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CHAPTER 4 - Results and Conclusions

In this chapter the combined results of the ten case study properties are presented in figures and tables, and discussed.

Figure 4.1 (click thumbnail at right) shows the very high variability in rainfall over the time series. The dry nature of the period is also evident with eight years of the 11 being below the 30 year average of 575 mm.

The average stocking rate over all farms is far less variable and shows no strong relationship to the rainfall trends. Only slight drops in stocking rate are observed after the 1980/82, 1984/85 and 1987/88 droughts.

Table 4.1 shows the relatively low variability (measured by coefficient of variation) in stocking rate on most farms over the period.

It is important to note also that the stocking rate for a property taken at the standard time of 30 June is not always a good indication of the stocking rate changes which occur throughout the year. For example in a year of feed shortage at lambing time, various strategies are used to reduce the stocking rate below the 30 June level. These include selling in-lamb ewes, selling ewes and lambs all counted, and early weaning and sale of flying flock of ewes.

Table 4.1 Stocking Rate (SU/ha)

Property		Overall mean	C.V.	Post '87 Mean	C.V.	1984-87 Mean	C.V.	Pre '84 Mean	C.V.
	1	12.7	0.08	13.4	0.04	13.1	0.03	12.0	0.09
	2	10.3	0.05	10.4	0.06	10.3	0.06	10.3	0.06
	3	14.1	0.16	12.3	0.01	12.8	0.06	16.2	0.13
	4	8.9	0.11	8.3	0.08	9.1	0.15	9.1	0.11
	5	10.9	0.16	NA	NA	NA	NA	NA	NA
	6	NA	NA	NA	NA	NA	NA	NA	NA
	7	9.0	0.13	8.0	0.12	8.6	0.09	10.2	0.05
	8	7.2	0.11	7.7	0.09	7.0	0.07	5.9	NA
	9	10.5	0.18	10.9	0.12	12.0	0.21	9.0	0.05
	10	10.5	0.12	10.4	0.21	10.0	0.11	10.9	0.10

Table 4.2 Lambing Percentage

			Overall		Post 1987		1984-87		Pre 1984
Property			Mean	C.V.	Mean	C.V.	Mean	C.V.	Mean	c.v.
	1		136.3	0.31	132.6	0.03	125.5	0.11	149.8	0.55
	2		111.3	0.14	120.3	0.09	103.0	0.22	110.7	0.17
	3		84.9	0.20	84.8	0.14	85.2	0.25	84.9	0.26
	4		127.1	0.11	135.3	0.09	120.4	0.20	127.6	0.07
	5		119.0	0.33	NA	NA	NA	NA	NA	NA
	6		NA	NA	NA	NA	NA	NA	NA	NA
	7		110.9	0.19	115.5	0.30	111.6	0.19	105.2	0.23
	8		106.3	0.19	107.9	0.34	105.3	0.23	106.6	NA
	9		86.6	0.14	85.8	0.22	78.2	0.16	93.8	0.03
	10		120.3	0.17	111.3	0.28	117.1	0.19	128.3	0.15

In contrast, lambing percentage shows a much stronger relationship to rainfall. A fall in lambing percentage occurs 12 months after all three dry spells.

The variation in lambing % over a farm over 12 years is greater than for stocking rate. This illustrates the farm management option for climatic change of allowing stock condition and therefore per head production, to fluctuate widely while adjusting stocking rate of capital stock to a lesser extent.

Table 4.3 Total Lambs Sold

		Overall		Post 1987		1984-87		Pre1984
	Property	Mean	C.V.	Mean	C.V.	Mean	C.V.	Mean	C.V.
	1	1,470	0.33	1,755	0.08	1,675	0.22	1,051	0.53
	2	1,812	0.26	2,016	0.09	1,537	0.51	1,854	0.26
	3	1,036	0.47	1,020	0.54	985	0.35	1,086	0.68
	4	2,254	0.25	2,502	0.10	2,246	0.41	2,112	0.24
	5	1,557	NA	2,256	NA	857	NA	NA	NA
	6	NA	NA	NA	NA	NA	NA	NA	NA
	7	1,086	0.25	1,303	0.12	1,061	0.30	900	0.27
	8	1,327	0.27	1,457	NA	1,237	0.34	1,428	NA
	9	1,303	0.17	1,191	0.13	1,305	0.23	1,370	0.18
	10	1,221	0.29	1,247	0.06	1,127	0.55	1,281	0.26

The variability of total lambs sold (CV for 8 properties = 29%) is much greater than for lambing % (CV for 9 properties 17%). This observation was consistent for all properties in the sample (Table 4.3 and 4.2). This shows the combined influence of lambing % and stocking rate changes on total lambs sold. Stock selling strategies are also important. For example either selling lambs in the year they were born or carrying them through to more attractive markets in the following year. The sale or retention of female stock to alter the farm stocking rate also has an effect.

Table 4.4 Total Wool Sold (Kg)

		Overall		Post 1987		1984-87		Pre 1984
	Property	Mean	C.V.	Mean	C.V.	Mean	C.V.	Mean	C.V.
	1	10,715	0.23	11,916	0.09	11,678	0.18	8,853	0.35
	2	11,717	0.11	12,393	0.09	10,133	NA	11,270	NA
	3	10,371	0.34	7,704	0.10	9,321	0.48	12,810	0.21
	4	12,846	0.12	14,326	0.16	12,450	0.14	12,274	0.07
	5	9,459	NA	9,574	NA	9,343	NA	NA	NA
	6	NA	NA	NA	NA	NA	NA	NA	NA
	7	6,058	0.19	6,249	0.30	5,695	0.23	6,315	NA
	8	12,633	0.13	13,866	NA	12,175	0.10	12,001	NA
	9	12,315	0.17	11,405	0.10	14,460	0.14	11,144	0.09
	10	6,541	0.15	6,723	0.19	6,286	0.27	6,636	0.07

The variation in total wool sold per year (CV over 8 properties = 18%) is less than that for total lambs sold. This is consistent over all farms. Generally on individual case study properties wool production per head varied less than lambing %. The wool selling policy is also less likely to vary between years.

Figure 4.3 (click thumbnail on right) shows the decreasing trend in lamb price, wool price and gross farm income, expressed in 1990 dollars, over the time series. Of major significance is the large drop in wool price in the early 1980's and the sudden drop in lamb price in the mid 1980's when SMP payments were removed. Also important during this period was the withdrawal of support for the Meat Industry Stabilisation Account.

In 1985/86 lamb prices were halved and wool prices declined.

The effect on gross farm income was also accentuated significantly by the droughts which occurred over the period. In 1984/85 farms de-stocked (increasing income from the sale of capital livestock) and in 1985/86 retained or purchased livestock to rebuild stock numbers (this had the effect of further reducing incomes after the drought year).

This one figure demonstrates the significant impact market prices had on gross farm incomes. The effect on farm incomes of product price changes were more significant over the 12 year time series than the droughts were.

Generally, farmers managed their properties knowing that dry years were part of the risks involved in farming. However, in contrast, the sudden impact on prices resulting from Government policy changes were completely unexpected by the farming community and were therefore not planned for.

The data in the Figures 4.4 (left thumbnail) and 4.5(right thumbnail)  is presented firstly as the average across all 10 farms and secondly as an index against gross farm income (index = 100 in 1978/79). The indexed figures remove any major influences that the larger properties may have in calculating the mean for the 10 farms studied over the 12 year series. Notable results are:-

1	Cash Farm Expenses: Variation around the slight downward trend over the 12-year time series is low. The case studies show that although most properties reduced expenses significantly in the late 1980's as income levels dropped they were severely limited by non-discretionary and fixed expenses.
2.	Gross Farm Income: Variation is very high between years around a large downward trend.
3.	Cash Farm Surplus: This line closely follows the trend in gross farm income showing that there is, in reality, very little Opportunity to compensate for reduced income by reducing cash farm expenditure. Much of this expenditure appears to be non-discretionary.

Regression analysis of gross farm income against cash farm expenditure and cash farm surplus support points (1) and (3) above. R squared values were 0.6 for the cash farm expenditure relationship and 0.9 for the cash farm surplus relationship. This confirms that cash farm expenditure was not able to be varied significantly with the trend in gross farm income and that cash farm surplus closely followed the trend in gross farm income for the average of the farms over the 12 year time series.

The above comments are also illustrated in Tables 4.5, 4.6, 4.7, and 4.8.

The average coefficient of variation figures across all farms for the series are:-

• Gross Farm Income CV = 35%
• Cash Farm Expenses CV = 22%
• Cash Farm Surplus CV = 80%
• Disposable Profit CV = 1676%

It should be noted that the high variation in disposable profit is a result of both the inability to reduce expenses to compensate for lower incomes as well as the fact that, relatively, the disposable profit figure is smaller in absolute dollar terms. Consequently, where changes to gross farm incomes cannot be absorbed by reduced expenditure, the relative effect on disposable profit is very large.

Table 4.5 Gross Farm Income (1990 Dollars)

Property		Overall		Post 1987		1984-87		Pre 1984
		Mean	C.V.	Mean	C.V.	Mean	C.V.	Mean	C.V.
	1	110,063	0.37	95,101	0.27	117,106	0.22	113,406	0.57
	2	126,627	0.43	72,845	0.71	123,425	0.46	160,818	0.25
	3	88,394	0.34	59,274	0.25	75,102	0.29	116,500	0.12
	4	188,371	0.23	172,972	0.29	175,385	0.35	207,998	0.15
	5	131,781	0.27	NA	NA	110,092	0.35	158,917	0.09
	6	212,298	0.37	173,995	0.57	165,162	0.50	272,990	0.06
	7	77,581	0.24	62,621	0.33	71,194	0.28	91,667	0.11
	8	115,335	0.42	NA	NA	93,216	0.61	NA	NA
	9	148,199	0.40	121,472	0.15	117,437	0.75	188,844	0.17
	10	86,790	0.45	65,906	0.10	74,452	0.84	109,191	0.24

Table 4.6 Cash Farm Expenses (1990 Dollars)

Property		Overall		Post 1987		1984-87		Pre 1984
		Mean	C.V.	Mean	C.V.	Mean	C.V.	Mean	C.V.
	1	54,370	0.17	48,489	0.16	53,051	0.20	58,953	0.17
	2	57,194	0.27	42,414	0.15	71,725	0.10	57,342	0.25
	3	51,927	0.24	40,285	0.19	49,046	0.28	61,217	0.11
	4	76,292	0.18	82,896	0.35	75,644	0.15	72,847	0.14
	5	79,119	0.15	NA	NA	73,374	0.21	83,485	0.12
	6	127,897	0.28	114,922	0.16	103,258	0.46	155,393	0.11
	7	48,716	0.22	38,156	0.18	48,734	0.06	55,038	0.23
	8	89,248	0.21	NA	NA	88,402	0.18	NA	NA
	9	95,254	0.18	73,447	0.09	104,868	0.14	100,647	0.14
	10	46,626	0.31	32,647	0.18	40,653	0.15	59,791	0.18

Table 4.7 Cash Farm Surplus (1990 Dollars)

Property		Overall		Post 1987		1984-87		Pre 1984
		Mean	C.V.	Mean	C.V.	Mean	C.V.	Mean	C.V.
	1	55,693	0.75	46,612	0.63	64,056	0.25	54,452	1.28
	2	69,434	0.77	30,431	1.63	51,700	1.14	103,475	0.44
	3	36,467	0.57	18,989	0.42	26,056	0.45	55,283	0.28
	4	112,079	0.39	90,076	0.24	99,742	0.69	135,151	0.22
	5	52,661	0.58	NA	NA	36,718	0.83	75,432	0.23
	6	84,401	0.70	59,073	1.57	61,904	1.20	117,596	0.20
	7	28,865	0.49	24,466	0.60	22,459	0.91	36,629	0.24
	8	26,088	1.90	NA	NA	4,814	13.99	NA	NA
	9	52,945	1.05	48,025	0.42	12,569	6.31	88,197	0.39
	10	40,165	0.83	33,259	0.25	33,799	1.78	49,400	0.55

Table 4.8 Disposable Profit (1990 Dollars)

Property		Overall		Post 1987		1984-87		Pre1984
		Mean	C.V.	Mean	C.V.	Mean	C.V.	Mean	C.V.
	1	(627)	55.72	(8,365)	4.96	(1,229)	7.27	4,497	12.14
	2	3,332	9.48	(8,055)	5.09	2,353	22.88	10,751	2.49
	3	17,779	1.08	3,722	2.13	6,669	0.82	35,102	0.49
	4	13,360	1.69	19,600	1.89	16,813	1.50	6,853	3.19
	5	6,182	3.30	NA	NA	13,358	1.68	(372)	68.07
	6	(289)	236.62	(37,933)	2.52	(11,713)	6.78	31,437	1.85
	7	(2,064)	7.41	(141)	82.54	(9,286)	1.87	2,559	7.49
	8	972	55.41	NA	NA	(22,157)	2.96	NA	NA
	9	(17,141)	4.23	1,537	11.62	(69,522)	1.75	13,556	1.98
	10	5,893	5.60	4,302	4.06	426	139.48	11,222	2.42

In figure 4.6 both the lines of Cash Farm Expenses and Debt Servicing as a % of Gross Farm Income show the same general trend. There is an inverse relationship between both measures and gross farm income.

For example, in a year of high income the expense will be a lesser % of that income and in a year of lower income the expense will be a higher %. This occurs simply because the variation in gross farm income is much greater than that of any expenditure. This suggests limitations of using such a ratio to assess the performance for one year in isolation, as discussed below.

Examples of high between year variation in these % 's are illustrated in Case Study 1, when the purchase of livestock to stock a new property distorted gross farm income. In Case Study 2 a similar situation arose. In Case Study 2 a second example occurred when income was low in 1985/86 following the drought and removal of SMP payments.

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