This study was commissioned by MAF Policy to determine the level and structure of farm debt in New Zealand in 1998. This study was commissioned to update farm debt information held by MAF. MAF uses this information for its macro-economic forecasting activities, to assist with the understanding of the financial structure, funding and profitability of farming in New Zealand, and to show how this has changed over time.

This report provides the latest information on farm debt across a wide range of sectors.

It provides a thorough analysis and presentation of the level and structure of farm debt in New Zealand based on the survey undertaken. It also comments on how debt has changed over the last decade and provides some information on the assets owned by those farm enterprises that replied to the survey.

The last study of agricultural debt covering all types of farming was undertaken by MAF Policy Services. This earlier study used data collected by Statistics New Zealand for the 1988 accounting year.

This is a smaller survey than the earlier Statistics New Zealand comprehensive survey. The major difficulty with this smaller survey was achieving a high enough response rate to be sure that the results are truly representative. The overall response rate to the survey was 60 percent.

Annual economic surveys are conducted for sheep & beef farming and dairy farming by the Meat and Wool Economic Service and the Dairy Board respectively. These surveys do not cover other types of farming such as cropping and horticulture but are considered reliable of the farm types they cover.

This survey estimates total New Zealand farm debt to be $18.7 billion as at June 1998. Not all farms in the survey were of sufficient size to be regarded as stand-alone farm businesses. For this reason the reported level of national farm debt does not only relate to on-farm businesses. Industry estimates suggest that New Zealand farm business debt, where the debt is serviced from the farming business, was approximately $14 billion as at June 1998. Readers of this report need to be mindful of this when using or quoting the reported value of national farm debt from this study.

Alan Walker
Director Policy Information and Regions