• Rural NZ
• Adverse Events
• People issues
• Profitability
  • Compliance costs
  • e-Commerce
  • Employment
  • New industries
  • Performance
  • Producer Boards
  • Stocktake
  • Structural Change
  • Trends
• Research
• Rural Proofing
• SLM Hill Country Erosion Programme
• Community Irrigation Fund
• Stats & forecasts
• Sustainability
• Legislation
• Media Centre
• Publications
• What's New

4 Geographic Differences

Table 9 indicates different expenditure amounts by different sectors by geographic location. Care should be taken in interpreting this table, as the survey method does not determine a reliable degree of confidence in this level of geographic calculation.

Table 9: Sector Differences by Location

	Arable	Livestock	Dairy
North	803	257	1289
Central	1063	475	2108
Mid	1244	867	2123
South	839	307	1990

All figures are expressed in dollars per hectare. Major points to come out of Table 9 are:

• In all sectors, farms in Central and Mid Canterbury have a much higher expenditure per hectare than their northern and southern counterparts. This is particularly obvious with livestock farming where expenditure patterns are almost twice the next highest in the Mid Canterbury area. This is primarily due to a high degree of stock sale and purchase activity.
• The table shows some interesting combinations whereby arable properties in Mid Canterbury have very similar expenditure levels to dairy farms in North Canterbury whereas livestock properties in Mid Canterbury have similar expenditure levels to their arable counterparts in North and South Canterbury.
• It appears that some of the differences in expenditure patterns through the Central and Mid Canterbury areas are strongly influenced by the fact that their properties have much greater turnover than their less intensive, more extensive neighbours in North and South Canterbury.

5 Summary

5.1 Results

In 1999, Agriculture New Zealand carried out a survey of Canterbury farmers to determine the impact of the 1997–1999 Canterbury drought. The results of this survey work are reported in the MAF Policy Technical Paper, "Regional Economic Impacts of the 1997–1999 Canterbury Drought" published in February 2000.

This was designed to give a representative sample of the Canterbury farming economy.

This study carries out further detailed analysis of the bulk information gathered in the 1999 survey.

The 1999 survey of 269 farmers gave a 95 percent confidence level that the sample represented the population with an error level of no more than 10 percent in any of the three major sectors (arable, livestock and dairy). This means that comparative data within and between sectors gives a satisfactory level of reliability. However, when that information is broken down into analysis for comparison within and between sub-regions, the confidence levels and error levels decrease and increase respectively.

This study is based on relating the results of the two questions together to determine actual expenditure levels with a further breakdown of expenditure by sub-regions. In this way, MAF Policy is better able to understand the impacts of intra-regional expenditure by farmers.

Arable and livestock farmers have very similar expenditure patterns in percentage terms with approximately 75 percent of their expenditure occurring in small towns or Ashburton or Timaru. Dairy farms have a different expenditure pattern with a smaller portion of expenditure occurring in small towns (28 percent).

However, the impact of the large amount of total expenditure means that dairy farms put twice as much money through the economy of small towns as arable farms who themselves put 2.5 times the amount of income through small towns as livestock properties.

The big winners from dairy farm expenditure are the medium-sized cities of Ashburton and Timaru with 55 percent of the expenditure going through them or $1,120 per hectare.

Dairy farmers and arable farmers appear to have similar capital expenditure levels. However, dairy farmers spend a greater proportion of it in the local area than arable farmers do.

Although the expenditure pattern figures are standardised as a result of the collection method, it still indicates that dairy and arable properties are putting much larger amounts of money per hectare through the small towns than traditional livestock farming.

In summary, this means that a large proportion of day to day farm working expenditure goes through the local economy in all of the sub-regions.

Spending patterns are very similar to farm working expenditure in that an even greater proportion of expenditure in Mid and South Canterbury goes through Ashburton and Timaru.

In North and Central Canterbury, there is a trend towards more capital expenditure occurring in Christchurch and less in the smaller towns.

Table 70 indicates that personal expenditure is more evenly spread than other expenditure items. The original survey indicated that the general trend was that immediate personal needs such as groceries, health, insurance and education were predominantly bought in smaller centres but that discretionary expenditure on things such as clothes and entertainment and durables were most likely to be spent in Christchurch or outside the region.

Total expenditure per hectare across the region is $624/ha with 34 percent of this ($196) occurring in small towns, 44 percent ($275) occurring in either Ashburton or Timaru, and surprisingly only 20 percent ($121) occurring in Christchurch itself.

Farmers purchase the majority of their direct inputs, or goods, as close to the farm as possible.

A much higher proportion of services, both professional and semi-skilled, are purchased in the larger towns of Ashburton, Timaru and the city of Christchurch.

Capital expenditure patterns are even more highly concentrated on the medium cities of Ashburton and Timaru.

In all sectors, farms in Central and Mid Canterbury have a much higher expenditure per hectare than their northern and southern counterparts.

5.2 Interpretation

The information in this report is useful as base data for those people wishing to further understand the relationships between farming businesses and the economics of their rural servicing communities. Although it is important to point out that the figures in this report represent gross expenditure amounts, it does not indicate what proportion of expenditure stays as profit within the community or business that it is spent in. However, it is fair to say that income from services is most likely to be retained in higher proportions than incomes from goods that are sold or retailed at a margin.

The results of the study suggest that there are complex interrelationships between location, land use, profitability and in terms of the contribution that farming makes to the local economy. These figures can be used as a basis to calculate the impact of forces that work to change any of these relationships. For example, it can be seen that although dairy farmers spend a much lower proportion of their expenditure in local communities, the net dollar value that they put through the community is much greater than traditional dryland farming practices. This is particularly significant in areas that are seeing large-scale dairy farm conversion at present.

Therefore, this information is useful to planners, rural businesses and those people working in the rural community as a basis for understanding the interactions of rural business profitability.

Contact for Enquiries

Rural Affairs Coordinator
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND

Phone: +64 4 894 0675
Fax: +64 4 4 894 0745
Contact this person