Worse fall in income forecast for farmers

Press, 12 October 1985, Page 3

Worse fall in income forecast for farmers

By

HUGH STRINGLEMAN,

fam editor

An official farm monitoring report has shown that all sheep and beef farms face an average $23,000 drop in net farm income for

the 1985-86 season. The latest Ministry of Agriculture four-monthly monitoring report, released yesterday, predicts a net farm income for the “all classes representative sheep farm” of $ll,OOO. Last season that figure was $34,000. The drop in net income of $23,000 has been revised by the Ministry from the $20,000 prediction used by its director-general, Mr Malcolm Cameron, in late September. At that time he said 2000 sheepfarmers were in “extreme financial difficulties,” another 5000 were in a “very tight position,” and 800 were feeling the pinch. New Zealand has 30,000 sheepfarmers who generate about $3 billion worth of meat and wool each year. The sheepmeats portion of the combined income of sheep and beef farmers is expected to be only half what it was in 1984-85.

However, a net farm income prediction of $ll,OOO does not tell the full story of financial woe facing sheepfarmers. Net farm income is officially defined as gross farm income less farm working expenses and debt servicing. From net farm income fanners have to pay personal living expenses and any development or capital expenditure. On personal living expenses of $lO,OOO a year, sheepfanners on average are drawing less per week than the union movements wants as a minimum wage. This is in spite of turning over $lOO,OOO annually through the farm and employing assets which prob-

ably have an average value of about $300,000 on today’s farm prices. The Ministry farm monitoring report also shows that gross farm income for the all classes representative sheep and beef farm is expected to be down 22 per cent. ‘ . Debt servicing is budgeted to rise 10 per cent, Including interest payments up 16 per cent on 1984-85, and farm inputs will drop 26 per cent. Fertiliser application is predicted to be down nearly 40 per cent nationally to only 60 per cent of maintenance requirements. “Farmers are indicating through these monitoring interviews a very strong aversion to further borrowing, opting to cut farm expenditure to balance budgets,” said the Ministry’s chief farm adviser (economics) Mr Alan Walker, yesterday. Farmers in North Island hill areas, Canterbury, Otago, and Southland are being hardest hit by the crisis.

On North Island hill country, debt servicing will account for 25 per cent of gross farm income. Sheep farms in Canterbury and North Otago will get little development or capital expenditure, - and farmers also propose to cut personal expenditure an average 20 per cent Debt servicing will take nearly 28 per cent of the gross farm income from this class of farm. Intensive fattening farms in Southland and South Otago may be even worse off. Their gross farm income is budgeted to fall more than $30,000. Almost 30 per cent of the gross will be taken by debt servicing and farm working expenses will be slashed 25 per cent, which will be a big blow to the rural economies of the regions.