Chapter 3: The Impediments to Restructuring

Jack is a consultant with a rural bank, and he also owns (with his brother) two properties where they farm sheep. The bank is a specialist rural bank which provides finance to farmers and only lends to the rural sector. Jack sees the bank operating in an ‘old school’ style with a focus on one to one visitations with farmers in their homes. As the bank consultant he knows about the class of livestock the farmers have and the operations they are developing.

Jack explains how bank managers are increasingly becoming more like farm consultants, with managers having to be up to date with farming issues. Even though this bank operates with an old-fashioned bank culture in terms of personalisation, gone are the old days where a bank manager would sit on his high chair trying to create an image of power and have farmers humbly asking for financial assistance. Jack believes the banker of today is far more knowledgeable of the cyclical effects in farming, he has more information on the weather and the financial situations of farmers. Jack notes that more farmers today have tertiary qualifications and coupled with farm discussion groups this has greatly improved farmers’ capacity to manage their business.

Although farming is going through a very productive period at present, Jack has seen the damage that the 1984 policy reforms have had on small rural communities. Jack has seen first hand the pressures that many services and community groups face in order to survive. He points to the forestry sector as a contributing factor of rural depopulation. Jack suggests that the forestry companies came in and bought farms and in doing so, gave many farmers the escape they were looking for and offered them large sums of money. He says some farmers took that money and left to go to the city. This meant that the average farm has become bigger with fewer employed in the industry, and fewer people living in the countryside. Many clubs and societies have ceased to exist, with many amalgamating. Jack explains that many professionals like GPs, accountants, teachers and solicitors do not want to remain in the rural communities as locally they are seen as unattractive places to live.

Jack is angered by the way rural communities have been treated and the way they continue to be treated by the Government. He believes farming is still the backbone of New Zealand, propping up those in New Zealand who cannot be bothered to work. Ironically he points out that the Government took away subsidies for farmers to use them for paying income support and social welfare benefits, which Jack believes are subsidies in their own way. However, these people don’t care about the rural population, the providers, as all the money is being used to upgrade the cities. He feels the rural sector is being mistreated. He believes it is important to maintain the services the local town already has, to try and attract people. He feels the enormous pressure being placed onto the little towns which are ‘squeezing the life out of them’ he says.

There are various reasons why some farmers are more successful than others, Jack explains. Most important is knowledge, ability to make good decisions at the right time, good animal husbandry and the ability to apply good farming systems. The farmer needs to have a combination of various skills. As a result the current agriculture economy boom Jack has seen money return to the community, and more services returning. It has put some life back into the rural areas, but Jack says they are not out of the woods yet. He believes that the farming industry is going to reach a point when it will go through another period of pain. The Government is too comfortable with the current situation whereby they are increasing the flow of money to social services, but the service industries have increasingly high costs, and too many people are enjoying a high standard of living which they are not paying for. The productive sector is feeling the pinch and as profits shrink the weight on the shoulders of farmers is lowering their ability to perform. Jack sees danger coming.

Stan began farming in 1993 after attending university followed by two years overseas. He studied agriculture and economics at Lincoln. Stan is married with two young children and his wife works as a fulltime mother. In 1993 he farmed with his brother but he began farming in his own right in 1994 and his farm comprises 548 hectare with both sheep and cattle. Stan and his wife have extended their property over the last year by buying a smaller farm of 60 hectares. He employs one temporary person, a student from Lincoln University, who is undertaking compulsory practical work and is paid the normal wage for a farm labourer.

Stan is a strong believer in personal drive and motivation; that he believes is where success is built. He says you can’t force it upon people, but they have to want to make a go of farming to succeed. Stan never experienced the difficulties in the 1980s which his father did; he is involved in a new era of farming where he believes great returns can be made for those who work hard and are smart. Stan believes that in whatever line of business you are in you need to posses the same core attributes of sound business skills, people skills, decision making skills and information gathering. He states that the successful farmers are those with drive and enthusiasm to get to the top. He highlights that for some the barriers to exit farming are primarily the fear of the unknown and lack of opportunities

The property that Stan farms is a fourth generation farm, which his great grandfather broke in from native bush. Stan explains that he has changed pretty much everything on the property, as his father was of the generation where the eldest son of the family inherited the family farm, however his heart was not in it and he meandered along for thirty years never really changing anything. When Stan took over he set about intensifying the entire farm. He changed the stocking, increased fertiliser applications, increased fencing and he is currently cultivating virgin land. The farm used to have 20 paddocks, now there are 71. Other changes include improving the soil quality, using stocking policies and changing breeds. Stan believes he has been very focused on what he wants to achieve and what he is going to do to reach those goals. Treating the farm as a business and making decisions that are planned is very important. Farm consultants are used on the farm so that Stan can constantly get the best out of his farm. He has also been involved in discussion groups and field days.

Stan indicates that there has been a significant drop in numbers in the farming population. He points to the local school to make his point. When he was at school there were 70 children of whom 60 were from farms. Now there are approximately 36 children and only a handful are from farming families. The people who lost their farms or lost their jobs in farming shifted into town to find other employment therefore leaving the rural communities bare; and when people leave they take away the need for the number of services in a community. Stan has seen the rural post offices and other services close, however it is something which he believes is not a big loss for him personally. He says they definitely lost the community spirit in the area, but with the internet and the telephone there is no need to go to the local community to use the services that were once there. He can do his banking online and place telephone orders for anything that he may need and have it delivered. The communication age has solved many problems, so long as there is good internet access. However Stan believes you can’t become a complete hermit, and he attends most community events which are centred at the school, such as local discussion groups. He is also a keen golfer.

The community, Stan suggests, is seeing the flow-on effects from the general trend of larger farms and fewer people employed on farms. Cheap, abandoned housing is being occupied by those who don’t work on farms and are dependent on government benefits as a way of life, and this, says Stan, is causing problems. These people bring their personal problems to the area. Problems include crime and child behavioural problems at the local school. Stan is positive about the future of farming in New Zealand. He believes there is a hungry generation of farmers coming in who are totally business focussed, who will have large farms with increased production.

Ron, has been involved in farming all his life. When he left school in 1968 he spent time away from the family farm, as he wanted to gain outside experience before coming back and settling into the farm environment. Ron studied at Lincoln University before returning to the family farm. Currently Ron owns a total area of 1500 hectares, of which 950 hectares are effective. He has sheep, beef cattle and deer on his property. He employs a stock manager, and uses four farm consultants, along with his wife who takes care of all stock recordings.

Ron says that he sticks to a very simple philosophy which is ‘do the basics and do them well’. He is very business-minded and is very aware of the agricultural industry in the context of the world market. Ron says that six years ago he made his biggest breakthrough in farming when he decided to set fiscal targets. The fiscal targets were focussed on gross per hectare rather than production targets. He explains that ‘what this does is if you set a high fiscal target, you then look at your production records and even if you get production to a certain point you still may not reach the fiscal target, and then a policy change is required’. Ron says ‘you need to set goals and have indicators to ensure you are reaching those goals. However to be successful you need to be able to implement change and work hard to make sure you reach your targets’.

Ron believes that the farm consultant’s information and advice is extremely valuable. He uses four consultants who all have different skills, and so he uses their skills to set the direction for his business. He explains that he has also learned to employ people on the farm who are smarter than he, which he now sees as a sound business ethic. However Ron states that employing top quality staff can be problematic. He has been lucky that he has found professional people to work for him on the farm, but they are often changing jobs and it is an ongoing dilemma. He insists he pays top dollar for them as they are worth it. He explains that it ‘is not always those with farming backgrounds who are the best. It is often young men who come from urban backgrounds, as they come in with no preconceived ideas and don’t have the routines of some of the other farmers.’ Ron is also involved in farm discussion groups and he sees this as a way of learning and gaining business knowledge from other farmers who have bigger and more successful holdings, so he can employ that knowledge in his business. He is involved in two discussion groups, one at a national scale and the other is a local discussion group.

He explains that there are real opportunities in rural life and he places great importance on the survival of rural communities. He sees people leaving rural areas because ‘they don’t like living in the country anymore or because they don’t like the distance to the big cities. It’s more than just a lifestyle; if you want to succeed then you have to think of your farm as a business. Those who are not business-orientated should get out of farming now while the prices are at a good rate’. He identifies that Wairoa experienced a heavy rural downturn with many farms being sold, which then saw a flow on to a downturn in the community, which has brought problems. Rural decline has also seen a downgrade in the rural post service, which only delivers mail two times a week, which Ron says hinders his business. However he says that ‘the banking service is excellent today and I have a top businessman working for me who knows how to manage the farm finances and knows the farming business’.

A former Farmer of the Year winner, Ted currently has his own agribusiness which involves the administering of animal health products. He has had his business for three years and previously worked in various jobs including selling burglar alarms and working for the drought recovery group, of which he was co-ordinator. Ted’s wife is a teacher, and together they have two children, who are about to start education at boarding school. Ted originally started farming in Gisborne, where he was the third member in a partnership between his father and his brother, who farmed the family farm of 6000 acres. When his father died the partnership with his brother ended, due to legal problems, whereby it was easier to dissolve the partnership rather than remove a deceased partner from the partnership. Ted’s brother bought him out, and so he and his family bought a farm further south. Ted’s new property was 1200 acres and he farmed it for five years before deciding to sell. Ted had experienced difficult times as a farmer and when in 1998 they experienced one of the worst droughts in history for the area, he decided he needed to take action.

In the last three years of farming Ted decided he wanted to provide a better lifestyle for his family. He first went to the bank to increase his borrowing, to continue developing his farm so that it could become more productive. He used this increase in borrowing capacity to pay for a number of developments starting with soil quality, building more fences to enable a subdivision of paddocks for better grazing management, and sowing of new pasture. The real problem was maintaining growth and this required that he apply a capital dressing of fertiliser on part of the farm. Ted went back to the bank to borrow more money as he also wanted to change his breeding policy. However the bank refused. So the conclusion was reached that with the way things were in the 1990s, he would have a mortgage on a small property, and he couldn’t see himself overcoming the debt. Ted had a chance to refinance with family money which would have allowed for development, however with his wife working in town and his children of an age of attending boarding school, they sold. They purchased a place in town, after making a capital gain on their property.

It was very stressful being a farmer in this region due to the number of drought, Ted explains. In those times he says there were many social problems with farmers working harder and harder to keep stock alive, leaving their wife to keep everything else going. Farmers tended to withdraw into themselves, as the pressures increased. Farm workers too were stressed as there was no money to pay them, and many were caught in a catch 22 situation as the social welfare system, Ted believes, penalises those who do part-time work. Although everybody needs to work, many can’t survive on part-time work. It was very stressful he explains in the lead up to selling the farm, due in part to the way the bank behaved. Ted admits that he should have sought more professional advice before he invested in his farm however they faced extreme climatic conditions with heavy rain in the winter and severe drought in the summer. However Ted states that he and his family enjoyed their time on the farm and in the local community, with the rural environment an ideal place to raise children. Ted received advice in selling his farm from many professionals; however he says it ultimately is an individual decision. One of his concerns was what he was going to do when he exited farm ownership, so he sought advice from a number of farm consultants who had insight into the opportunities in the agriculture sector, as that was what Ted enjoyed doing. The initial step in deciding to sell is the most difficult but Ted believes it is easy once the decision is made.

With Ted’s business he is not completely removed from farming. He also does some work as a farm consultant, as well as a technician monitoring pastures and animals. Ted and his family enjoy some of the benefits of shifting into town. The children are closer to their school, and have various sports and entertainment facilities available to them. Ted highlights the fact that his wife is much happier now, not having to take a long drive to town anymore. However the family miss the small community they were once apart of, and Ted notes that after they and a number of other farmers left, the school closed down and many of the clubs had dwindled away. Ted explains that twenty years ago he would have been a member of six different committees, now he just belongs to the dog trial club. In hindsight Ted would have liked to have held on to his farm for another two or three years as farmers are doing so well now

Trevor has been a farmer since he left school in 1963 and has experience in different farming systems. He worked on a dairy farm for nine years, followed by short term contracts in share milking in Hawke’s Bay, after which he bought his own farm in the bay area. He decided to grow crops for a period of time, however he had a desire to move into sheep and beef farming. In 1981 he and his wife bought a share on a 1000 acre sheep and beef farm. After selling that farm in 1990 he became a farm manager until 1996 when he moved into his current job as a rural real estate agent.

Despite Trevor having a very successful farming career he decided to exit from farm ownership in 1990. He and his wife both worked long hours, he on the farm and his wife as a nurse, who made a 100km roundtrip due to the farm location. Farming had experienced difficult times and Trevor was suffering from stress and depression which was impacting upon his family. He was involved in farm politics, Federated Farmers and farm discussion groups and he felt that he would be able to gain other employment. He was offered a farm manager’s position which allowed him and his family to move closer to town and closer to school for his children. Trevor highlights the importance of having a strong community which offers services to him and his family.

As a farm manager Trevor explains, he continued to suffer from stress as a result of the pressures of his job. He then decided to quit working as a farm manager due to the immense stress that came with the job. He explains that he was working hard and very long hours, and got to a point where he couldn’t delegate because he thought no one could have done jobs as good as him. There was also a period where the family never got away for holidays or spent any time as a family. He says people were surprised at what happened to him, he explains ‘I nearly lost the plot altogether, I became physically and emotionally exhausted, I couldn’t stop crying all the time, and thought I was going mad’. He knows of other farmers who have been and are still suffering from immense stress, but suggests farmers are pretty good at hiding their emotions.

Trevor now has a very successful job as a rural real estate agent, and he and his family have discovered many benefits since exiting farm ownership and management, with the number one benefit being less stress. With less stress Trevor says ‘pleasures like spending more time with his family and just being available for them, instead of being seen as someone who can’t do this or that with his children.’ He has more time to get involved in the community and has been able to partake in further education. He has become aware of the opportunities that are out there for farmers wanting to do something different. Trevor suggests he should have sought advice and gone on to do some tertiary course when he left farming. Trevor’s advice to other farmers is that ‘you shouldn’t get hung up on farming being the only thing there is to do. There are a lot of farmers out there that would be very good at doing other things but they don’t know it’. He says ‘there are very good career advisors now and they highlight your skills that many farmers don’t realise they have. There needs to be more awareness about this amongst farmers, so they can set goals and seek advice, perhaps through seminars’.

Tom is a trustee with the Rural Support Trust and worked previously as the trust co-ordinator. He currently is a farm owner with a 600 ha property with eight thousand stock units; however he is handing that over to his son due to his imminent retirement. He spent some time working for wool brokers, before taking over the family farm.

The Rural Support Trust was set up in 1988 and its function is to provide services to anybody in the rural area, not just farmers, but workers on farms, and people living in the rural community who have problems. The Trust provides a confidential and free service. Tom says that the farming community has been faced with many problems which have pushed people to the brink of disaster. Some of the most serious problems in recent times have been related to droughts. The Government provided financial support to those who have been badly affected, and it was the Trust’s job to assess the situation on the properties that had been struck. If farmers met the criteria, then upon the recommendation of the Trust the Government would lend financial support. Other disasters the trust has helped out in are floods and severe hailstorms which destroyed crops and created erosion problems. Tom highlights that very often problems on the farm can lead to financial difficulties, personal and family problems. However, of late, agriculture has had a number of very productive seasons and the Trust has had very little work to do which, as Tom explains, is a positive thing.

The current co-ordinator no longer works full-time but is employed on a contract basis when required. The government once provided a dollar for dollar, but now if there is any work that the government needs doing, they pay the Trust for that service. Current funding comes mainly from community donations. Tom, being a trustee now, works voluntarily for the organisation. Tom says that the Trust exists so farmers and others can use it when disaster strikes and when times are difficult. Tom is aware that unforeseen circumstance can arise at any time and sees it as extremely important that the Trust continues to exist.

Tom says that the 1984 policy reforms impacted hugely on rural communities. Although the Trust was not set up until 1988, there were still problems occurring in the aftermath well into the 1990s. He says that with the removal of subsidies farmers couldn’t afford fertilisers, or to maintain fencing. Farmers were hoping things would just improve, but when they couldn’t afford development costs, the farms became dilapidated. Tom explains how stress was a major issue for some farmers. Pressure came from the many sources both financial and personal. The Trust was not just there to keep people on the farm; they wanted them to do the best thing for the families involved. Tom says ‘most guys spend all their life wanting to buy a farm and to tell them that walking away from it might be the best thing to do is very difficult’.

Tom describes the population decline as the most significant change in rural communities over the past 20 years. He says the standard of living has increased dramatically but that what was an economic unit 20 years ago is no longer viable anymore. With farm amalgamation the issue of depopulation emerges, with more farmers leaving, and few farmers operating larger holdings. Tom also states that forestry is a problem in the area with about 10 percent of land now planted in trees, with that figure to go up to 20 percent in the near future. He knows of five large farm holdings which were sold to forestry in 2001. Tom remembers that thirty- five years ago there were four primary schools now there is only one, with a role of about 10-15 children. Tom says the rural population will continue to decline, and that the forestry companies have sped the process up in the area. With population decline comes community decline and Tom explains that 20 years ago his community was thriving with shops, activities and clubs all being very successful. The cricket, rugby and tennis clubs have gone, the local hall is not used much anymore, clubs for children have shifted to town, and the Young Farmers club has disappeared, as there are no young farmers in the area. Often wives of young farmers don’t want to live out in the country, as their jobs, friends and family are all in the city. Tom says this is why many young people don’t return to the rural communities.

Ray decided to sell his farm in 1997, having farmed since 1977. Ray explains that ‘well farming you can’t beat it for the lifestyle, it’s a great lifestyle.’ During the 1980s Ray and his family struggled financially to maintain the farm as the withdrawal of government subsidies had a devastating impact on their income levels. Ray admits that he should have been more proactive rather than reactive to the situations that occurred during these difficult times. This situation continued through the ‘90s and put tremendous pressure on the relationship between Ray and his wife at that time. ‘We always had a very volatile relationship and that’s why I choose to get out’ Ray’s marriage ended under the pressure and stress of the farm situation and so the farm had to be sold.

When asked if these were stressful times for farmers during the ‘80s, Ray replied ‘oh yes it was, because in those day I remember you would get a bill for sending your ewes off to the works. I ended up killing some old sheep and digging a hole and burying them that way. They were worthless’ When asked what other factors influenced his decision to quit the farm he replied ‘the main things would be the down turn in farming, the forestry coming in, these days there seems to be a lot of broken marriages, it’s the stress of life. Were we live its only 30 minutes to town, a lot of women work in town. They needed to work in town when times were tough on the farms. The community is dispersing too, there are knew people coming in.’

Jo had been a farmer for thirty years and in 1995 he sold his 4100 acre farm. He had been approached by a neighbour who asked him to sell but Jo explained that his farm wasn’t on the market and that he had no intention of selling. When asked to name a price Jo explains ‘I said about half a million dollars more than it was worth at the time which was silly money.’ Jo’s neighbour decided that he would not pay that price for the farm. However it soon became common knowledge Jo explains that I had put a price on the farm and he says ‘I had one joker who came along, flew over the property in a helicopter and offered me 1.6million and we struck the deal that he would take over the farm in 18months. We thought about it for a while and we could see no downsides to what he offered and so we decided to go with it.

Jo now works as a manager in a meat processing factory and when asked what have been the benefits for him and his family having sold the farm he replies, ‘financially we are a hell of a lot better off. Freedom to travel, we can retire if we want to….. Since we sold the farm we have done extremely well by investing that money. We invested some in shares and the biggest plus is that we haven’t had to live off that money. With my wife and I working, we earn more than we can spend. I have looked at our investment as a business on its own. We have been able to buy a bigger house in town, we have a beach house and we can travel.’

In 1986 Ben was forced to sell his farm due to debt problems, after farming his property for 15 years. He explains how difficult it is to sell the farm, ‘when you lose your farm, you lose your job, you lose your home, your children have to change school, so losing a job in town is quite easy really in comparison.’ He continues by saying, ‘for two years or more I was very depressed about it. I had wanted to buy another farm. I battled and battled and then bought a scrub farm and then lost it also. It was a hard time.’ When asked, what impact the withdrawal of government subsidies had on his farm in 1984? He replies, ‘for me I would still be there if they hadn’t done that, we might still have had a district there too if they hadn’t done that, there is nothing there now except pine trees.’

Ben now has his own accountancy business and lives in town and when asked about the differences living in town and the country, he replied, ‘You would have helped your neighbour and wouldn’t have expected anything for it and they would have helped you. In town you have to rip everybody off to survive.’ Ben who is almost 70 years of age still has strong ties to the land and often feels that he could still buy another farm. He misses the rural way of life and even though he hasn’t been farming for many years he still misses having his animals.