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Zealand. Farming was seen as the backbone of the economy,
with sheep numbers growing exponentially. Families were
proud of their rural heritage, and much of the government
support focused on helping people establish farms through-
out the country. Subsidies were abundant, with many farmers
living off government hand-outs rather than aiming to create
wealth through their own endeavours.
Unfortunately, during the 1970s and 1980s new challenges
arose for New Zealand’s rural farming families. Farming
became less prosperous due to the country’s financial situa-
tion and the loss of some key export markets. On-farm costs
rose, returns fell, and yet land prices remained high.
To add to this in the early and mid 1980s, farmers were
faced with the sudden and unexpected removal of subsidies.
Until then nearly 40 per cent of the average New Zealand
sheep and beef farmer’s gross income came from government
subsidies. Farmers were used to the extra income and calcu-
lated the subsidy payments into their overall profit forecast. A
year later, almost all of these subsidies were removed. It was
a shock to the whole of New Zealand and as a result family
farmers lost a large part of their income and were left to their
own devices for keeping the farm viable.
You may think that this major policy change would have
destroyed the make-up of the family farm, but looking at the
current situation, the conclusion is that New Zealand farmers
have come through that experience stronger than ever. Left to
face the market, farmers and rural communities have contin-
ued to prosper and they are determined never again to be
dependent upon government hand-outs or subsidies.
Outside New Zealand, farmers in many countries have
been facing radical change and are coming under the pres-
sure of less support for farm production. In many cases
they have been confronted with the reduction or elimina-
tion of government subsidies while more recently there has
been a fall in commodity prices in the wake of the global
economic downturn. Farmers and their supporters fear for
the future of those who work on the land, their families, and
the communities in which they live. The fear of the long-
term destruction of the traditional family farm haunts many
farmers’ dreams.
Yet using New Zealand as an example, the truth is other-
wise. For family farming, there is life after subsidies. Indeed
life after subsidies is better than farming that is depend-
ent upon government hand-outs and reliance on others to
produce food. New Zealand has prospered under a subsidy-
free regime, with families becoming smarter in the way they
operate and communities adjusting to changing market
demands. The removal of farm subsidies in New Zealand
has given birth to a vibrant, diversified and growing rural
economy. New Zealand’s experience over the last 30 years
has thoroughly debunked the myth that the farming sector
and the environment cannot remain healthy and prosper
without government subsidies.
The removal of subsidies has proven to be a catalyst for
productivity gains. Such improvements in productivity are
readily apparent at the level of the individual family farm.
Lambing percentages, lamb export slaughter weight and milk
fat processed per cow have all increased. The diversification
of land use prompted by the removal of subsidies has been
beneficial for farmers and has increased the size and scope of
the New Zealand agricultural sector as new innovative prod-
ucts have been developed.
Farmers are now farming better than ever. They are much
more conscious that their activities must make good busi-
ness sense. No longer are they chasing subsidies, pursuing
maximum production at any cost. Farmers maintain cost
structures that reflect the real earning capacity of their farms.
They invest in protecting their environment and the value of
their land is based on its earning capacity in the market.
Good management of the environment is an integral part of
sustainable agricultural practice by farmers. With the removal
of subsidies, agricultural practice is now driven by the demands
of the market and by consumers. The removal of subsidies
has also broadened the base of family farming to encompass
activities, such as rural tourism, that bring management of the
landscape and the rural environment to the fore.
The New Zealand agribusiness sector has become far more
professional and innovative. As a result, it is more efficient
at providing the world with top quality foodstuffs and fibres.
The farm servicing sectors have also become more efficient as
farmers have insisted on greater value for money.
New Zealand farmers are now more in charge of their
own destiny and no longer at the mercy of government
price or subsidy fixing. Farmers and their families have
proved far more resilient and adaptive than was expected
when subsidies were first removed. Early predictions of
huge numbers of farmers walking off their land did not
occur. Official predictions were that 8,000 farms would fail,
but in the end only about 800, or 1 per cent of the total
number, faced forced sales.
During the transition, many family farmers supplemented their
incomes. As with the first settlers, often a spouse worked in town
Image: Federated Farmers of New Zealand
Farming in New Zealand extends across family generations
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