WOOL PRODUCTION

Poverty Bay Herald, Volume LXVI, Issue 19890, 18 March 1939, Page 8

WOOL PRODUCTION

LOSSES IN OTAGO TYPICAL BALANCE SHEET 20,000-AGRE RUN Increased costs of all kinds and lower prices for fine wools have created an impossible position for sheepfarmers on the high back country of Otago, and the need lor relief by means of a reduction of production costs has been urgently canvassed throughout Dominion. Statements of the fine wool producer’s plight, however, to date have been couched in only general terms. With a view to presenting the problem in more specific detail, an Otago Daily Times reporter secured a complete profit and loss statement for a typical Central Otago station holding, and the 'figures supplied show how impossible it is for this type of woolgrower to operate at a profit under current conditions. The balancesheet speaks for itself. •A Typical Case The selection of a property for presentation as an example was carefully made. The choice fell upon a 'Central Otago run which has been prudently and expertly farmed by its present occupier for a number of years, and the facts disclosed may be regarded as applicable to the average 10,000 to 20,000-acre station In Central . Otago with small irrigable and cultivable areas. ■Many similar properties in Central Otago would show an even less favourable balance-sheet, and although evidence of more remunerative operation of such holdings could probably be adduced, there can be no question that the deficit here disclosed is characteristic of a majority of pastoral runs of this kind. Values throughout are average standard values, and nothing has been allowed for a variety of miscellaneous expenses, insignificant in themselves but of vita] importance in their collective influence on the runholder’s budget. It cannot be too strongly emphasised that the property in question has been well farmed with a view to keeping up the condition of the land and maintaining the standard of stock and improvements. .And the result, after 12 months’ hard work, is a deficit of .11424. U .' Details . of Station The property under review carries 2240 sheep. Of these, 1400 are ewes, including 1250 breeders. There are also illoo wethers, 700 hoggets, and 40 rams. The lambing percentage has been generously stated at 70. and allowance has been made for a death rate of 74- per cent. Improvements, including house, shearing shed, shearers’ quarters, outhouses, implement sheds and stables, as well as fencing, shelter, gates, etc., are capitalised at £3OOO. Stock, plant, and equipment, including sheep at 20s a head, implements, and that absolute necessity in the back country, motor car or truck, are covered by the coTiservative sum of £3500, making the total cost of creating a going concern £OSOO. The expenditure and revenue account for the property are set out hereunder, and it will be seen to what extent the cost of producing 70 bales of wool, a few hundred practically unsaleable sheep, and a few skins exceeds the return to the runholder. Costs and Receipts The following items comprise the expenditure' side of the balancesheet:—lnterest on improvements, stock and plant at 5 per cent, £325: rent, £250: rates, £45: insurance, £ls: 1 repairs and renewals, £SO; manures, £ls: seeds, £2O: winter feed and stock foods, £25: woolpacks, dip, etc., £35; shearing expenses, £100: cropping expenses, £ls; cartage and railage, £80: motor expenses, £SO; wages, £234: living expenses family of 4 at 16s per week each, £150: stores for 2 men at 15s per week each, £7B: replacement rams, 15 at sgns„ £76: total. £1569. Opposite these figures must be olaccd the details of income as follows: —Wool, 70 bales at £l3 per bale, £910; surplus sheep, 600 head sound mouthed ewes and wethers at 7s (a nominal figure). £210: skins. .£25; deficit, £424; total. £1569. Interest must be allowed, since if land is unable to return interest on reasonable improvements and stock it is not worth farming, but in the present instance even if this item were deleted from the expenditure the balance would still be on the wrong side. Position Not Over-stated The plight of the real high country run-holder, is much worse than is indicated by the above figures. Even prior to the recent substantial increases in production costs, wool growing on these properties was unprofitable, but to-day it is impossible for occupiers to carry on. For one thing there are many station owners in Otago who 'have the additional problem of finding the men to Work even 'at the increased wages now provided. Musterers for the high country which cannot be fenced are practically unprocurable. The lure of public works wages is too strong for men to forsake shorter hours and higher wages for the arduous ’business of clambering over the mountain runs of the Lake County. Shearers. shed hands,* rabbiters and labourers are only less difficult to get. Pastoralists will not regard the

figures of income as under-stated. The average grbss return to growers for the two wool sales held in Dunedin this season has .been a fraction over £l3. 'With respect to sheep at 7s a head there will probably be some difference of opinion. The same stock were worth 14s last year, and at the present time are probably worth a good deal less than 7s. Surplus sheep cannot be given away in Central Otago to-day. A Tarras runholder stated that he offered the other day to give <a man some Merino ewes, and the only reply lie received was, “I’ll think it over.”