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Guy Trafford laments the lack of pathways for young aspiring farmers to acquire a place of their own, a problem that seems to have fallen off the radar. Societal ambivalence to food production isn't helping either

Rural News / opinion
Guy Trafford laments the lack of pathways for young aspiring farmers to acquire a place of their own, a problem that seems to have fallen off the radar. Societal ambivalence to food production isn't helping either
farms watching cows grazing

I was fortunate enough to be around when the then Government had a focus on getting young people into farming.

This was driven by the broad understanding by both Government and the wider community that farming was underpinning the economy. Hence the use of subsidies and other incentives to try and ‘crank-up’ the agricultural sector to bail out the economy.

Hindsight has shown us that many of these steps had unintended consequences which did all sorts of harm to both the farming sector and the economy.

Anyway among the programs were schemes designed to help new farmers onto the land. Finance was provided by the government-owned Rural Bank which lent monies at a subsidised 7.5% rate, and we also had the Department of Lands and Survey which developed farm land from Crown owned land and other abandoned farms etc. These farms, once developed to a reasonable standard, were put into a ballot which aspiring young farmers could go into and hopefully win. They didn’t come free; deposits were required and the farmers were kept to very stringent budgets.

However, between these and the Rural Bank, reasonable numbers of young farmers got into farming.

Aspiring farmers were often able to gather together enough money for a deposit by working in such trades as shearing, fencing and in the meat processing works.

Since then with the structural adjustments policies bought by the 1984 Labour Gov’t, the Rural Bank was privatised, and through several ownership changes ended up in Rabobank (via Wrightson Finance). The Department of Lands and Survey (Now LandCorp or Pamu) was one of the few crown owned entities not sold off (think of Kiwi Rail, BNZ, MoW,  State Power, etc, etc,) supposedly to provide a land bank to meet Treaty of Waitangi settlements. Pamu certainly wasn’t kept because it was a cash cow to government as the meagre returns since have shown. Readers can make their own minds up as to what purpose it is meant to achieve, even today.

The average age of farmers has reflected the changes of ease of access to farming. For the 1971-81 period showed as farmer numbers increased (the incentivised period described above), the average age decreased (44.3 to 41.9). However, from 1981 to 1986 there was a reversal in this trend and the average age in 1986 rose to 42.5.

From 1986-91 the average age went up again to 43.4. Many young farmers were ‘pushed’ off the land during the restructures and there were few ‘new entrants’ with many farm sales being amalgamations by older ‘established’ farmers.

The trend has continued, with data from Statistics NZ showing the average age of farmers increased 2.6 years to 51.4 between the 2006 and 2013 censuses (beef farmers average age 56.1; deer 55.8; dairy 41.7; mixed cropping farmers 49.1).

In trying to find the latest information I have come up short. Stats NZ do not seem to keep it and I am waiting to see if Fed Farmers have similar updated information. It seems to be an area being overlooked within the census data. Having just downloaded the 2019 Farm Survey form farmer age is missing which does appear to be an oversight given, at least in my mind, the importance of such and easily collected information.

According to the FAO; In the UK, the average age of a farmer is 59. In Kenya, it is 60. And in Japan, with the highest average age for a farmer, it is 67.

While researching the topic I came across a somewhat romanticised video on where the farmers are and one of the comments posted which resonated is copied in below:

selso costa, 3 years ago

How did we get here?

Simple ...

1- First you spread the "news" that the population will grow wildly, that there is no more space and that we will starve in a few decades. Then farmers and researchers improve their techniques to increase productivity. Production grows much faster than the population, and then prices fall.

2- Second, you swear and scold and accuse the farmers of destroying the world, of polluting everything, of wanting to kill the people with monster foods that only benefit these damn rural capitalists.

That is..., in addition to the farmers do tiresome, uncertain, risky and stressful work, they are accused of all possible evils, of destroying the world, nature and the land itself.

What motivation do you expect these farmers' children have to keep working? In addition to enduring a difficult and hard work, you still have to listen - by who is fed by them - that are they the bad guys?

So ... here come some college kids full of organic-socialist beasts on their heads to make little gardens and films thinking they'll save the world ...

Certainly age of farmers is a problem, much of it I believe is due at least in New Zealand is due to the inability of young(er) farmers being able to access the funds to get onto the land.

Dairy farming has a lesser age problem at least in part due to the stepping stone approach made available through the share farming options which are not generally there for sheep and beef farming.

Equity partnerships are available as a means to invest and grow ownership in property. And leasing does provide another route while still farming.

However, with the size of the deposit required normally 20% plus and with the high cost of all farm types there looks to be no light on the horizon for seriously aspiring young farmers.

Despite this some do make the jump, often by making their money outside of the agricultural sector and others with family support. But the increasing age and lesser number of farms (which means they also cost more) indicates that the pathway to farming is not an easy one.

Currently technology has replaced some of what youthful bodies could bring to the industry but there is a limit to what can be expected on this front.

In the meantime aging farmers are switching away from the more labour intensive sheep to cattle and of course trees have a growing influence.

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16 Comments

For the purposes of the stats, what constitutes a farmer?

I think you'll find rural bank went to national bank and thence to ANZ.

Fair proportion of the sheep and beef  ex ballot farms around bop are heading into trees.

Reality is similar to housing. Incomes simply fell behind land price, unless you already have land you simply can't keep up up. Even dairyings golden ticket of share milking is a hard ask, 300 cows plus machinery will require around $600k total, $200k deposit. Finding a 50/50 position is then a problem, locally over the years a number have actually been picked up by farm existing farm owners either individually or as a group. Then managers are put on, rungs removed.

3 of my 5 kids with their partners have been from workers to self-employed in farming, minimum 10years As of June 1st all herds  and equipment will be sold and they will be leaving, for a variety of reasons but mostly "had enough" at least for the moment.

 

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Redcows - amazing for you to get 3 kids to want to go farming. Did you tell them half truths when they were growing up?

My mistake was to educate our kids - it made them smart enough to chase careers elsewhere. I just have to remind them how much I owe the bank to keep them away.

Regarding the article I don't know any step of farming where a 20% deposit is enough. Banks bare minimum is 35% and prefer 40% on livestock or farmland. 

To succeed nothing has really changed from my generation - you have to work really hard, be innovative in your thinking, take risks and have some good luck along the way. And have a supportive partner.

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I definitely didn't get them to go dairy farming and they got well educated. Engineering, science, law, biology. All decided at about 25 to head farming, not really city people all prefer kids to grow up rurally.

So exactly the sort of hard working highly educated couples that farming  looks for. 

All have the money to buy property now and have. None of them made the majority of that money farming despite spending most of their working time there.

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Redcows - my comments about kids were firmly tongue in cheek. My father sent me to Auckland, last thing he wanted was me becoming a farmer. I came back after a career elsewhere. Would love one or two of my kids coming back home but their decision.

I make jokes but completely agree with you that modern farming needs well educated people to both drive performance and handle the ongoing wave of regulations and compliance. 

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The yields in farming are even lower than residential real estate.   Sure the land gains are big and tax free.      But now we are at the point of demographic turnover and its ... becoming harder to realise those gains.    Trees must look to be a great exit for many.

If farm values follow residential values in reverting to longer term yields its going to be a deep and wide NZ recession.    As farmers are being crushed on the cost side, hard to see that book value can be justified.     

The entire country is being built around low interest rate funded capital gain.....

And now the rates are not low.

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IT Guy - Using a realistic budget dairy farms (other than Waikato) can generate around 6% to 7.5% return on assets at current prices.

It is comparable with the return on commercial property and above most residential.

And it would be a brave person who bought any sort of property for capital gains at this time. 

    

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There hasn’t been much commercial property yielding anything in the 6% territory for a while. yields dropped, depending on asset quality, well into the 3% territory. Better than the 1% on resi I guess. 

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"land gains are big and tax free". According to our RV the farm has gone up in value 15% over the last 10 years. Can't wait to cash out and spend that big 1.5% annual tax free capital gain. 

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Social ambivalence,  no. Society is becoming more aware of how wrong animal exploitation is. You personally might not have an issue with inseminating a cow, killing her baby and stealing the milk,  but your partner/kids/mum might - either way animal agriculture is a less attractive career compared to the old days, when animals were just dumb machines that couldn't feel pain.

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An empty stomach will likely focus attention. You really do need to get out more and stop reading propaganda from "vegan monthly". It's making you shrill! Get in touch with Fed Farmers. I'm sure they can find a farmer willing to show you how an actual farm is managed, rather than the theoretical one in your head?

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Good stuff Palmtree.

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I like it when people get so batsh*** that it's hard to tell whether or not it's actually satire.

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I think that you only need to look at the poor leadership in the ag sector. Little wonder that young people are not inspired to go farming. The whole sector leads with a "poor me" approach, blames government for making farmers too accountable for their environmental inaction, and hides behind the "we grow food" mantra of self-righteousness.

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This is the real issue facing all of the world - ageing populations. This has been forecast for decades but everyone ignores it and seems to think we can import young ones.

In most of rural NZ the working age population is going to decline between 10 to 30% in the next 10 to 20 years. Population wont fall - just a lot more older people needing help and assistance.

We don't have enough shearers, meat workers, truck drivers etc etc now - its only going to get harder.

Its not that people don't respect Ag - any bright, motivated young person has many options - they don't need to live in remote, hard to access, long hours, lower pay areas.

Just look at Europe, Japan, China, Russia, USA and other who are ahead of us on this - we have a declining work force which the modern world has never encountered before.

Start to read the work done by Dr Natalie Jackson, Prof Spoonly etc - its all there. People leaning over a bar or fence and "sorting out the problems" are in for rude shock.

 

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Same in the trades, you got lots in Thier 70s still working, then their kids in their 50s, but then there is a big gap, as there was hardly any apprentices trained in the 90s. Partly filled by immigrants.

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The problem is the extremely high price of land compared against the returns - try beef farming in a profitably way unless the land has been in the family for 60+ years.

The days are gone where 'working hard and saving your money' will get you a farm deposit.

I have friends who took over family farms in their late 20's and 30's. But they always leave out the bit of the story where the family left $1m in the farm to make it happen, or how the siblings all took a hit on their share of the inheritance so one son could go into the farm. 

The farm next to me is on the market for $4.0m and my farming friends tell me it's a sub-economic unit.

Like I said, the days are gone.

 

 

 

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