BNZ is encouraging farmers and processors to consider the upcoming gas transition loan guarantee scheme, under which the government backs up to 80% of an eligible bank loan taken out to shift a business off gas.
Peter Savage, Head of Customer & Industry Insights – Agriculture at BNZ, says volatility in fuel prices and supply has turned energy resilience into a standing concern for the primary sector.
“We’ve probably learnt a lot more about the energy sector than we ever thought we would,” he says.
The exposure sits more with diesel than petrol. New Zealand uses about eight million litres of petrol a day and about 11 million litres of diesel, Savage says, with energy accounting for between 5% and 20% of farm costs depending on whether the operation is dairy, sheep and beef, or arable.
“Farmers are really good at managing variability and costs; what they’re not so great at is managing if that tap actually runs dry,” he says.
He says it shows up less on farm than in processing, in work such as seed drying, vegetable processing, wineries and commercial greenhouses. He recently visited a pig farm that spends about $5,000 a month on energy to keep piglets warm and run ventilation.
Qualifying businesses need to use about 1,000 gigajoules of gas a year. It works out to only 50 houses, with an average gas-connected home using about 20 gigajoules. Applicants must cut their gas use by at least 15% while maintaining or increasing production, moving to alternatives such as electric hot water heat pumps or biomass boilers, with the government guarantee letting the bank price the transition competitively.
“This transition loan is something that we’re really excited to talk to our customers about.”
He says diesel resilience on farm comes down to planning ahead and, where supply allows, trimming exposure. Theft has risen in the tighter market, making storage worth a second look, while smaller machinery, solar and other on-farm generation offer room to reduce reliance over time.
“In the past, diesel on farm was probably like Wi-Fi for you and I – it’s just there, it works.
“You pay the bill whether you’d like to or not.”
He says energy has moved from a background line item to a regular conversation between farmers and their bankers.
“It’s a good time to think about energy from a resilience point of view.”
For over 160 years, BNZ’s Agribusiness Partners have worked alongside farmers, bringing the expertise to support them through the seasons. To see how that support can work for you, speak to your local partner. Search BNZ Agribusiness.
This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser. Opinions expressed are those of the speakers and not necessarily of BNZ. No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article.
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