Results from a 2015 survey of NZ farm managers/owners covering debt and related issues designed to explore the impact of debt

Abstract

With increasing debt levels across primary production businesses it is important to have contemporary knowledge of the levels of debt on NZ farms, including both past and present levels, but more importantly, have information on the difficulties debt levels might be creating and the human factors associated with these debt levels. This report provides information and data from a random stratified survey across all farm types in all regions of New Zealand designed to answer the questions highlighted. In general the data is presented rather than deeply analysed as this will occur in a series of research articles to follow. The information contained in the report is available for everyone with an interest in debt matters to allow them to further analyse situations deemed to be important. The information was obtained through an eight page questionnaire sent out to the sample which was stratified by farm type, farm area, and region. The strata percentages of the total sample of nearly 2300 farmers were based on the population percentages. The response rate was 19% with the responses not being significantly different from the sampled percentages. The data is contained in 133 tables which divide the information according to farm type, total farm capital groupings, debt levels, and equity groups in most cases, but also by farmer age, education level and exam grades in other cases. Manager gender divisions are also presented where appropriate as well as labour unit level groupings. It is clear debt levels vary widely with some farms having zero debt, but also some have small equity. Most farms are held in trusts and partnerships of some kind, though sole proprietorship is also important. Most debt is through fixed mortgages with interest only payments occurring. In real terms capital gains are virtually non-existent, and the return on capital hovers round 3% making debt reduction difficult, though it is occurring as shown by the changing equity levels. Anxiety over debt issues, and many other issues, is also prevalent. Information on the farmers’ objectives is also presented showing farmers seek many outcomes from their farms other than financial. If the latter was the main objective many farmers would sell up. Also presented is data on farmers’ management style as this could well impact on debt levels and repayments. The full list of questions asked and information obtained is listed in the appendix copy of the questionnaire.