This is exactly the problem that capitalism faces.  15% might be acheivable when leveraged with oil based fertilisers, machinery, automation and cheap labour inputs in the form of imports from low wage economies.  Put a value on topsoil, clean water and forests etc. and put this on "someone's" balance sheet and then calculate the real return, it's even less.  I'm not sure of the answer but it's obvious that 15% is unrealistic, and if that is earned "somewhere else" that's only because of oil.  If farming can't be profitable what are we going to eat?  The French tolerate low returns and compensate for it.  Is this nostalgia or acceptance of reality.

Very brave but true article David. Well done, but the banks will hate you for it.

To achieve that 15% return, land values for NZ$3.8 million would need to be written down by NZ$3.3 million or 87% to just NZ$0.5 million.

No government in their right mind would allow this to happen.  Perhaps a return of 5% , leading to a write down of NZ$1.1million ( 29%) ?

Farms valuations  should never have reached  the height around 3 years ago, that  quotable values, &  registered values , keenly thought they were doing people a favour including the business they received .   Banks had years of lending freely , then suddenly found that some farms were not giving the returns& farmers were unable to pay their debts.

The  only way a beef farm & sheep farm, can help themselves is to give a hand to the dairy grazing  opportunites. Though must admit that there are plenty doing that.

Or subdivide & sell , put the revenue in the banks.

My wife Jules and I leased our beef & sheep  farm out for 11 years , and semi retired into town.

Though keeping our help in where needed .  In the recent years we were receiving 69  thousand per year including GST on  350 acres approximately .

The lessees were required to put a certain amount of fertiliser on  each year.

We subdivided land off to make it less expensive for the potential buyers that finally purchased some of our property. Otherwise it would not have been non profitable for them & would have been out of a lot of peoples reach. Especially in the currrent climate of economics & lending.

Unless of course one has pure breed beef & or sheep, re South Island or some links with direct overseas buyers, to make some profit from the endeavour , tha average farmer is going now where .

Farms get put into trusts, etc , & the next generation is faced with how the goverment is seeing  the agricultural industry in years to come.

  What we have learnt from the farming experience is that people who get involved usually love the life style, & some pay dearly for that, never mind about the economics .

also alot of debt came from the last 4 years droughts

when farmers get back to 2000 levels it should lift profitably but it is odd that our second biggest export earner is being hung out to dry ,

Sheep and beef farms should be bought and sold on a stock unit basis (SU). The value should be determined by the net surplus ( before debt servicing and tax) multiplied by 10 years. So when most sheep and beef farms have a surplus of about $30-40 per stock unit wintered, then they should be worth $300-400 per SU. At the moment that would be a reduction in price of around 50%, back to where they were in 2001.

Some sheep or beef farms can be used for other things but their owners prefer to continue in hope the meat industry will change. Therefore some sheep farms could be dairy farms, At $6/7 milksolids some dairy farms were earning over 20% ROC, Return on Capital.

 My 70 year old accountant determined in his phD that farmers were going to be the wealthy ones. I am losing faith that the world is going to appreciate what farmers do, therefore I must change what and how I farm.

They aint making any more land. I believe that after we get a large increase in land values, it tends to go up in chunks, then commodity prices rise up to those land values.

The spin from these bean counters makes me laugh.

No mention of the never ending threats to our property rights because of ridiculous rules and regulations dreamed up by the shiny a..... bureauracts and self serving politicians.

Really, offshore investment is about securing food security, something the aussies are cottoning on to.

Why do the Chinese want to buy up our land?

Dairy land is their first cab of the rank. But I am certain they are also looking at Beef and Sheep land as well, and will haul the cheque books out soon.

Our problem with sheep and beef is that every other guy is ripping us of in the suppy chain. From NZ Meat processors, to shipping lines, and lastly Supermarkets......In the hay day of sheep and beef, farmer owned operatives managed and owned significant parts of this supply chain. Today only Dairy has retained this model and they have capitalised on it.

Beef and Sheep farmers need to unite, and they have two dog shows of ever achieving that now or in the future.

Could it be that Sheep & Beef Farmers (without too much debt) are in a better financial position than some Supermarkets.  

The Chinese want to buy our land because they know the world is going to have big trouble feeding its self especialy when the ets starts to bite with land going into trees right around the world we can't eat trees it is all about suring up supply of food

I feel all you who think you are paying a lot for food now prepare to pay more