Farmers pessimistic, says M.A.F. report

Press, 12 July 1988, Page 3

Farmers pessimistic, says M.A.F. report

PA

Wellington

Dairy and deer farmers were in good heart while horticulturists and sheep and beef farmers faced tough times last season, according to a Ministry of Agriculture and Fisheries “state of the nation” report on farming.

The farm monitoring report said most sheep and beef farmers’ finances continued to decline during the season and a 5 per cent rise in gross incomes would fall again in the 1988-1989 season.

Sheep and beef farmers had settled on a formula of weathering tough financial times by keeping production costs to a minimum, lowering breeding stock numbers and pushing up the, number of trading stock. MAFTech Policy Services’ assistant manager, Mr Brian Cloughley,- said a true equilibrium would not be reached in this sector until the level of debt servicing had been reduced.

Farmers were still pessimistic about their futures and there were few strong market signals for farmers to plan their short term futures.

He predicted beef prices would firm and wool prices hold on last season. 1.

The report said inflation, early season frosts, Cyclone Bola and rising costs had combined to make the 1987-1988 season one of the worst on record for New Zealand horticulture.

Mr Cloughley said morale was

low and the industry trend was toward retrenchment and survival.

MAF estimated up to 15 per cent of kiwifruit growers would have to sell up next season because they could not pay their debts. More than 60 per cent of those remaining needed a tray price of $7 to survive, he said.

The report said 1 many horticulturists blamed the high level of the kiwi dollar for a 40 per cent drop in net returns, but the New Zealand currency had appreciated only 3 per cent against currencies of its trading partners. South Island stone-fruit growers had benefited from North Island growing being hit by Cyclone Bola. Pip-fruit orchardists fared best in the sector and could look forward to a good 1988-1989 season, but over all the horticultural sector was struggling with the problems that had affected pastoral farmers the last three years. The future looked brighter in the dairy industry where record production had shown a marked increase in the industry’s confidence.

Gross farm incomes had risen an average $ll,OOO for the 1987-1988 season and for the first time since

1984 gross farm income was over $llO,OOO. Farmers had lifted spending on farms on items such as fertiliser, which was applied at near maintenance levels this season. Federated Farmers’ meat and wool section chairman, Mr David Peterson, said drought conditions in the United States were likely to bring big drops in beef prices as feed grain prices increased and farmers killed stock. He also doubted wool prices would hold.

While the report had shown a 5 per cent increase in gross incomes this was almost certainly because farmers were selling capital stock.

The chairman of Federated Farmers’ dairy section, Mr Geoff Mathis, agreed the outlook was brighter for dairy farmers.

There was a lot of confidence in the industry and current prices were the best they had been for three or four years. Mr Mathis put this down to two reasons. First, because of the success of the Dairy Board in finding new export markets, and second, because stockpiles of milk powder and butter had decreased.