A management and economic study of farming in the South Island high country : with special reference to property development

Abstract

The high country region represents approximately 20% of the total grazing area of New Zealand, and covers the mountainous inland areas of Marlborough, Canterbury, Otago, and Southland provinces. Although wool is the main product, the area contributes only approximately 2.3% of the total New Zealand wool clip.

Most of this diverse area is Crown land let under various forms of lease to individual farmers. The pioneers who first settled in the high country developed a farming pattern largely by "trial and error". The extensive grazing system which evolved is basically unchanged today. Holdings have remained large to accommodate the uncertainty of the physical environment and the economic instability resulting from the reliance on wool as a source of income. Historically, wool prices, and as a consequence, incomes of high country farmers, have fluctuated markedly from year to year. These fluctuations often necessitated short-term retrenchment for economic survival.

Since the 1950's, there have been continuing adverse trends in both wool prices and prices paid for inputs. This had subjected the high country farmer to an increasing "cost-price squeeze".

Increases in production, as a possible counter to this economic decline, are now technically feasible. Control of the rabbit and advances in technical knowledge have made development of high country properties practicable. However, many runholders consider that the profitability of development is not readily apparent. They hold that while an increase in production, and so returns, may be expected, in many cases there is no clear relationship between these and the increased costs incurred in undertaking development. As a result, there has been only limited investment in high country development.

This study aims at finding out whether the profitability of run development is sufficient to counter the continuing economic decline. The technical relationships and the economic characteristics of high country farm development are examined and three individual case studies are analysed.