Pastoral incomes collapsing

Press, 20 December 1985, Page 20

Pastoral incomes collapsing

Incomes for sheep and beef farms in 1985-86 have collapsed relative to the previous year, and will be the lowest for 25 years, according to Mr Neil Taylor, Director of the Meat and Wool Board’s Economic Service.

The pastoral industry was in the midst of one its low points, said Mr Taylor. The previous season was mainly excellent, with farm gate prices reflecting the 20 per cent devaluation in July, 1984, coupled with good volumes of production for sale. However, the 1985-86 season is in direct contrast. With the dollar floating upwards and more than wiping out the devaluation, ex-port-led farm gate market prices had fallen. Wool and sheepmeat production volumes were down because of lower per head performance and because sheep numbers have declined by 1.2 million in 12 months.

As a result, gross income bn sheep and beef farms is estimated to fall 21 per cent, with the biggest decrease coming from sales of sheep and lambs. On-farm expenditure will be squeezed to a minimum and is expected to be reduced by 23 per cent in volume terms compared

Many cereal crops are showing symptoms of infection by barley yellow dwarf virus.

Symptoms in autumnsown wheat crops are yellowing of the flag leaf, stunting of plants, and white heads in severely affected plants. In spring-sown barley, infected plants show a bright yellow discolouration of leaves and some stunting.

Diseased plants are usually found in patches scattered through the paddock, although in severely infected crops large areas may be affected; Yield losses may be insigifnicant in crops where only a few plants are affected, but might reach as high as 30 per cent in crops where disease incidence is high and plants were infected in the early stages of growth. The increase in importance of this disease is due to:

© The warm autumn which allowed aphid flights to continue well into June thus introducing disease into autumn sown crops. © The early planting of autumn wheat which meant that many plants were infected by these aphid flights and served as reservoirs of disease.

• The aphid populations in crops remaining high during the mild winter and then introducing disease into spring sown crops. Control of virus depends on prevention, i.e. stopping entry of the virus into a crop by controlling the aphid vector or by disease avoidance. Vectors can be controlled by timely applications of insecticide.

Disease can be avoided by later planting of autumnsown wheat so it emerges after the last aphid flights. It is too late to take any action this season but appropriate management techniques for control of the virus will be available with the M.A.F. management packages in time for next season. APHIDS

The number of rose grain aphids in crops is declining now due to a combination of wet weather and crop development. In general, numbers have been lower than last year.

In most cases, spraying for rose grain aphid will not be economic from now on. Check crops for grain aphids, by examining 50 heads. If an average of five aphids per head is found before the milky stage, an application of insecticide is economic. See AgLinks FPP 509 and 840. GLUME BLOTCH

Moist, humid weather on the East coast is allowing the development of glume blotch. The disease is not aniticipated as .being a problem in Canterbury, Marlborough nor North Otago but will require monitoring in Southland on susceptible cultivars. Glume blotch is common in Southland but only causes significant yield losses when it spreads onto the head and

with the previous year. Fertiliser use, in particular, will decline 40 per cent Interest payments are expected to make up 20 per cent of farm expenditure, by far the biggest item. The next biggest cost will be vehicles, fuel and power, estimated to account for 12 per cent of total expendi-

Net income per farm, including partnerships and multiple family ownership, is estimated to decline steeply from $29,500 to $13,900 (a reduction of 53 per cent), in spite of the cutback in on-farm expenditure.

In real terms, net farm income will be less than one third of a decade ago and the lowest in 25 years. The per farmer level of net farm income for 1985-86 is estimated to be $7300.

The financial projections were based on the New Zealand dollar being worth 48c to 52c in United States currency, said Mr Taylor. The figures, therefore, would not be altered by the recent weakening in the New Zealand dollar.

Mr Taylor said there would be little, if any, funds available on most farms this year for capital purchases of plant A further indication of the serious financial situation is the low level the sheep and beef farmers terms of exchange index has fallen to. The index provides a measure of the relative purchasing ability of farmers.

For 1985-86 the index is down 32 per cent on the previous year, and is at its lowest level since the index started in 1960-61. The index is also 22 per cent below its previous lowest level in 1974-75 when the first “oil shock” crisis occurred.

Under the economic conditions that now prevail, the paper equities generated by rapidly increasing land prices from 1979-80 to 198384 are likely to vanish. This

will be particularly severe on those who purchased properties since 1978 (4588 properties of over 200 hectares were, purchased between 1979-80 and 1983-84) and those with low equity. These people stand to lose the most, as will people who borrowed heavily to develop their properties. What were once rational investment decisions under the previous economic environment have for some become bad finan-

cial propositions that cannot ~ be sustained today. The outlook for 1986-87 is for the productive base of “ total stock units on sheep and beef farms to be down at least a further one', million stock units. « This destocking of farms ' is expected as the result of < low levels of on-farm ex-;?, penditure and low levels of« inputs such as fertiliser 7 over recent years.