Farm debt per hectare up 140% in six years

Total debt per hectare has increased about 140% between 2003 and 2009 for both New Zealand dairy and sheep/beef farmers.

Total debt per kilogram of output increased by similar margins, a report from the Ministry for Primary Industries showed.

Overall, the approximate debt ratio was much higher in the dairy industry than in the sheep/beef industry, but the sheep and beef industry's estimated debt ratio appeared to be growing faster, reflecting low returns, MPI strategy director James Palmer said.

"The reasons behind this need further investigation, for example to determine what could be considered as investment in on-farm development."

The MPI's strategy team investigated input and output trends in pastoral farming.

They found New Zealand farmers were using less land and less labour to produce a kilogram of milk or meat than they were a decade ago.

Sheep and beef farming continued to be the dominant agricultural land use, occupying more than four times the area used by dairying.

However, dairy support activity was increasingly occurring on properties not classed as dairy farms.

Between 2002 and 2009, the average number of dairy cattle run per hectare increased by about 5%. Dairying had also increased production per hectare and production per animal.

During the same period, the average number of sheep run per hectare decreased by about 11% and beef cattle decreased by 8%, while average beef and lamb production per hectare went down slightly.

Fertiliser use, both per hectare and per unit of production, fell significantly between 2002 and 2009, the only exception being nitrogen use on dairy farms where there was a slight increase.

Between 2002 and 2009, the labour used per hectare and per unit of production decreased significantly on all types of pastoral farms, indicating efficiency gains in farm management including increasing automation.

Sheep and beef farm input prices increased 2.4% for the year ended March 2012, a recent report from Beef and Lamb New Zealand economic service showed.

Prices had gone up 22.3% in the past five years, compared with a 15.2% increase in the consumer price index for the same period, the service's executive director Rob Davison said.

Fertiliser, lime and seeds increased 7% while fuel increased 5.4%, which was the smallest price increase since 2007. Feed and grazing prices went up 5.9%.

Local government rates increased 5.6%, with an overall cumulative increase over five years of 30.7%Offsetting the increases were some significant decreases, with the "price" of interest on farm debt going down 4.6% and the strong New Zealand dollar helping dampen the domestic rate of inflation, Mr Davison said.


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