Economics Of Land Development For Agriculture And Forestry

Press, Volume CVI, Issue 31089, 18 June 1966, Page 20

Economics Of Land Development For Agriculture And Forestry

“Land development for agriculture on pumice country has a small margin of profitability over development for forestry at 1962-63 costs and prices, provided that reading and housing costs are not included,” said Professor B. P. Philpott, Director of the Agricultural Economics Research Unit, Lincoln College, commenting on the broad conclusions from -the latest research publication of the unit released yesterday.

The publication is entitled “An Economic Analysis of Large Scale Land Development for Agriculture and Forestry” and the authors are J. T. Ward (formerly of Lincoln College), E. D. Parkes, a member of the staff of the Research Unit and Messrs M. B. Granger and R. T. Fenton of the New Zealand Forest Service.

Professor Philpott said: “The publication contains the results of a joint study undertaken by the Research Unit and the New Zealand Forest Service and is the report of an economic analysis of Irage scale land development for agriculture and forestry, based on a case study of the Maraetai block on the pumice country in the Taupo-Rotorua area. The research represented an exercise in cooperation between a number of organisations with widely differing interests in land development. “The Agricultural Economics Research Unit at Lincoln College is interested in the theoretical basis of assessing large-scale development projects and in the analytical techniques which should be used in such work. The Department of Lands and Survey is concerned with developing land for settlement and the Forest Serivce is similarly concerned with

developing land for exotic forests. “Not infrequently a conflict of interest arises between Government departments as to which use areas of land should be put. It is hoped that the publication has presented a method by which such conflicts may be overcome. “It must be remembered,” said Professor Philpott, “that the results depend very much on the assumptions made with respect to costs, prices and productivity in future years. “While the authors have chosen the most reasonable assumptions in reaching their results, they have also explored the effect of varying these assumptions and it is apparent that these effects on the margin of profitability in either use can be very sub

statial indeed. Moreover, it would be unwise to generalise from this study as to the relative profitability of agriculture or forestry in other areas of New Zealand, for which conclusions could only be made on the basis of similar special studies, some of which are already under way at the Research Unit,” he said. “The authors suggest that large-scale development of the nature envisaged for agriculture or forestry, development involving between one and two million acres of land for each use, is bound to have major repercussions upon the economy as a whole because of the inter-relationship between these industries and other sectors of the economy. “A full study of these implications requires an input-

output analysis based on sector accounts. The Agricultural Economics Research Unit at Lincoln College is now making a study of the farming sector account and contemplates, in due course, making a similar analysis for forestry. “It is essential that the development plans drawn up by the Departments of Agriculture and of Lands and Survey and by the Forest Service, should be reviewed jointly and, as far as possible, integrated to avoid incompatibility. To be successful this will require land-use planning and it will also require a measure of general 'economic planning because land development involves the use of resources which are in demand from other sectors of the economy.”