The distribution of surveyed farms by farm size (as measured by gross income) is shown in Figure 1 and by area in Figure 2.

Figure 1 Distribution of farms by income class and farm type

Figure 2 Distribution of farms by area class and farm type (area owned)

A recorded area of zero indicates that the farmer owns no farmland, i.e., the farmer leases all their land, or is a sharefarmer and owns no land.

Dairy farms and cropping farms tended to have higher incomes than did sheep and beef, or horticulture farms. Almost half (46 percent) the sheep and beef farms surveyed had a gross income less than or equal to $100,000. Only 12 percent of dairy farmers had incomes less than or equal to $100,000. Thirty-seven percent of horticulture farms had incomes less than or equal to $50,000 and 18 percent between $50,000 and $100,000. More than 50 percent of "other" farms had income less than or equal to $50,000.

Sheep and beef farms occurred in similar numbers across the range of area classes; 38 percent of sheep and beef farms were over 400 ha. Thirty percent of dairy farms were between 51 and 100 ha, with relatively few dairy farms more than 200 ha. Ten percent of dairy farmers were sharefarmers and owned no farmland. Over 80 percent of horticulture enterprises were less than or equal to 50 ha; 3 percent had a total area of over 400 ha.

About half of all cropping farms were between 101 and 250 ha; only 16 percent were more than 400 ha. Almost half the "other" farms were less than 50 ha. These farms included deer farms, poultry and pig farms, horse breeding or horse rearing, and farms leased for grazing.

Overall, 90 percent of farms reported some form of debt. A slightly higher percentage of cropping and dairy farms reported debt than sheep and beef, horticulture, and "other" farms (Table 7).

Table 7 Number and percent of farms reporting liabilities

We asked farmers to record the main purpose of the loan, for each individual liability recorded. Not all farmers completed this and some farmers recorded more than one purpose for a loan. Loans with multiple or unspecified purposes are therefore reported separately.

About one-third of all loans were taken out to pay for running costs, and about one-sixth for farm purchase (Table 8). The largest loans were for farm and land purchase, and refinancing. Taking into account the size of the average liability and the number of individual loans, the greatest use of borrowed funds was for farm purchase, followed by running costs.

Table 8 Purpose of loans

We also asked about the source of each loan. The manner in which this section of the survey was completed revealed the greater flexibility in the finance market since the previous survey. Whereas, in the past, farmers tended to be restricted to obtaining loans for farm purchase from a limited number of institutions (such as the Rural Bank and Trustee Companies), and seasonal finance from trading banks or stock firms, farmers are now able to obtain a wide range of credit arrangements from a number of different institutions. The fact that one loan may now be used for more than one purpose makes it less meaningful to analyse the proportion of liabilities by institutional source and main purpose for the loan than was the case in 1988.

A total of 2712 individual loans (Table 9) had been taken out on the 790 farms reporting liabilities (Table 7), an average of 3.4 liabilities per farm reporting liabilities. The average amount of each individual loan was $92,900. Taking into account the size of the average liability and the number of individual loans, the largest source of term funds was trading/trustee banks, followed by loans from family members. The largest sources of funds for seasonal finance were bank overdrafts and revolving credit facilities. Including overdrafts, revolving credit facilities, and term loans, and multiplying the average liability for each of these by the number of individual liabilities, trading and trustee banks provided 68 percent of the total funds advanced to the respondents, and family members 12 percent.

Table 9 Source of finance for loans

By combining the source and main purpose of liabilities, the main purpose of funds from each source can be seen (Table 10). Funds from trading and trustee banks were used mainly for farm and land purchase. Loans from family members were used in a similar way. Trust companies and solicitors provided large amounts of money, but to few farmers. Because the table reports weighted data, some cells show an average value for the liability but no liabilities. This represents one respondent with a farm type having low weighting.

Table 10 Liabilities by source and main purpose

Note: This table is based on weighted data. Some cells show an average value for the liability but no liabilities. This represents one respondent with a farm type having low weighting. Total numbers of liabilities are not necessarily the sum of all individual liabilities.