Farmers are being asked by rural lenders to take a board approach to their operations and stop making important decisions around the kitchen table.
Fraser Farm rural financial advisor Don Fraser says banks are asking farmers to get better governance and structures in place.
He says the banks are wanting a board approach and it's best practice for everybody including the lender.
Mr Fraser says while he can't provide specific details of the banks asking farmers to take this approach he knows it is happening under the radar.
He says in the past farmers have often made decisions and then gone to the banks asking them to fund it.
Mr Fraser says banks are now intimating that they would like to see a board of directors on large farms so there is better governance, controls and reporting.
"I think it's a great idea, and dare I mention the Crafars but if they'd had a board of directors and things were run at arms length I don't think they would be where they are today."
Mr Fraser says farmers with boards appreciate the fact they are no longer solely liable for every decision and they have a board of directors helping them make those decisions.
Useful approach for large enterprises, says Rabobank
Rabobank New Zealand chief executive Ben Russell says there is a lot of focus on this approach, particularly for larger enterprises.
He says the vast majority of New Zealand farms are still family farms where they own one or maybe two farms.
Mr Russell says the main thing for those farmers is that they plan carefully and take advice, whether it's from a board or from financial advisors such as accountants and solicitors.
But he says larger enterprises that have multiple farms and may be in an expansion phase are much more complex to run.
Mr Russell says in those cases it's much more important for those business to have good systems and processes to ensure the management on farms is what it should be.
He says that's where boards, advisory boards and more formal structures should come into play.
