CHAPTER 3 - RESEARCH PLANS AND METHODS
3.1 Introduction to the Research Methods
The methodological approach to this study was survey research. Face-to-face interviews were conducted with a sample of farm families in which two generations were farming together. In each farm up to four interviews were conducted: with the older husband and wife, with the child designated as 'most involved' in the operation and with his/her spouse. In our experience with survey research, face-to-face interviews are preferable since they result in higher response rates, independence of responses of family members, higher levels of interest in the project by sample members, and increased knowledge of the context of the study on the part of the interviewer. We were fortunate in this study to have as interviewers women who were familiar with New Zealand rural society.
3.2 Description of the Research Areas
The research study was carried out in the South Island of New Zealand. The research communities were sited within three regions: North Canterbury, South Canterbury and Southland.
North Canterbury. The survey area in North Canterbury includes the Amuri district and an area of the Hurunui River. It comprises approximately 330,000 ha and contains 400 farming units. There are four main farming types in the district: dryland plains and downs farms, hill country farms ranging from easily cultivated hill to undeveloped hard tussock country, irrigated sheep farms on the plains and some irrigated dairy farms. A small area of arable crops is also grown. Stock enterprises operated include breeding ewe flocks for the sale of finished lambs and wool, breeding beef cows and beef finishing, fine wool production and store lamb production.
The dominant climatic feature is the proneness to summer drought. This arises from a combination of hot, dry summers and large areas of shallow soils. Most aspects of farm management are aimed at maintaining income while minimising the impact of drought.
Geographically, the dominating feature of the landscape is the Culverden-Balmoral Plain covering approximately 40,000 ha. Of this, 10,000 ha is planted for commercial forestry and approximately half the remaining area is developed for irrigation. This plain is surrounded by developed easy hill country with steeper hill and undeveloped tussock country further back.
The district is some 100 km north of the major city of Christchurch (population approximately 300,000). Basic rural services are provided by small, local townships such as Waiau, Culverden, Hawarden and Waikari. These small, rural townships have encountered difficult times over the last 10 years. The local economy has had to adjust to rural economic change and the impacts of adverse climatic events.
The area was first settled for farming in the latter half of the 19th century. The farms were large containing tens of thousands of hectares. Subdivision of the larger units began almost immediately and, since that time, subdivision and amalgamation of farm units have continued through advances in farming technology; the impact of changing economic times; policies aimed at rehabilitating soldiers following world wars and now the impact of irrigation development.
The range in farm types makes it difficult to describe a typical farm. Most of the dryland plains and downs farms are small, have been severely affected by climatic conditions, have significant debt levels and have been struggling to consistently generate profits. The hill country farms have generally had less debt and been more profitable recently, largely through good beef and wool prices. Similarly, the irrigated farms have produced well and generated good profits. The region experienced major snowfalls in July and August 1992. The August snow which fell near peak lambing had a major impact on lambing percentages. Most farmers suffering a drop in lambing of between 20% and 30% with some dropping more than 60%.
The irrigation development of the Culverden/Balmoral area over the last 12 to 15 years has allowed the introduction of dairying as a change from the traditional sheep and beef farming pattern. This has brought in a new type of farmer, the corporate dairy farmer, and sharemilker.
In June 1992, farm succession was being noted by North Canterbury farmers as a concern, particularly where resources were felt to be insufficient to support both parents in their retirement and the establishment of the new succeeding farmer. Few farmers were financially able to pass the farm to the next generation and retain sufficient capital for a comfortable retirement. On the hill country farms of Canterbury, succession had become a major issue. In many cases, it was reported that farmers were discouraging their families from entering farming and instead directing them into a professional career or trade (New Zealand Ministry of Agriculture and Fisheries, June, 1992).
South Canterbury. There are approximately 1,000 full-time farming units in South Canterbury. The activities of farming carried out in the area range from extensive fine wool sheep grazing through to intensive flat land process cropping and dairying. The predominant farming type is that of downland sheep and beef grazing with some limited grain or arable crops.
The dominant climatic factor of the region is its proneness to prolonged summer dry periods. The region has a history of periods of up to six months with very little rainfall, which has a great impact on the farming systems carried out there. The geography of the region ranges from coastal plains up through rolling downs over one mountain range into a mountain tableland and then up into the Southern Alps. The port of Timaru is the major population base with approximately 30,000 residents. This city is predominantly a service centre for the outlying rural community. k has a wide range of processing and handling facilities for the produce that comes from the rural hinterland.
The indigenous population of Maori people was predominantly coastal-based with activities of fishing and gardening. The region was then settled very early in the European settlement of New Zealand. Settlement was encouraged by the proximity of the port. South Canterbury has a farming history as old as most areas of New Zealand. Over the years, land use has changed with the availability of water which has been provided by either public or private irrigation schemes, leading to the intensification of farming operations to activities such as processed cropping and dairying.
A typical farming operation would be a 270-hectare property, running approximately 2,800 stock units. This farm would be predominantly sheep producing with some cattle and some cropping. Farm productivity would on average be greater than the national average, although periods of dry weather can impact on productivity, dropping levels considerably lower.
Like the rest of New Zealand, the basic infrastructure of farms and farming families has changed greatly over the last few years. This has been due to the increasing pressures of the restructuring of the economy on the vulnerable rural sector. In 1992 these South Canterbury farmers were also identifying succession as an issue. They were expressing concern that with the combination of a lack of profit and high debt levels there was no mechanism available for farm succession (New Zealand Ministry of Agriculture and Fisheries, June, 1992).
Southland. In eastern Southland there are some 1,525 holdings of over four hectares in size which comprise four main farm types. These can best be described as extensive, semi-extensive, intensive sheep and beef and dairying. Of the extensive farm type there are 55 large tussock (natural grassland) farms of more than 2,000 hectares. These properties are predominantly tussock with up to 70% of the tussock developed. They run breeding ewes, beef cows and fatten 70% of the progeny. There are 250 semi-extensive properties from about 300 to 2,000 hectares. Here the main classes of stock are breeding ewes and fattening cattle. The intensive sheep and beef farm type is the most predominant with 1, 175 farms at an average size of 200 hectares. These intensive sheep farms have a high lambing percentage and medium to high stocking rates. They are also farmed in conjunction with some fattening cattle, some deer and some cropping. The fourth and final main farm type is dairying. At present there are 45 dairy farms within the eastern Southland district. This number has trebled in the last two years and it is expected to increase.
With the district's very reliable rainfall of between 1,100 and I ~00 mm, drought is not a factor in farm productivity. The most important factor limiting pasture production is the cold winter. Approximately 60% of the total land area of the district is either flat or rolling country, while 40% is in steeper tussock country.
The typical farm is 200 hectares flat to rolling silt loam, carrying 3,000 stock units, being 2,590 ewes, 500 hoggets and 25 cattle. It produces 125% lambing, 5.8 kg wool/sheep stock unit and all lambs fattened to 15.5 kg (average). Those properties carrying an average debt loading are showing a small surplus. Where debt servicing is low and production is above the average, these properties are very profitable. The downturn in sheep farming, in particular, has accentuated the diversification to deer and dairying while goat farming has been experimented with and found lacking.
Gore is the main service centre. In the past, it was one of the most wealthy centres per head of population in New Zealand with a prosperous and aggressive farming population both surrounding it and depending on it. It was also the nerve centre for the rail link with six separate lines meeting at Gore. With the demise of rail came an increase in trucking and for many years there were six separate trucking firms operating. The downturn in agriculture has severely affected Gore but it is now re-establishing itself, albeit at a lower economic level, as farm profitability improves.
The downturn in farming profitability in New Zealand since 1984 has also markedly changed farmer attitudes and farm productivity in the Eastern Southland district. Production declined in the mid-1980s and has been gradually increasing, since farm profitability has improved and reinvestment is possible.
The Gore district was one of the earliest settled in New Zealand following the purchase of Southland from the Maoris in 1853. The pattern of large grazing farms was the initial settlement unit on the rolling and hill country with smaller farms on the flats and along the rivers. The rehabilitation of soldiers after the two world wars on to farm settlements had a minor effect but the area is basically a long, well-established, prosperous area.
Of current interest is dairy conversion with 150 new farms supplying the Edendale Dairy Factory, 30 of which have come from the Gore district. The expansion of dairying in Southland has led to a marked increase in the value of 'potential' dairy land. Values have continued to inflate with land in some areas achieving a 30% increase on prices sheep farmers were paying 12 months earlier. This increase in land values has encouraged a number of sheep farmers, who were struggling financially, to sell. On the other hand it has enabled other sheep farmers to capitalise on higher priced dairy land and purchase larger sheep units in non-dairying areas. It has created a greater degree of comfort amongst sheep and dairy farmers alike, as they see their equity levels improving (New Zealand Ministry of Agriculture and Fisheries, June, 1992).
3.2.1 Farm Sales
In a previous study (Keating and Little 1991) the process of choosing the successor of the generational family farm was identified. It was found that the financial status of the farm was critical in the placement of the successor. In families where more than one of the children were eligible, only the more affluent parents expected to be able to set up more than one child - but all the farmers hoped that they could place one child on the farm and in succession. Wilkening (1981) was cited who argued that to the extent that farm land is transferred between generations, the price tends to be below market value.
"the nature of the transfer and the share received by the son or daughter taking over the farm will affect the burden carried by the farming child and the previous equity or inequity of the division of family assets among siblings." (p.61)
While all the farmers in the present study reported that they intended to continue farming and that for them at least, the continuance of the family farm was important, the research interest was in the effect intergenerational transfer may have on the land market.
In seeking data on open market farm sales, farm sale statistics were reviewed and it was found that the picture given by the national land sales data is not as straightforward as it may appear, mainly because the classification of 'family farm status' relies on informal data gathered only arbitrarily through land sales documentation.
Variables that further confuse the picture are, firstly, the fact that farms can be and are bought on the open market by purchasers who are themselves, 'family farmers' and who by their purchase, and if it is their intention to do so, being a further generational cycle but who are not identified as 'family farmers' at the point of sale.
Secondly, succeeding generation farmers will also purchase the family farm on the open market to allay future sibling and family accusations that they attained their farm unfairly. (Taylor and McCrostie Little, 1993). This study found no evidence that open market family farm sales, 'tended to be below market value'. On the contrary the study found instances where paying the full market price for the family farm was cited as contributing to the inability of younger farmers, the successors, to survive financial or climatic crises.
Given this situation, it was found that within the research communities, of the total of 598 farm sales in 1992, 100 were recorded as 'family farm' sales. In terms of the intergenerational transfer of land as a factor in the land market, national statistics supplied by Valuation New Zealand show that of the 5,393 farm sales in 1992, 698 were 'family farm' sales. These low proportions of recorded family farm sales probably result from the fact that the identification of a 'family sale' often relies on the local knowledge of individual valuers. It is therefore reasonable to assume family farm sales are not always identified and therefore not classified accordingly. This seems particularly likely given that Greenwood (1992) in her study of Northland was able to collect data that classified farm purchases in the area. She found that, "forty percent of the current farmers gained ownership of the property from the transfer of land and capital from parent to child". A further twenty percent of farmers gained their farms with the, "assistance of family capital generated by farming" (p.4). While the remaining forty percent of farms were purchased on the open market, Greenwood also notes that all these farms were in fact being sold to other family farmers.
3.3 Research Instrument
The research instrument was a questionnaire, which had four parallel forms: two for the parent generation and two for the child generation. The four forms were parent male (PM), parent female (PF), child male (CM) and child female (CF). Forms were colour-coded for ease of use by interviewers. Copies of each form are attached to this report (Appendix 1).
The questionnaire had several sections.
Sections A and G. Demographic variables including personal data on the respondent (age, education, off-farm employment and income), data on the farm business (size, type, debt load, assets), and family structure (age, number and marital status of children, number of children involved in the farming operation), provided background data on the business and the family which were considered essential to the analysis of retirement and transfer issues. For example, family structure provides information on potential successors. In conjunction with farm history data from the subsequent section, questions of how potential successors are integrated into the business were addressed.
Sections B and C. Farm history. The sections on the history of work, management and ownership of the farm were developed by the researchers to tap changes in involvement of these aspects of the business. Prior research in New Zealand (Keating & Little, 1991) confirmed that involvement of both men and women changes over the cycle of the business from entry to exit. The purpose of the farm history section of the questionnaire was to track movement in and out of the business and possible generational transfer of business responsibilities. Specifically, this section of the questionnaire assessed the change in the amount of work, management participation and ownership over the work-life of the older and younger generations.
Both history of involvement and future plans for involvement were measured. In addition, information on others who did work or had management responsibility and their level of participation in farm tasks was gathered in order to understand patterns of participation of all family members. These data are central in determining movement in and out of the business by gender and generation. This section of the questionnaire was refined through several pre-tests with experts in farm management and farm transfer and with agricultural consultants and with members of farm families in Canada.
Section D of the questionnaire was developed to assess definitions of retirement from farming, reasons for retirement and retirement planning activities. All questions were developed by the authors and have been validated in previous studies including Generations in Alberta Farming Families (Keating & Munro, 1991) and in conjunction with MAF Policy advisors.
Section E includes a series of questions about 'stake' or investment in farming as an occupation, in the farm as a family heritage and in children's occupational following in farming. This instrument was developed from the theoretical literature on generational stake (Bengtson & Cutler, 1976; Bengtson & Kuypers, 1971; Knipscheer & Bevers, 1985; Moss & Abramowitz, 1982; Thompson et al., l985). 'Stake' is operationally defined in this study as the investment and commitment both generations have to each other and to the family farm business. Based on this definition 30 questions were developed that would indicate stake in the farm and farm family. The face validity of these items was tested in Alberta, Canada by asking a panel of experts in this field to review and comment on the new questions. Only minimal changes in wording of the questions was suggested by this group and these changes were made. Next the scale was pilot tested with two farm families (eight individuals) to assess the appropriateness and the readability of the questions. Again only minimal wording changes were suggested and these changes were made. Subsequent to these tests of face validity the stake scale was administered to members of the seventy four families in the sample.
Further statistical analysis was then conducted in order to establish the reliability and validity of this new scale. Initially factor analysis was run to discriminate among the various constructs that were a part of the original scale. Two factors were identified; stake in farm and stake in family. A factor loading level (of 0.40) was utilised as an indicator of the appropriateness of inclusion of items in the various subscales.
The questionnaire on family support (Bloom, 1985) is used in this context to provide data on perceived levels of family support and communication which can be compared to ways in which older farmers manage their retirement. Our previous findings are that at least some intergenerational problems in farming families are centred around lack of open discussion of retirement plans.
The scale was created to provide "an improved self-report measure of family functioning" (Bloom, 1985, p226). Bloom's scale was developed based on four previously developed scales: The Family Environment Scale (FES) created by Moos and Moos (1981), The Family Concept Q-Sort (FCQS) created by van der Veen & Novak (1971), The Family Adaptability and Cohesion Evaluation Scales (FACES) by Olsen, et al. (1979), and the Family Assessment Measure (PAM) developed by Skinner, et al. (1983). The total scale is composed of 75 items and has 15 five-item sub-scales. The general headings of the sub-scales are: relationship dimensions, personal growth or value dimensions and system maintenance.
Two sub-scales (cohesion and expressiveness) were selected from the Bloom's scale for use in this study. These two sub-scales were categorised under the label of relationship dimensions. Reliability of these sub-scales was tested using Cronbach's Alphas. The Alpha scores were 0.89 (cohesion) and 0.86 (expressiveness). Average inter-item correlation for cohesion was 0.61 and for expressiveness was 0.55.
Section F also contains an established instrument, the Perceived Stress Scale (Cohen, et al. 1983). The P55 is a 14 item scale designed to measure respondents' sense of control over their lives. Cohen et al. developed the P55 by giving the test to three samples: college students (samples 1 and 2), and to a more heterogeneous sample of individuals attending a smoking cessation program. From these tests, the reliability coefficients were calculated as 0.84, 0.85, and 0.86 respectively. The test-retest correlation for the college students was 0.85 while the correlation for the smoking cessation sample was 0.55. Cohen et al. determined that these data indicate that the P55 has reliable test-retest reliability.
Research on this instrument has shown that those who feel in control of their lives are more proactive about life decisions than those who are more fateful. In this context information from this scale may help us predict those who will delay retirement and risk reducing their options for sale or transfer of the farm.
Contact for Enquiries
Rural Affairs Coordinator
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
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NEW ZEALAND
Phone: +64 4 894 0675
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