Impacts of Dairy Conversion in the Taupo District

OVERVIEW

4.0 METHODOLOGY

OVERVIEW

A consultative approach was taken in carrying out the research proposal.

Consultants interviewed five sheep and beef farmers and five dairy farmers and carried out a telephone survey of a further 20 farmers. These farmers were selected by Agriculture New Zealand consultants to represent "typical" farmers of the district. Dairy farmers included those in the Reporoa area as this group includes large dairy farms which are on similar land to that available for conversion in the Taupo District.

During the interviews, information on economic, social and environmental influences were discussed and recorded and farmer’s perceptions of future trends and issues were noted (refer to Appendix 1 for copy of questionnaire).

Agriculture New Zealand also made extensive use of recorded data from Agricultural Statistics, Valuation New Zealand and other central and local Government agencies.

Agriculture New Zealand and Woodward-Clyde made extensive use of information held by local and regional councils. A consultative approach was taken with both the Taupo District Council and Environment Waikato to detail and record their data and solicit their opinions on the issues highlighted in the terms of reference.

The methodology outlines how the work was undertaken and should be read in conjunction with the terms of reference.

Agriculture New Zealand and Woodward-Clyde adopted the following approach in carrying out this research assignment.

4.1 Preliminary meeting between Agriculture New Zealand, Woodward Clyde, MAF Policy and Environment Waikato

The purpose of this meeting was to obtain a thorough understanding of the results required, to clarify any further queries with regard to the terms of reference, to identify key milestones and deadlines and to identify information sources and documents held by MAF Policy and Environment Waikato.

4.2 Development of project management outline

This ensured that all the inputs and requirements were identified and co-ordinated to ensure timely delivery to meet the terms of the brief on time and within budget.

4.3 Information gathering phase

Agriculture New Zealand interviewed five sheep and beef farmers and five dairy farmers selected to represent the "typical" farmer in the area plus conducted a telephone survey. "Typical" farms were those of a size in the order of farms undergoing conversions to dairying ie 170 to 350 hectares. Agriculture New Zealand developed the format for the interviews, information required and structure of the questionnaire in conjunction with MAF Policy and other project participants. The following information was collected and recorded.

(a)	Typical gross and net farm incomes

	Agriculture New Zealand analysed farmers’ accounts and using the farm monitoring budgets developed 10 farm budgets. These budgets provided hard data on typical gross and net farm incomes for the area. Little previous farm monitoring data exists for this area or this type or scale of farm.

	The economic data resulted in a model farm budget similar to MAF’s farm monitoring process. Data on individual farms is not presented.

	This data was also used to predict changes in district wide farm gate gross and net incomes and the impact this will have on social and environmental concerns to the district.

(b)	Tenure, ownership and employment

	In conjunction with factual data, farmers were asked to background these issues.

(c)	Environmental

	The interviews were used to establish farmer practices in:

	-	stock classes and stocking rates
	-	fertiliser use
	-	riparian management
	-	water demand
	-	other environmental issues including water run-off, fertiliser and/or chemical run-off

(d)	Adequacy of local Council infrastructure and servicing

	Farmers were questioned on the adequacy of existing services from the Councils and their perceptions of what services and infrastructure will be needed to service an increased population of farmers.

Concurrent to the farmer interviews, a supplementary telephone survey of 20 farmers was conducted. This survey sought the same type of information.

The outcome of this intensive farm monitoring was a model budget for a "typical" sheep and beef, and dairy farm. Individual data remains confidential to the farmer and Agriculture New Zealand.

In addition to farm data, demographic and social impact data was collected by Woodward-Clyde.

4.4 Data Analysis

Concurrent with the survey, Agriculture New Zealand and Woodward-Clyde reviewed current data. Information sources include:

-	Agricultural Statistics
-	Valuation New Zealand
-	Economic Service, Meat & Wool Board
-	New Zealand Dairy Board and New Zealand Dairy Group
-	New Zealand Census Data (1996 data should have been available early in 1997, but was not available for this study)

Information gathered in 4.3 and 4.4 was used to address sections 3.3.2, 3.3.3, 3.3.4 and 3.3.5 of the Terms of Reference.

4.5 Local authority and government input

Information regarding environmental, social and district issues was discussed and recorded from interviews with key agency personnel. These agencies include:

-	Environment Waikato
-	National Institute of Water and Atmospheric Research Ltd (NIWA)
-	Education Review Office (ERO)
-	Local Health Authorities
-	Taupo District Council
-	Transit New Zealand
-	Electricity Corporation of New Zealand and Electrical Supply Authorities
-	Stock firms

These interviews focused on the key issues identified in the Terms of Reference, particularly 3.3.2 e), 3.3.3 e), 3.3.5 a) and e), and 3.3.6.

4.6 Facilitation of iwi input

Agriculture New Zealand used their networks to facilitate interaction with Ngati Tuwharetoa and the local hapu to consider their requirements. The focus was with Maori authorities who are active in the ownership and management of significant land resources.

Key issues discussed with the local hapu included:

-	land holdings
-	level of interest in conversions
-	resource availability
-	water quality
-	cultural sensitivity to land use changes.

4.7 Economic analysis

Specialist skills utilising Geoff Butcher and Associates and Agriculture New Zealand’s Agricultural Economist, were used to project the impacts of the planned expansion, in particular:

-	the direct employment impacts conversions could have on the district over the next five years.
-	an estimate of the multiplier effect.

Input-output economics have been used to assess economic impacts from the conversion of land from sheep and beef production to dairying in the Taupo district. A regional input-output transaction table was created using the GRIT method from the 1990/91 national table. Superior data from farm surveys was inserted to improve the quality of the table. This included creating two new sectors - sheep and beef farming on farms subsequently converted to dairy and dairy farming on new conversions. The impacts of these two sectors were compared to estimate the difference in impact on the Taupo district economy between land in sheep and beef and dairying.

Agriculture New Zealand subcontracted independent Regional Economist, Geoff Butcher and Associates, to develop a regional input-output table for the greater Taupo district.

The data from the on-farm survey (farm financial and full time employment equivalents, and where purchases and sales are made) was modelled through the input-output table to determine both production induced and consumption induced effects both for on-farm activities and for processing activities.

Cost benefit analysis has been widely used as an economic tool to measure the direct economic benefits of investment and economic change in New Zealand. It can provide a consistent framework to present market and non market values and to analyse possible trade-offs between values resulting from alternative resource uses. However, cost benefit analysis does not consider the inter-industry relationships within an economy and consequently fails to incorporate secondary and subsequent rounds of economic activity. Input-output analysis offers the means of deriving multipliers that can be used to measure the flow-on effects from an initial change in economic activity in one or more sectors of an economy. The advantage of input-output is that depending upon the degree of model closure, the direct, indirect and consumption induced requirements for the industry’s output per unit change in final demand, can be estimated.

While input-output analysis has some significant limitations (Neild 1989) it has passed the crucial test that for many purposes, it predicts reasonably well (Richardson 1972).

The data indicates where the employment and economic impacts are likely to occur (by sector).

4.8 Environmental analysis and the development of a framework or methodology for a full environmental report

Woodward-Clyde (NZ) provided input from their team of environmental research specialists to assist with this analysis. This team included resource management, planning, civil engineering, environmental scientists, soil specialists and water experts.

This facet of the work identified indicators that are relevant to developing a full understanding of the environmental effects accompanying the transition to dairying. Illustrative examples are set out below.

A suitable, cost effective methodology was developed for determining the environmental effects, of interest in a subsequent phase of the research.

This included the nomination of a suitable timeframe for undertaking the research and an indication of necessary budget requirements. Potential indicators include the following:

-	social and demographic changes
-	infrastructure demands
-	roading
-	electricity
-	rural water supply
-	local government services, eg refuse, noxious plants, pest control, regulatory services and catchment management
-	erosion and sedimentation
-	riparian management
-	water quality (ground and surface)
-	water quantity
-	point and non-point discharges of contaminants
-	changes in vegetative cover
-	landscape/visual changes

Woodward-Clyde’s expertise was mainly used in sections 3.3.2 c), 3.3.3 c), 3.3.5 c) and d), and 3.3.7.

4.9 Effectiveness of Methodology

Utilising a cross organisational, multi- locationed team provided both positive and negative results. The total number of personnel involved was approximately 19 across three organisations in a total of eight separate locations.

Positive aspects of this approach were:

-	Utilising specialist skills for specialist activities was possible
-	A wide range of expert opinion was forthcoming
-	The final report was technically stronger due to expert input

Negative aspects were:

-	Varying levels of interpretation of client outputs required
-	Logistical co-ordination of inputs and outputs consumed excessive time inputs
-	Continuity was not always smooth
-	Short-comings in information occurred in some situations where people collecting information were not necessarily the final users of it
-	Computer software varied from site to site making data exchange complex

The methodology assumed that sound base information would be available and accessible. This did not always prove to be the case. For example the 1996 Census Data was to be released early in 1997. This did not occur for all data needed for the study. Reliance on 1991 census data alone gave no means for comparisons.

The project timeline developed gave all contributors a clear picture of their allocated time inputs and responsibilities. Despite this, some participants exceeded time allocations.

The questionnaire ended up being very large as data was collected on many areas. Interviews subsequently took approximately an hour each. This placed a heavy load on farmers’ time.

Farmers were very forthcoming with information and in most instances had relatively good records and data available.

	© MAF 1997
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