Deer farming not for weak hearted or impoverished

Press, 2 August 1985, Page 21

Deer farming not for weak hearted or impoverished

If you have the money, want a challenge and are prepared to take a risk, have a go at deer farming, Mr John Collie, a deer farmer from Kowhitirangi, advised West Coast farmers last week. Deer farming has a great future on the West Coast with an assured summer grass growth and the lack of major diseases, Mr Collie said at the West Coast Farmers Conference. However, with prices for breeding stock exceeding $3OOO. per head, deer farming was not for the weak of heart or for people without the necessary finance. “If you have a financial problem now, buying deer on today’s market using borrowed capital would be tantamount to committing suicide,” said Mr Collie. Borrowing money at today’s interest rates over a short term generally required the selling of all female progeny to meet load repayments which was not feasible for farmers running a deficit and looking for diversification. “Remember, deer die; even expensive ones are not immune and to a certain extent only risk capital should be used to buy deer,” warned Mr Collie. The only alternative for those with financial difficulties was to either capture the initial stock or attract investors, options which were often not practical.

In spite of the financial hurdle facing prospective deer farmers, Mr Collie was highly enthusiatic about the deer industry’s potential and described deer as “great animals and a pleasure to farm.” He farms deer on 86ha near Hokitika. The low annual input structure of deer farming ensured it would be viable in the facing of continuing inflation, said Mr Collie. He recommended that deer be farmed on good well-fertilised pastures close to a farmer’s residence rather than on poorer land at the back of the farm. Deer had the potential to outperform traditional livestock so they should be fed accordingly. The market for live deer was showing a preference for heavy animals and it could be worth $5O a kilogram to grow out young stock before sale, said Mr Collie. If weaners were not kept growing during the first winter, they will never reach their potential liveweight. With a good level of winter feeding, young hinds should reach a liveweight of 70kg by the time of their first mating at 16 months. Mr Collie said he tended to understock his deer farm to ensure the deer were not underfed. If they were underfed, deer could lose weight and be put under stress. “One dead hind is a tragic

loss — at present prices it could represent $3OOO to $4OOO plus the value of a hind fawn at $2OOO to $3000.” Earlier, Mr Mark Macintosh, a farm advisory officer at Westport, outlined the options open to farmers wanting to start deer farming. For a holding of 10 hectares Mr Macintosh looked at three alternatives — running breeding hinds, a combination of breeding hinds and velveting stags, and solely venison stags. The capital cost (excluding land) for a lOha deer unit running breeding hinds was $225,750; breeding hinds and velveting stags $118,110; and venison stags $39,750. In gill cases capital development expenditure comprised $16,000 of the total. Looking at the financial costs, Mr Macintosh said it was obvious why so much deer fencing had been erected yet few deer if any, had been put behind it. Erecting just fencing was not economically sound because the money put into fencing was gaining no return and could be earning interest in the bank. Most West Coast deer farmers were financing their ventures out of income, often from the sale of captured deer. Few were involved with outside investors, which was a source of finance for many deer farmers in other parts of New Zealand. Isolation and a small

population were reasons for the lack of outside investment on the West Coast, said Mr Macintosh. If fortunate enough to secure an investor, this method of establishing a deer farm was very attractive. Other sources of finance included the sale of capital assets (land, stock or plant) and commercial loans. The gross margin profit on 10 hectares for the breeding hind policy would be $56,390, for breeding hinds and velveting stags $30,050, and venison stags $10,020. An average sheep and beef farm on the West Coast has a gross margin profit of $1740 for 10 hectares, and a dairy farm $B6lO. When principle and interest payments on capital needed to finance the venture 100 per cent are taken into account, the expected profits turn into significant deficits, said Mr Macintosh. On a yearly cashflow basis, the breeding hind option would peak at a deficit of $119,500 in the fifth year and emerge on the credit side in the ninth year. The breeding hind and velvet option would have a maximum overdraft of $58,500 in year five and make a true profit in the eighth year, and the venison stag venture would have a maximum deficit of $20,500 in the fifth year and the first profit in year eight. If values did drop, the values of a farmer’s assets and his profits would fall correspondingly, with farms running breeding hinds suffering most.