I'm of the view that there are old and not-so-old farmers and there are bold farmers.

When it comes to boldness age doesn't necessarily discriminate, although it's fair to say that farmers in their peak are more likely to take a risk than those in their twilight years with less to prove and less time to bounce back. Right now boldness is in decline, but our society needs people who are prepared to take risks because all progress involves some degree of risk.

Of course we can insure against risk, but sometimes the cost of the insurance is so expensive that the operation can be successful but the patient still dies.

How much does the average farming family in NZ spend on insuring buildings, plant, fire, life income protection, public liability, loss of profits, business disruption and personal assets? Probably between $25,000 to $35,000 a year.

Overall, insurance cost increases over the past decade in New Zealand have been well above the annual inflation rate.

Even if you stay in bed all day these insurance costs, and other expenses such as rates, are still going to be incurred. Both are like a severe anchor and consequently you may as well be bold and spread the costs over a well run and well managed business.

Dramatic change is everywhere and it is not changing – it has already changed. The key change over recent years has been that there has been a tremendous power change from producers to consumers – this has happened right around the world.

Farmers are producers and they are the absolute risk takers with consumers holding all the power. Witness the major power that supermarkets in New Zealand, Australia, the United States and Europe have and this is unlikely to change. We are seeing farmers in UK reacting strongly against their supermarkets as a consequence.

If farmers cannot own and operate a supermarket then they need to be bold and take calculated risks. You and I must get our feet on the ground with this issue as standing still is not an option.

We are not alone. Newspapers and the media industry and their advertising revenue streams are struggling with the internet as their longstanding business model is really under major pressure at the present time. Those that survive will need to take bold decisions requiring some bold capital expenditure at the same time.

It really is true that sometimes in business attack is the best defence. Innovation for the last 20 years or so is the new game in town – reject it at your peril.

You and I talk about the middle man and how he or she just clips the ticket on all transactions between producers and consumers. This has been happening for years and the internet and technology has really eaten into this nice little high-profit, low-input game. The change here is called disintermediation and as an example think of booking your airline tickets which can all take place from anywhere on your own with no-one between you and the airline.

Technology and innovation is in many cases a huge conversation conducted entirely among machines. Either you get bold and control these processes for your benefit or you can get swamped – it's your choice.

Mobile technology will continue to rise and rise and the key is for you and I to harness this, not to just watch it.

Remember the old saying that there are three kinds of people? There are those people that make things happen – bold, those that watch things happen – not bold and those that wonder what happened – beaten. It's absolutely true. 

Consumers are now in charge on the demand side. We are consumers which on the face of it is good, but we also need to be able to tap into the supply side as well because that is the source of our income.

Barriers to entry into many businesses have tumbled so that new competition emerges almost daily and they look like traditional competitors. The cost of failure has never been lower and the stigma of failure is much less important. These are bold people and innovation and technology is the foundation of their business.

Let's close on these pearls of wisdom:

- We need to take 100 per cent responsibility for our lives and forget blaming others.

- Most successful people can visualise their goals and they are always envisioning the future – they can't get it out of their minds.

- Most people are afraid of rejection so they don't ask, but successful people ask, ask and ask and don't worry about rejection.

- We need to face up to what isn't working and often a confirmation of the status quo is the worst option. We need the best option and then do homework on it.

- We need to be a class act and we need to leave things a lot better than we found them. We need to always be positive and willing to help and we need to be able to perform under pressure.

On balance, it is quite clear that fortune will tend to favour the bold – calculated bold.

Pita Alexander is a specialist farm accountant at Alexanders.

12 August 2015