Learning to live without subsidy
Learning to live without subsidy
In the first of an occasional series, NZ beef and sheep farmer
Steve Wyn-Harris reports on the state of farming in that
country, which abolished all farm subsidies in the mid 1980s
GDAY from a Kiwi cocky from Down Under. Or if you prefer, hello from a New Zealand farmer in the antipodes. Despite the differences in colloquialisms, geography, season and climate, farmers weekly readers and myself share many of the same concerns, fears, difficulties and triumphs.
Farming for most of us is more than a means of earning a living, it is a way of life and for me, a passion. I view land ownership not as a right but as a privilege. Consequently I live by the maxim "live life as if you will die tomorrow but farm as though you will live for ever".
Of course that is just a smart way of avoiding one of the most over-used words of our time – sustainability. But sustainability goes well beyond being environmentally durable because we as farmers must, of course, also be financially sustainable.
I know this latter issue is one that occupies the minds of all farmers and in particular many of those reading this as you grapple with falling prices and lowering subsidies.
All support measures and subsidies for New Zealand agriculture were dismantled during the mid-1980s by the Labour Party, our left- of-centre political party. Ironically, subsidies and market intervention had reached their height under the previous administration, the normally right-of-centre National Party.
Falling incomes
Rob Muldoons National government had implemented the subsidy programme in response to falling farm incomes as we lost automatic access to the UK when it entered the EEC and to maintain production apparently to assist the economy.
They were dropped by the new Labour government because of a profound shift in doctrine and because we could no longer afford it.
Our small country lacks any mineral or oil reserves and has a large reliance on agricultural production, which account for 60% of exports. Our population of just 3.5m results in a modest tax base and a small pool of consumers for our primary produce.
Thus we were subsidising ourselves beyond our means. Dire warnings about thousands of farmers going broke and a huge translocation in the rural sector were forecast by some.
This didnt happen but it certainly has been a difficult 10 or 15 years for many if not most. Quite a few have left the land but usually with some equity intact because although land prices are dropping they have held at comparatively reasonable levels.
But for those of us remaining there have also been many changes. We have certainly become more hardened businesspeople with a strong eye to costs and potential extra income. Many now have off-farm work (such as writing columns) or their partner has returned to the workforce.
Split between neighbours
A lot of properties have been amalgamated or split between neighbours to maintain an economic unit. When my parents first came to this property they bought the 186ha (460 acres) from a couple whose two sons also worked the farm. My parents dropped a labour unit and then four years later dropped the other labour unit.
Over the last 15 years I have farmed an additional 121ha (300 acres) with a much increased carrying capacity per hectare as well as the off-farm income. This with little use of casual labour other than the shearers.
Others with higher debt levels will be working a lot more area and stock units per worker than this.
But we have become a lot more efficient and responsive to market signals, which means that our farming and stock policies have to be much more flexible.
Back in the 1970s if a bad drought came along you would expect the government to come along with a package that would ease the pain. Now we know for certain that no assistance will be forthcoming and make decisions such as destocking based on market signals and the probability from the weather forecasters of when it might next rain.
This has resulted in us becoming reasonably lean and mean within our businesses. Despite high costs of sending the product around the world and stiff tariffs we are able to sell our produce competitively.
You certainly have great challenges ahead of you as you are eased towards more of a market economy but the results will not be all bad as opportunities undoubtedly lie ahead for those who can rise to those challenges.