8.0 SUMMARY AND CONCLUSIONS
Off-farm income is received by the majority of farmers in New Zealand, and is likely to be increasingly important in the future. Off-farm employment in particular, is likely to increase in more densely populated rural areas, and in districts within commuting distance of urban areas. In this, rural areas reflect the trend towards pluriactivity in New Zealand as a whole.
The phenomenon of increasing participation by farmers in off-farm work and investment in off-farm enterprises, is part of a wider picture. The long-term trends of declining product prices and of technological change in agricultural production are demanding adjustment by farmers. Gouin et al (1994), in noting the chronically low returns to the resources invested in agriculture, observe that rather than leaving the profession, farmers will accept low returns to their own capital and labour assets. That is, there is a degree of asset immobility in the farm sector, attributed to the skills and qualifications of farmers, and their attachment to the profession. However, the drop in farm profitability during the 1980s resulted in an increase in off-farm employment, indicating the relative mobility of human resources in farming families (Gouin et al, 1994). Most farmers appear to desire to retain ownership of their farms, and will work off the farm in order to achieve this. If the trend towards lower product prices and labour-saving technological change continue, there will be a continuing demand for off- and non-farm sources of income ie, off-farm employment, off-farm businesses and enterprises,and/or on-farm non-agricultural income generating activities.
Although off-farm work inevitably diverts labour and, to a lesser extent, management resources away from the farm, the effect on agricultural output is not as pronounced as might be expected, because many farmers invest at least some of the income earned back in the farm, in resources that substitute for their own labour, and in farm maintenance and development. The case study farms described in section seven reveal few clear and unambiguous relationships between off-farm work and the long term productivity and profitability of the farms because, in six of the seven cases, the farmers were glad to be able to use off-farm income to maintain or improve their farms, and expressed pride and satisfaction in the resulting stock performance [ They may also feel that in the long-term, these investments will pay off in monetary terms, eg, if the profitability of farming improves, or if they sell the farms; but these were not the feelings expressed during the interviews. ] . It is likely that the case study farmer's non-monetary goals at least partly underlie the investment of off-farm earnings in the farm.
A number of policy issues arise from the expected increase in demand for off-farm employment:
- definition of a "farm" must be broader than a "full-time unit" for policy interventions, facilitation and monitoring activities, if the substantial numbers of farmers with off-farm work are to be included.
- of agricultural output may need to incorporate estimates of off-farm employment if there proves to be some systematic effect on output.
- such as the Ministry of Agriculture's The Situation and Outlook for New Zealand Agriculture and Farm Monitoring Report is important in assisting farmers to make economically efficient decisions about the allocation of their labour and capital resources.
For government policy purposes, off-farm work may be viewed as a positive development in rural areas on balance, improving the economic circumstances of farm families, and probably maintaining rural populations. The case-study farms also suggest that the net effect of off-farm work on the biophysical environment may be neutral, or even positive.
Whether the experience of off-farm work is a positive one for the farming families themselves depends, to some extent, on their circumstances and attitudes. The case studies illustrate that for some farmers, off-farm work is an admission of defeat or failure. The sense of being forced into working off-farm, combined with farming systems that had not been adapted in a planned way to increased time pressures, resulted in an unsustainable situation for one of the case study farms. For others, working off the farm is part of a success story, in which off-farm income is used to achieve personal and family goals.
Contact for Enquiries
Rural Affairs Coordinator
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0675
Fax: +64 4 4 894 0745
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