Low cost farm system recession durable

If this is a recession, I kind of like it, says Gisborne farm consultant Peter Andrew. The AgFirst consultant says the low cost system Gisborne sheep and beef farmers run bodes well for them to come through the current recession in good shape reports Country-wide. "In our district we have a low level of supplement feeding, we have large farms, and a pretty healthy environment for stock growing. All of these are critical to have a low cost of production farming future." Andrews is optimistic about the current year, which looks much more financially healthy than last year when AgFirst database figures showed an estimated 12% of Gisborne farmers made a financial loss. The average Gisborne farmer in the year to June 2008 only made a worrying $98/ha before debt servicing. The number of farmers with a negative economic farm surplus was three times that of previous years. They can't stay in business, he says. The interesting thing is that the district average farm size is 1995ha, with 1426ha effective." While the top 10% of farms measured on financial performance were quite large at an average of 1060ha, some larger farms definitely struggle to be as profitable as some of the smaller ones, he says. There's a definite trend towards farms amalgamating and getting larger, with neighbours buying up property. A few years ago the district average was only about 900 effective hectare. "Even though the last few years profit levels are lower than where we would want them, 85% of people in the district are making a profit, covering their costs and paying their debts off. That is a pretty healthy picture given where a lot of businesses have gone in the last little while." He's picked a few recent trends. "What is emerging is the person who probably has quite well fed stock, and maybe has their foot off accelerator a touch as far as stocking rate." They don't feed out supplements and don't have animal health issues. They are not in top of the class for production and gross income but they are in the top 25%. They have relaxed healthy stock which are performing, and not costing a great deal to get there. These farms are sustainable because they are fronting up year after year in the analysis and doing well, he says. "It's not happening with people who are very highly stocked." Stocking rates for average farmers are 9.0su/ha, for the top 10%, it is 9.5su/ha.