Saturday, March 30, 2024

It’s not all about the money

Avatar photo
Environmental stewardship is trumping the drive for big returns, a report from Lincoln University says.
Reading Time: 3 minutes

Farmers on properties with a net annual profit of less than $50,000 list minimising pollution, improving the condition of the property, and ensuring employees enjoy their job as more important than expanding the business or making a comfortable living. 

The research was done by Lincoln University senior lecturer in farm management research Dr Kevin Old and research fellow Dr Peter Nuthall.

In two surveys the pair sought opinions and preferences on farm succession and governance.

The priorities of less-profitable farmers might reflect a mindset that had largely dismissed the idea of achieving larger returns or expanding the business on grounds that it was essentially unobtainable, they said. 

Instead job satisfaction came from notions of environmental stewardship and quality of life. 

“Interestingly, farmers on properties with lower returns also placed attending field days as one of the lowest objectives.” 

The results had come with no real surprises to the farming industry, they said.

Federated Farmers national board member and Canterbury sheep-and-beef farmer Chris Allen said while all farmers had environmental goals at the top of their lists, some had greater ability to achieve them.

“All farmers have a passion to look after the environment,” he said. “It would be fair to say that the owner-operator farmer sees farming as their livelihood and their passion is seen through different eyes than the bigger, corporate farming systems.” 

Any farming business needed to be recording a financial surplus for best-practice environmental stewardship, he said.

“We have got to be making money to continue with the environment stewardship as we know we want too. It’s about economic surplus to achieve the outcomes.”

The situation was especially frustrating for the sheep-and-beef industry, which struggled to achieve big economic surpluses, he said.

“We have had the hatch pulled down for too long. We haven’t had the surplus. 

“We have all got to be economically viable to achieve the environmental outcomes and politicians all need to understand that message.” 

The report showed more-profitable farms, with a net annual profit of $100,000-$150,000, had the same objectives, albeit in a slightly different order. 

“These farmers placed ‘it is important to make a comfortable living at the top of the list’,” it said.

Of great surprise to the researchers was the importance to pass the farm to family being placed at the bottom of the list.

When it came to farming succession there was no one-size-fits-all, Allen said.

“Farming is a complex beast when it comes to ownership and governance and not all farmers are planning for their next generations. 

“Not all have family succession options and each individual farm will set its own values and have its own company, trust or individual names that are relevant to the individual circumstance and again, that is more relevant to the owner-operator.” 

The surveys covered the entire country and all farm types. The first was in 2006, with 700 respondents, and the second was done in the latter half of last year, with 805 respondents.

New Zealand has historically had an orientation to the family farm, where ownership was simple and most farms kept one or two people occupied. 

The research aimed to determine whether that traditional model had changed and to what degree.

It was found that the average age of farmers in NZ in 2006 was 50 but last year that had edged up to 53. 

The average farm size increased from 557ha in 2006 to 591ha last year.

The researchers noted changes in employment levels on farms were most pronounced in the dairy sector, with dairy production increasing from 951.5 kilograms of milksolids (MS) a hectare in 2006 to 1134.3kg MS/ha last year.

That contrasted with a drop in lambing productivity from 130.3% to 127%.

The South Island in particular has had a notable increase in average farm size.

Across all farm types 25% are run by one person. Farms with two people make up 41%, with three-person farms covering 13.5%, meaning almost 80% of farms in NZ remain low-labour operations. 

Twenty per cent of all NZ farms are sheep farms and have three people or fewer working on them. 

Along with the increasing age of farm managers, the number of years farmers owned their farms was probably increasing, the researchers said. The average length of ownership now was 25 years. 

While farms were getting larger and farmers were staying longer on their farms, ownership systems remained relatively simple and farmer objectives hadn’t changed much, although the extra emphasis on the environment and sustainability was significant, they said.

“If you believe all that you read you would get the impression that NZ farming is going corporate, but, while it is true that some corporate or quasi-corporate family arrangements exist, by far the majority of farms are simple family affairs,” they said.

Total
0
Shares
People are also reading