – farm systems to support your decision-making.