Over a number of months/ maybe years time is grinding on most people's wallet- sadly. Bankruptcies will increase sharply soon, I think.

I think bankruptcies will decimate my industry, farming. I met with a real estate agent this afternoon,its not a bed of roses in the farming sector. Accounts are going months unpaid,wages are not even being paid in extreme cases.He has almost no buyers and know idea of what the market for farms is at in $$. Banks wish to sell but only at 5k an acre, wont let new buyers pay over 3k. The banks appear to have stopped issuing credit except for the capitalisation of debt. We are facing a crisis unseen in my life time and even my fathers. Sheep prices are high but the UK is crumbling and destroying the value of its currency

http://www.telegraph.co.uk/finance/economics/6006215/Pound-falls-ahead-o...

Im talking to friends who find the lack of reporting of the problems facing eastcoast farmers astounding. Its a giant debt trap and its been sprung. Dont underestimate the size of the problem or its effect on our exports.
If the country is borrowing money with the expectation that the rural sector will pay it off from future earnings they are deluded. On my farm we have had no rain for nearly a month my water tables are as low as they have been in 10 years. The feed situation is critical and fatal for many. My feed situation is dire and I only have half my normal stock. This mornings rural press carried a front page story on suicide and depression in rural communities,that says a lot. Then further in a story on the problems the climatic conditions are causing to the dairy industry. No feed poor condition stock, no money for feed payout inadequate.
It sickens me to read of the bullsh*t about house prices our export sector is being dismantled in front of our eyes,house prices will be the least of our problems.

AndrewJ, I went to a calf sale a couple of days ago, big friesian bulls were being snapped up by agents at a huge premium to send to hawkes Bay. It was a rort. Once those orders were filled, prices went from $120 down to $25. If only those farmers knew they were being done by their agents.
Apparently Dairy cows and heifers are being sent to the works flat out, as farmers cant afford to buy feed, they are reducing stock numbers and the works are paying the best price. Talking to a bloke at the sale who had travelled around a bit, he said feed in the cental to upper north island was extremely tight.
Economic weather report not good I think.
Last month, late July I was looking at colostrum tanks. Ok we are talking the very beginning of calving. The manager of the rural merchandise store told me he would do an exceptional deal, as he didnt want to be left with it. He was in panic mode and the season hadnt started. I went down the road looking at others, at the next store they had very little stuff in stock. Usually they are packed to the rafters for calving. The next store, the salesman wanted to regale stories of dairy hardship and bankruptcy.
Crikey, drystock farmers go for years with shite returns, dairy cant get through one.

I would not want to be a banker in rural NZ right now, especially if I were the sod who just a year or so ago was doing the rounds, encouraging farmers to take on more debt and expand their properties.

Andrewj Says:
"Farmers that have high debt levels and there are many and many are large,simply have no way to pay off debt. They never thought it would be a problem."

I dont get it, be it farmers, home owners, property investors, any sort of business....
How can they borrow such high (over 1/3 of their total capital value) get a return of say 10%, pay interest of 5 to 8 % and expect to buy groceries, let alone improve, or cover maintenance ..and survive?
To do so they may as well put their money on the roulette table and cross their fingers, and like they occassional gambler, they may strike lucky, but the odds are against it.

Steptoe
Farmers have 50 billion $ of debt to the main banks at 10% interest 5 billion of interest.
Fonterra want pay 5 billion to farmers this year. Gross agricultural income will be around the $16 billion. Debt is unevenly spread %30 of farmers such as Hubbard carry most.

The problem is this is the driver of the economy our biggest earner by a country mile.
Look at this comment from a real estate agent today on another thread

# Real Estate Agent Says:
August 12th, 2009 at 9:11 am

I suspect that anyone who has their house up for auction today will have called their salesperson and increased their reserve price and the buyers will simply increase their bids to compensate!

These items in this mornings Herald:

"Auckland house prices tipped to rocket"

Infometrics' predictions on Auckland median house prices
* 2009: $440,000
* 2010: $483,200
* 2011: $506,700
* 2012: $553,000

NZ median house prices
* 2009: $339,200
* 2010: $376,200
* 2011: $391,400
* 2012: $419,400

Steven Glucina, a Ponsonby real estate agent at LJ Hooker, said the market was very active. "I sold a two-bedroom do-up villa at 61 Pine Street, Balmoral under the hammer on Saturday for $679,000, which was $109,000 over the council valuation.

"The market in this area is red hot at the moment. I have seen over 1,000 buyers visiting open homes in Pine Street in the past 3 months. I have never been so busy in over 12 years in real estate!"

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10590127

I take it from this that debt is being added again to our economy. I suggest that it is a second tranche to the coming second great depression
this from Bill Bonner

The stock market crashed in '29. The market then bounced. After a few months almost everyone was persuaded that the "worst was over." But the worst was just beginning. It wasn't until 1932 that the stock market finally hit bottom. By then, it was beginning to seem like a depression...and only years later did economic historians tag it as a 'great' depression.

This depression is still wet behind the ears... We're still in the bounce phase. On Friday, the Dow went 113 points higher. And as the bounce continues, more and more investors will come to believe that stocks are in a new bull market and that the economy is back in growth mode.

Neither will be true.

With the average P/E earnings in the USA approaching 140 I suggest we have a long way to fall. Adding fuel to an already overheated property market so punters with obviously little or poor business sense can climb in is absurd and some how twisted.
Our local Plumber is laying of workers he has employed for over 20 years, he is one off hundreds of businesses doing the same. What will it take to destroy confidence in housing its now beyond my comprehension.

neil
thanks thats scary, as was this,

http://www.energybulletin.net/node/23259

Andrewj ..thinks for the figures, Doesnt look good ....I was just commenting how 'good traditional commonsense' business practises had been thrown out the door

Andrewj Says:
"second tranche to the coming second great depression
this from Bill Bonner

"The stock market crashed in "˜29. The market then bounced. After a few months almost everyone was persuaded that the "worst was over." But the worst was just beginning. It wasn't until 1932 that the stock market finally hit bottom. By then, it was beginning to seem like a depression"¦and only years later did economic historians tag it as a "˜great' depression."

That has been on the back of my mind for nearly 2 yrs now...Nevellie also did an article comparing 1873 and 1928 some time back, which then more or less confirmed my gut feelings..And a couple other articles/links with overlay time graphs that show similar likely possible trends...

And A recession does have a financial definition....Depression doesnt, it is more a description of the state of mind of the people, in retorospect.....inflation, unemployment, state cant afford to pay benefits/super etc to the extent it used to.

SteveL from the competition of course reliable-no. Bet you are pleased not to be farming through this, man its tough out there.
Look at China go
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6011674...

William
Its hard to advise on Calves. We have a massive shortage of stock and all are aware that when we get into a feed surplus situation its going to be crazy for a few years. The techno boys are particularly vulnerable. I say that if you can raise calves cheap and, if it rains and we get a good spring,if the dollar falls,if the US stimulus works,if the $ drops back to .40, if the works dont go broke,if we dont get an out break of Foot and mouth, I think you could do very nicely. Its just a matter of working out the risks, simple really.

Yep, Andrewj and William I bet its tough, I farmed in negative equity for a few years after drought in the late '90s. Its stink to have the bank breathing down your neck, but it does make you focus!.
On one of the rural bankers farm visits during the drought, he sugested the possibility of the place turing into a desert permanetly (global warming or something?). Less than 10 years later he's talking to me about dairy conversions!

William, have you considered rearing dairy heifers? By the time that they are r3yr ic cows they should be quite valuable as it will be apparent that the dairy production correction cull has over corrected.

Andrewj, I don't think a couple of ex-Bayleys agents jumping ship to Wrightsons to sort out that mess is going to make Bayleys stop selling rural realestate.

stevel
another good video

http://informationclearinghouse.info/article23240.htm

I belive there is only a tiny little bit of money chasing farms.. PGGWrightson make there money A. from finance and B. from real estate Baileys may get a bigger share of the market soon.

Cost $250k to get each of those agents over to PGG, plus some pretty tasty on going benefits for them, so no doubt PGG will be looking for some good results!.