Why more townies should spend an occasional day on a farm.

Listener: 17 April, 2010.

Keywords: Business & Finance;

Occasionally a townie should go to a field day on farming, as I did recently at Glenside Station, near Gladstone in the Wairarapa. Covering 1125ha and carrying about 10,000 stock units – mainly sheep and beef but also deer – it is one of three hill farms operated by Taratahi Agricultural Training Centre, a leading agricultural training provider. As well as gaining NZQA qualifications, its graduates are made work-ready – to start immediately as effective agricultural workers – which means they need a lot of hands-on experience. That’s why the training farms have to be commercial operations.

In the morning, I and about 40 men and women from farms were shown over Glenside. On a windy hill they discussed fertilisers, stock diseases and stock management. Farm stock manager Gerald Cox described his complex decisions, such as rearranging his flocks on the pastures, weekly or even daily. (For instance, ewes with triplets, ewes with twins and ewes with singles are grazed separately at lambing.)

One view of farms –  and farmers – is that they’re simpler than what goes on in the cities. To the contrary, I was struck how Cox and the others were making more complicated decisions than the managers I meet on factory visits (yes, I do them, too), with the one exception that their stock are not subject to the Employment Relations Act.

Development economics tends to think of farming as a simple activity and of manufacturing as sophisticated, so industrialisation must be a good thing. Consider “complexly transformed products” for export. New Zealand does not do well internationally on this measure. But it treats farm output as simple, making no allowance for the complexity of transforming grass into meat (and the field day did not even get to a freezing works).

The managers’ difficulties were illustrated by some the abundance of grass in some pastures, which was getting long and rank. The Wairarapa has just had three years of drought, and stock levels have been cut back. With the rain, the grass was getting away, but there were not enough stock to eat it all. (Apparently, feeding sheep too much stresses them – humans take note.)

In the afternoon there were lectures at the Gladstone Sports Complex. (Lectures? I told you farming was a very sophisticated business.) I’ll skip the vet who talked about things that would convert the readers of a family journal to vegetarianism.

There was also a short presentation from Sam Lewis, chairman of AFFCO, whose meatworks buys stock for processing and exporting. I got the impression the farmers were not nearly as knowledgeable about what happens on the other side of the farmgate, but Lewis, a farmer himself, handled their questions well and genially.

Then there were the accounts. It turns out the financial state of post-drought Wairarapa farms is not healthy. One might have thought that with the rain, it would be all go. But the farmers were rebuilding their flocks and that takes cash (or forgoing cash by not selling stock). Chris Garland, director of local agricultural consultancy Baker and Associates, reported on the farms his firm is advising, and – gulp – their net cash flows are still negative, and are still expected to be next season, even if the rains continue.

The cash flow is measured as revenue after expenses and family drawings. I suppose it means the farms are still investing, increasing their stock units and fertiliser application. (There was no mention of big investment developments.) Yet in five of the six reported years, the farms ran cash deficits. No doubt farmers get their return from capital gains when they sell, but the incoming farmer starts with the offsetting capital loss. Can this go on for ever? Steins Law says if it can’t, it won’t.

Back in town, it’s easy to forget the farmers’ problems, as we guzzle imports partly funded by their export success. But should we? Take, for example, the Tax Working Group, which did not have a single farm-oriented specialist on it. Would it have come to quite the same conclusions if its members occasionally spent a day with farmers?