Issues and Trends
Farmer confidence is up, after what they considered the best financial result in 15 years. They are forecasting another successful year in 2000/01, and plan to reduce farm debt. While confidence is up, farmers are still wary of unpredictable climatic events and cyclical market returns. They are aware the high prices received this year are primarily due to exchange rate influences.
Increased returns in 1999/2000 led to increased expenditure on deferred fertiliser applications The Ravensdown Wairarapa store recorded a 25% increase in sales in 1999/2000.
While the lower exchange rate boosted export returns, farmers are concerned about the low value of the New Zealand dollar and the flow-on inflationary effects.
Farms are shifting to more flexible stocking policies involving increased finishing stock, fewer breeding stock, and higher numbers of cows.
Most in the agricultural sector are uncertain about the future direction of land prices. Some expect that land prices will rapidly increase, as occurred in 1993, due to improved profitability. Others consider higher stock values and the uncertainty of future returns will hold land values down. Top performing operators are continuing to expand their businesses through land purchase and leasing.
The gap between the upper and lower farming quartiles continues to widen.
The agribusiness sector is concerned at the lack of young people entering the agricultural industry, resulting in a shortage of skilled labour such as shepherds. This is attributed to the perceived poor image of agriculture as a career option. In addition, it is becoming increasingly difficult for entrants to the agricultural industry to purchase farms.
Farmers are becoming more aware and concerned about environmental issues, such as greenhouse gases and resultant possible restrictions placed on farming operations.
Many farmers are very positive about their regional council's role in sustainable land use, and the fencing off of bush or steeper hill areas.
The political direction of the current government concerns farmers, as does the implications of government policy on farm profitability. While farmers are currently enjoying the low exchange rate, they are concerned about the long-term volatility of the dollar. Farmers are concerned at the impact of the Employment Relations Bill, ACC changes, higher tax rates and the negative effect of government policies on business growth and expansion.
Farmers are becoming increasingly concerned about the possible threat to the agricultural sector of biosecurity failure, highlighted by the recent discovery of the varroa bee mite.
Uncertainty exists about the possible future role of biotechnology in agriculture.
Animal health has been a major issue in 1999/2000, with facial eczema and intestinal worms affecting production.
Concern continues over the ongoing erosion of services in the rural community, particularly power reticulation, telecommunications and roading. Telecom has raised the issue of withdrawing from servicing rural communities, which is a significant concern for the agricultural sector.
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Contact for Enquiries
Farm Monitoring Programme Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
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