Higher stocking rates higher profits

Abstract

This study can be used as a basis for improved stocking and increased profits on most New Zealand farms. Most farmers on the high fertility Southland Plains are carrying about 5 or 6 ewe equivalents to the acre, but many are hesitating to increase stock numbers any further. The recent low wool and lamb prices, the credit squeeze and the unhappy economic position of New Zealand have made farmers cautious of spending money on further farm development. Some feel that possibly labour costs will be too high and that unreliable prices may make development beyond the 5 or 6 ewe equivalent level unprofitable. Costs move upwards - this is a fact of life we all have to accept - prices for wool and lamb vary - this too we must expect - and we must also expect that in the long term a cost-price squeeze will threaten family incomes and will erode the profits of farmers who do not progressively increase production. Some farmers claim that there is no incentive to develop - their incomes are high enough already - others claim that the 'Government gets it all through tax'-we have shown here that this is not the case-that further development to high stocking rate is profitable before and after tax. You do not have to run to keep ahead of the cost-price squeeze but it helps - a careful canter will do . One thing is certain - you can not stand still. This publication is the result of fifteen months of interviews and field work, undertaken by Tony Lewis of the Agricultural Economics Research Unit at Lincoln. We know our conclusions are sound, good profits have been retained by farmers who have adopted even more progressive development practices than we recommend for the average farmer. Increasing ewe numbers is not the only way to increase profit. There is good reason to believe that cash cropping, and under certain circumstances beef fattening could also bring in more income and this possibly at lower cost than intensive sheep fattening. These aspects of intensive development have yet to be investigated.