Investment analysis of beef syndicates

Abstract

Syndication and co-operation in some areas of agriculture are now quite common. At the farm level, for example, significant advantages may accrue from group ownership of machinery, labour and livestock.

Hagen (1971) discusses the advantages of farmers cooperating in joint ownership of machinery. In general these advantages are:-

(i) reduced per acre costs of cultivation. This is due to spreading overhead costs over a greater number of acres.

(ii) ability to purchase efficient, high capacity machinery, not otherwise within the reach of a small farmer.

(iii) release of capital which would be otherwise tied up in machinery.

Co-operation in the use of labour is very common overseas and also occurs to some extent in New Zealand. Legislation involving group labour schemes has been passed in New Zealand and state Advances Corporation finance is available for housing labourers employed by such groups. The main advantage of these schemes is that small farms which cannot support a full labour unit have easy access to labour when required.

A more recent development in New Zealand has been that of group ownership and breeding of livestock. The objectives of such groups may include:

(i) breeding and fattening of stock for sale.

(ii) obtaining a large pool of animals for breeding with the aim of rapid genetic improvement.