Path to farm ownership under pressure

A new study led by AgResearch aims to shine a light on the changing face of dairy farm ownership and management in New Zealand.

AgResearch scientist and project head Liz Dooley says the two-year joint study with Massey University will quantify anecdotal evidence about changing patterns of farm ownership and management.

"[It will] identify for the industry what structures are out there, and to what extent and why people are in them," Dooley says. "And what are the barriers, constraints, strengths and weaknesses of the different structures."

Growth in equity partnerships, the emergence of "mega" farms, pressures on the sharemilking system, land cost and the growth of career paths that don't end in farm ownership have all been identified as areas driving industry change.

Four focus groups in October, two in either island, will bring together industry people, farm managers, sharemilkers, owner operators and equity partners to discuss the issues.

These will be followed by a wider survey completed by next May and case studies by May 2007.

"Once upon a time the traditional step was farm worker, maybe manager, share milker [to] farm owner," Dooley said.

She says prospective owners now need more cows to buy land than previous generations did, making the goal of farm ownership harder to achieve. The result has been the rise of alternative routes to ownership such as equity partnership.

Joy Thomas, Federated Farmers chairwoman Rotorua Taupo sharemilkers' section, says although equity partnerships have "taken off" during the last five years, sharemilking is still the best route to ownership

"As part of Feds I've noticed that a lot of those equity partnerships have been coming unstuck as well," Thomas said.

"Realistically if you're going to own a farm then you have to go into an equity partnership with the goal that in five years you'll be the sole owner of it." Thomas says investors who haven't agreed a date by which they become owners can end up backing out of equity partnerships.

She adds although alternative routes to ownership do exist, there is a "distinct shortage" of people choosing a career in farming.

Qualified students who join large farming operations can find their scope limited. "They become disillusioned and farming becomes a last choice of career".

Thomas says the project could be useful for people "that are ready to take the next step [towards ownership] but aren't quite sure if they can afford the risk, or manage the risk, and go into farm ownership."

Dooley says the Dairy Insight funded project is an opportunity to discover the reality of farm ownership and management structures but also for all parties to share experiences and brainstorm about the future.

"I think it's important to understand what's happening out there and where the future of the industry is going," she says. "What's the dairy industry going to look like in 10 [to] 20 years time?

"It's not going to look like it is today."