Farms Hard Hit

Press, Volume CVIII, Issue 31659, 20 April 1968, Page 10

Farms Hard Hit

“Some fanners in the Taranaki hinterland have been very hard hit by the low prices for crossbred wool in 1967,” says Mr R. W. M. Johnson, senior research economist, the author of a new publication from the Agricultural Economics Research Unit at Lincoln College. “During 1966 we examined 15 development programmes on farms in this area behind Stratford and Eltham and found that with wool prices around 30 cents hill country development was a paying proposition. But when we reexamined some of these properties in 1967, when crossbred wool was only fetching 20 cents, we found that over half of the properties had ceased development altogether. Those that were continuing with development were well-established farms which could carry more stock

without heavy investment in bush clearing, sowing, fertiliser and fencing.” The publication gives details of four of the properties as at October, 1967, when the prospect for wool was at its worst. The financial structure of the farms is examined to show why low wool prices had lead to precarious debt positions. It is shown that one of the main effects of lower wool prices is to reduce the level of ploughedback farm profits. “A great deal of farm development in New Zealand is not financed by banks or stock firms but by the farmers themselves. When product prices fall, as they did in 1967, previous current expenditure levels must be continued and the squeeze falls on personal income and re-investment,” says Mr Johnson.