A study of hill country development on Horowhenua sheep farms : a thesis presented in partial fulfilment of the requirements for the degree of Master of Agricultural Science in Agricultural Economics and Farm Management at Massey University

a copy to be downloaded by an individual for the purpose of research and

private study only. The thesis may not be reproduced elsewhere without

the permission of the Author.

A STT.WY OF

HILL COUNTRY DEVELOPi'rENT ON HOROHHENUA

S BEEP FARJ:.IS

A thesis presented in ^partial fulfilment of the requirements for the

Degree of Master of Agricultural Science

in Ag-ricultural Economics and _Farm Management

at Massey University.

RONALD ED1vARD ^HALFOHD 1 971

The author wishes to thank Professor A.Ro ^Fra m^{pton i'or}

his advice and encouragement during the study, The author also benefited from discussions with Messrs X. Watson and A o \vard.

Programming assistance given by i'lessrs J. Gardner and

,,r, Pa}'ne is gratei'ull y acknohrledgecl.

Special thanks are due to Nr Te Sewell who encouraged the :. ,. (;hor to undertake this s tucly, and to the farmers in the Horowhenua district for their co-operation during the ^farm

surveys.

The support of the Department of Agriculture who continued to pay the author1s salary and 1d10 met tbe ^{full cotit of the}

farm su^rveys ^{is also} acknowledged.

Finally thanks are due to Hrs Alcock , .. -ho typed thi.s

thesis.

CHAPTER 1 1 ^• 1 1 ^• 2 1 . 3

CHAPTER 2

2 . 1 2.2 2 . � 2. 3 . 1 2. 3 . 2

CONTENTS

INTRODUCTI O N AND THESIS GUIDE Introduction

Obje c t ives o f t he S tudy The s i s Gui de

THE HOHO\vHENUA DISTRICT AND HILL CO^UNTRY DEVELOPMENT STUDIES

Int r o du c t i on

Loca^tioⁿ

Phy s i c al F ea ture s Topography

Soi^{l Ty}pes

2 . 3. 2 , 1 Main So il Types

2.3 . 3 2 . �-

2 . � ^• 1 2 . 4 . 2 2.4 . 3 2 . 4 . 4 2 . 5 2 . 6 2 . 7

2.8

2 . 9

2 . 1 0 2 . ·t 1

Climat e

Auxiliary Serv i c e s

R o a d s , Communi c a t i on s a n d Transport Serv i c e s Agri c ul tural C on t ra c t o rs

Fer t i li s er W o rks

Freezing Works and Saley^ar^ds Farm Ext en. s i on Servi ces

Lend ing Ins t i t u t i ons

Slmllllary

Hill Coun try Development Studies

The P ro fi tabi l i ty of Development Programmes

Ex po s t e S tudies

Ex ante S tudies

Combined ^Ex po s te and ^Ex ante S tudies

The Generalised Model The Approach Used

Page

17

1 7 20

2 2

2 2 2 2 23 23

27 27

2 9 2 9 29

30 3 1

32 3 2 35 35 3 8 3 8 3 9 4 0

2 . 1 2

CHAPTER J

J. 1 J.2

J. 2 . 1 J.2.2 J.J

J. J. 1 J . J . 2 J.J.J J . J . 4 J.J . 5 J ^.J^.6 J.4

J. 5

J^.5^. 1 J.5. 2

CHAPTER L�

4 . 1 4.2

4^.J 4. 4 4- . 5 4 . 6 4 . 7 4 . 7 . 1 4 . 8 ,4 . 9

S u^mm^ar^y

PROCEDURES USED

4J

I ntroduc t i on ⁴⁶

Farm S^{urveys 46}

Descriptive or Enumerative Surveys 4 7

Iⁿt^erview or Management Surveys 47

Horowhenua ^{Hill C} om1. try Surveys 5 0

The ^{Survey Area} 5 0

Identification of Survey Farms 5 0

Selection of Survey Farms 5 1

The ^Survey Me thod 51

In^tervi^{ew Tech}n^{ique and} Experiences 54

The Survey Data 5 6

The Value of Representative Farms as a Rese^arch 5 6

Technique.

Financial Analysis of Development Progranmws 5 8

Gardner's Financial Evaluation Program

Program Limitations

THE RANDON SURVEY FAID1S

Introduction

F arm S ize T^opogr^aph^y

Land U s e

Drainage and Water S upply

Bui ldings

Tenure of F arms

Management o f the Survey F arms F arm Owners

F arm Labour

59 6 1

65 65 66 6 7 6 7 6 8 6 9 6 9 6 9 7 1

h. 1 0 4. 1 1 h. 1 2 LJ. 1 3

h ^< 1 4

Lf., 1 4, ·1

4, 1 5 4 . 1 5.1

L�, 1 5, 2

h^.1₅.3 4. 1 5.4 4.15.5 4. 1 5 . 6 4.15 . 7 4.15.8 1L15 . 9

4. 1 6 4,1 6 . 1 4, 1 6. 2 4,1 6.3 4.16,4 4. 1 6.5 4.1 6 . 6 4.16. 7 L�,16,8 4. 1 7 CHAPTER

5. ¹

5

Stocking Rates Stock Performance

Page 73 77 Recent Prodllction. Increases on Random Survey _{Farms 79}

Future Production 8 1

Attitudes to Developm0nt 82

Adjustments Made _to Orfset the Cost Price Squeeze 85

Stock Nanagement 8 6

Breeding Ewes 8 6

Discussion 8 9

Hogget Management 92

Discussion 93

Wethers

94

Discussion ₉₅

Breeding Cows

95

Discussion

97

Dry Cattle 98

Pasture ?-Ianagement 98

Fertiliser Practices

99

Discussion 1 01

Subdivision 103

Discussion 1 04

Oversowing and Pas t^ure Improvement 1 05

Reversion 1 05

11' eed C ontr o l 1 0 6

P a s ture Pes ts 1 08

Swnmary 10 9

THE PURPOSIVE SURVEY

Introdu c t i on 1 1 2

5.2 5 . 2 . 1 5.2.2 5. 2.3 5.3 5 . 3' 1 5.3.2 5,4 5. _'-+. 1 5 . 4.2 5·5

5.5.2 5. 6

5 . 6. 1 5.6.2 5. 7

CHAPTER 6

6' 1 6.2 6 . 2. 1 6 . 2 . 2 6.2 . 3 6 . 2.4 6.2.5 6.2.6 6.2 . 7

C ase Farm A

The Deve l o pment Programme Fa ctors A�� e cting Devel opmen t C o n c lus i on s

C ase F arm D

The Devel o pmen t P lm1 C o n c lusi ons

Ca s e Farm C

The Devel opment Progranune C o n c lu s i on s

C a s e Farm D

The Deve l opr!">ent Programme C on c lu s i on s

Cas e Farm E - Rand o m Survey Farm I\ umber 20.

The D eve l o pment Pr o gramme C o n c lusi ons

Swmn ary

THE FEASIBILITY OF FUTurt.E DEVELOPHEST FOR REPHESESTATIVE F.t-'JU'I F.

In t r odu ct i o n

Deve l opm^ent Pr ogra1mne As s wnpt^{i o}n^s

P r i ce s

C o s t s

Taxa t i on

Live s to ck S t andard Values P e r s onal Exemp ti ons

L i fe Insurance P remiums D eve lopment Exemp t i ons

11 2

11 3 1 1 6 1 1 6

1 1 ₇

1 1 7 11 9

1 20

1 21 124 125 12 6 127

1 28

1 28

1 31 1 31

134 135 135 136 137 139 139 139 139

6.2. 8 6.3 6. 3 ^{• .} ,

6.3.2 6. 4 6. 4. 1 6. 4.2 6. 4.3

P ers ona l Draw-ings Repr esen t a t iv e Farm F D e s cr ip t i on o � t he Farm Devel opmen t PrograJJIDle ^One Finan c i al Eva lua t i on

Base Year Da t a Pr o duc t i on D a t a

The PI1.ysical Deve l opment Years

P age

140 1 40

1 5 1

6.�-3, 1 The D e b t Fre e Situa t i on

156 1 58 1 59 159 6, 4. 3t 2 The In�l uen ce o� Farm Indeb t e dne s s 1 63 6,4,4 The P o s t D ev e l opment Si tuati on 1 65 6. 4.5 The Pro � i tabi l i ty o� the D evelopmen t Progranwe 1 65 6.4. 5, 1 Eva lua t i on Und er Conditi o n A 1 67 6. L�.5. 2 Eva lu at i on Under Condi t i on B

6.L�. 6 6.4. 7 6. 5 6. 6 6. 6. 1 6. 6. 2 6. 6.3 6 . 6.4 6. 6.5 6 . 6 . 6 6. 7 6. 8 6. 8. 1 6.8.2

The E��e c t o� the Ferti liser Subs i dy 172

S mrunary ·1 7 5

Deve l opmen t Progranune T11·o 1 7 7

F inan c ia l Eva lua t i on 1 8 1

Produc t i on Da t a 1 8 1

Tlle Physical D ev e l opment Y e ar s 182

The P o s t D eve l opment S i tua t i on 184

The P r o�i t abi l i ty o� the Dev e l opmen t Pro gramme 1 86

The Ef� e c t o� t h e F er t i l i s er Subs i dy 186

Summary 1 8 7

D eve l opment Progran®e Thr e e 1 89

Finan c i a l Evalua t i on 192

Produ c t ion Da t a 192

The P hy s i c a l D ev e l opment Y e ars 1 95

6.8.3 6.8.4 6.8.5 6.8.6

C HAPTEH. 7

7-3 7.4 7. 4. 1 7.4.2 7.4.3 7.4.4 7.4.5 7.4.6 7.4.7 7-5 7.6

The P o s t Deve l o pment Situation 196

The Profitability o:f the Development Programme 198

The Effect of the F^ertili^{ser Subsidy} 200

Swmnary 200

Conclusion 201

THE FK�.SIDILITY OF FUTuRE DEVELOP:l-JEXT FOR

REPRESEXTATIVE FARN G AND REPRESEX1:A.TIVE

FAf0I A.

Representative Farm G 202

Description of the F a:cm 202

The Development Programme 204

F inanc i al ^Eva^.lu^{a tion} 207

Base Year Data 207

Production Da-ta 211

The Physical Development Years 211

The Post Development Situation 214

The Pro^fitability of the Development Progranm1e 21 !.j.

The E:f fec t of the Fertiliser ^Subsidy 217

Sununary 21 7

Representative F arm A 218

The Development Pr ogramm e 219

F inan c i a l Eva lu a t i on 221

Base Ye ar Data 221

Pr o du c t i on D a t a 223

The P hys i c a l D ev e l opment Y e ar s 224

The P o s t D eve l o pment S itua t i on 225

The Pr o f i t ab i l i ty o f the Deve lopment Pr o gr amm e 227

The Effe c t o f the F er t i l i s er Sub s i dy 229

Swmn ary 229

7.8

CHA^PTER 8

8 •. 1

8.2

'8. 2. 1

8.2.2

8.3 8' 3' 1

8.3.2 8,J,3

8 . l.j.

8.5 8,6

Page

Conclusions 230

TilE POTENTIAL FOR, AND J.i'EASIBILITY OF 1 INCREASED

PRO DUCTI ON IN THE HOROivHENUA ^{AREA . •}

In troduction 232

Potential Stockine; R^a

t

es on IIorowhenua Hill

Country. 232

Po tential Increases in Stock Nwnbers 235

Inputs Required to Achieve Production Increases 236 The Feasibility of Increasing Production. 24 0

Undeveloped Hill C oru1. try Units 24 ·1

The Small Hill Country Property 242

The 1Adequate Income' Farms

The Likelihood of Po^tential Production Increases244

Being Achieved.

The Alternatives to Development Conclusion

APPE.l'\DICES

A Letter Sent to Survey Fetrmcrs

B BreedinG Co1v Heconcilio.tion l>rograrn

C A :-.lethod of Reducing tl1e Bo.se Year Post Tax Cash Surplus in Gardncr1s ^Proc;ram.

24 8

D Gross i'largins For Breeding· El,·es and Br

e

^{eding Cm,·s on}

Horowhenua HiLL Country.

E The Cost of Cleari^ng Weeds on the Horowhenua Hill Cow1. try.

F The Present Value Measure of Profitability

G Supplementary Evaluation Data for Representative Farm F.

H Supplementary Evalu^at^{ion Data for} Representative Farm G,

I Supplementary Evaluation Da^{ta for} Representative Farm Ao

BIBLIOGRAPHY

Tab l e

2. 1

4. 1

4. 2 4 . J

4 . 4 4 . 5

4 . 6 4 . 7

l.j ^{. •} 8 4 . 9

4 . 1 0

5 . 1

5 . 2 5. J 5 . 4

5 . 5 5 . 6

5 . 7

5 . 8

5 . 9

6. 1

LI ST OF TABLES

Clim at i c Data ^{For T110} Ha j or T o,,·ns in th e

Sur·v-ey A rea.

Siz e ^and Topography of Random Farms Land Use on Random Surv ey Farms

Tenure and Respons ibility i' o r H anagem ent o f

Random Survey Farms.

A ge Distribution o f S^urve^{y Farm}e^rs

Conversion Coefficients For Sto ck Wint e^re^d

B r e e ding St ook on R andom Survey Farms 3 1 . ^{J .} 69 S t o cking Rat e s o^{n Ra}n^do^{m Su}r^vey Farms 3 1 . 6 . 69 S t o ck Performance on Random Farms

R e c ent Pro duc t i on In creas es on Random S^urv^ey

F arms.

Page 28

66 6 8 7 0 70

75

?6 78 80

Surv ey Farms 1d ^th Reg-ul ar Topdress ing 1 00

Programmes,

C as e ^{Farm A - Land Devel}o^pment P r o granun e and 1 1 4 St ocking R a t e Increas e .

C a s e ^{Farm B -} Development C o s t o f Tauhinu ^Land 1 1 8

C a s e ^Farm ^B - Total Development C o s t 1 '1 9 C a s e ^Farm C - St o ck I n c rease s Achieved by 1 22

S^ubdivision .

C a s e ^Farm C ^{- Land} D eve lopm ent P r ogramm e and 1 2J St ocking R a t e Increas es .

C as e Farm ^{D -} I ncreas e s in S t o cking R a t e 1 2 8 A s s o c i at e d wi th Devel opm ent .

C as e Farm E - Land Deve l opm ent and S t o cking 1 2 9 Rate .

C a s e Farm E - The Effe c t s o f Doubling S t o cking 1 JO Rate on St o ck P erformanc e .

C as e Farm E - S t o ck P erforman c e A ft e r S t o cking 1 JO Rate I ncre a s e s .

P ri ce As sump t i ons 1 J 8

ble

6.2 6.3

6, L�

6.5 6,6 6.7 6,8 6.9 6. 1 0 6, 1 1

6. 1 2 6. 13 6, 1 L�

6. 15

6.16 6, 1 7

6. 1 8 6.19 6.20 6, 2 1 6.22

6.23 6. 24

Livestock Standard Value s 140

Repres en ta ti ve Farm F ^- Deve1opment Progranune 149

One.

Programme One - Stock Reconci1iation 1 50

Stock Performance Data 152

Programme One ^- Deve1opment Costs 1 53

Interest and P r^incipa1 Repayments 155

Programme One - ^{J3as e Yea}r Data 1 57

Progranm1e One - Pr<···U.ction Data 1 60

PrograJru11e One - Financial Data for the Debt 1 62

Free Situation.

Programme One - The Effect of' Farm Indebtedness 161+

on Overdraft Requirements During Development.

Programme One - Post Development Sunnnary 165

Programme.One - Prof'itabi1ity Under ^Condition A 168

Programme One - P rof'itability Under Condition B 169

Programme One - The Ef'f'ect of' the Ferti1iser 173

Subsidy on Aru1.ual Overdraft Require^ments,

Programme One - The Ef'f'oct of the Fertiliser 176

Subsidy on the Profitability of' Development.

Repres enta ti ve ^{Farm F -} Development Prograrmne 1 80

1'1\TQ ^<

Progranune T'w - Stack Reconci1ia tion 1 81

De^velopmeⁿt ^Cost s 1 82

P^rograrmne Two - Production Data 1 83

P r ograrmne Two - F inan c i al Data for the Debt 184 Free Situation.

P rogramme Two - The Effe c t o f' Farm Indebt edne s s 1 85 on Overdraf t R equirements During Deve l opmen t .

P rogramme T1vo - P o s t Deve lo pment Sununary 185 Programme T1vo - P r o fitabi l i ty Und e r C ondi t i on A 1 87

Table

6 . 25 6 . 26

6 . 27

6. 2 8

6.29

6. JO 6' 31

6 . 32 6. 33

6. Jli.

P^{ag e}

Programme T\w - Pro f i tabil i ty Under Cond i t i on B 1 88

Reprcsentati...-c Farm F ^- Development Programme 192 Three.

Progran®e Three - S t o ck R e conc i li^{ation 193} Pr oG'rarnme Three - Development Costs 1 93 ProGramme Three - Product i on D<lta 1 9�

P^ro c;^ranun^e Three ^- Financial Da ta f o r the Deb t 196 Free Si^tu^atⁱon^,

Programne Three - The E�f e c t of Farm Indebted- 197 ne s s on Overdraft Requirements During

Development.

Programme Three - Post Development Swmnary ¹⁹⁷ Progranm1e Three - Profitability Under Cond ition 1 98

A ,

Programn^e Three - Profitability Cnder ^Condition 199

B.

Representative Farm G ^{- The Devel}o^pmen^t 208 Programme.

Rep^rese^ntativ^e Farm ^{G -} S t o ck Reconc i l ia tion 20 9 Represen tative Farm G ^- Development C o s t s 210 Represen tat ive Yarm G ^- Base Year Da ta 2·10 Representative Farm G Pro duct i on Da ta

Representative Farm G ^- F inan c i al Data For the Debt Free Situat io^n.

Representative Farm G - The Eff e ct o f Farm InclebtecLYJ.ess on Overdraft Requirements

Dur ing Deve l opment.

Repr e s entat ive Farm G - P o s t D ev elopm e n t SUllLmary,

Repre sen ta t i v e Farm G ^- The P rofi tabi l i ty o f

D ev elopment Unde r C ondi t i on ^{A .}

R e pr e s enta t i v e Farm G ^- The Profi tab i l i ty ^of

D e v e l opmen t Und e r C ondi t i on ^B.

21 2

2 1 3

213

215 215 21 6

7 . 1 1

7 . 1 2 7 . 1 J

7 . 1 5 7 . 1 6

7. 1 7

7 . 1 8

R e pr e s e n tative Farm A ^- The D e v e lopm e n t Progrrumne .

Repres e nta tive Farm ^A

Represe nta tive Farm A Repre senta tive Farm A l1epre s e ntative Farm A

Representative Farm A Debt Free Si tuation.

S t ock Reconcilia tion D e v e lopment Costs Base Year Data Produc tion Data

Financial Data For thB

Repres e n tati^ve Farm A - The Effec t of Farm Indeb tedn e ss on Ov erdraft Hequir e ment s During D e v e lopmen t.

Repr e s e ntative Farm A - Post De velopment

S UIIUllCJ_ ry ^•

Re presentative Farnt A - Profitability of the

Developmen t Programme .

C . 1 Ac tual Comput e r Printout

C , 2 Hand Dudceted Compari son of Data in C . 1 E.1 Land D e velopmen t Costs

G , 1 Progranune One - Annual Overdra:C t Requirements

G.2

and In ter e st Charges For Various Equi ty

Levels.

Progranune One Po s t D e velopm e n t D ata

G. J Programme Two - Annual Ov erdraft R e quire ments

G , 4

and In terest Charges For Differ ent Equit y L e ve ls.

Progranune Tlvo Po s t Development ^Data

G, 5 PrograiiUlle Tlvo - The Effe c t o f the Ferti l i s e r Subs i dy ^on Annual Overdraft Requirements . G, 6 Pro granune Two - The Effe c t o f the Fert i li s e r

Subs i dy on the P r o fi tabil i ty o f Development . G,7 Pro granune Thre e - Annual O verdraft Requirements

and I n t e re s t C harge s For Various Equi ty Leve ls .

G, 8 P rogranune Three - P o s t Deve l o pment Data

2 21 2 2 2 2 2 2

2 23 2 24

2 25

2 2 6 2 2 6 2 2 8

Table

G, 1 0

H. 1

H,2

Programme Three - The Effect of the Fertiliser Subsidy on Annual Overdraft Requirements.

The Effect of the Fertiliser Subsidy on the Profitability of Development,

Represen ta ti ve Farm G ^- Am1.ual Overdraft Requirements and Interest Charges For Various Equity Levels,

Representative Farm G Post Development Data H. J Representative Farm G The Ef'fect of the

Fertiliser Subsidy on Annual Overdraft Requirements.

H.4 Representative Farm G - The Effect of the Fertiliser Subsidy on the Profitability of Development.

I. 1 Represen ta ti ve Farm A - Annual Overdraft

I,2

Requirements and Interest Charges For Different Equity Levels.

Representative Farm A Post Development Data I,J Representative Farm A The Effect of the

Fertiliser Subsidy on Annual 0Yerdraft Requirements.

I,4 Representative Farm A - The Effect of the Fertiliser Subsidy on the Profitability of Development.

Figure

2 . 1 Loco.tion of the Survey Area

2.2 Hajor Landforms of the Survey Area

2.3 HoroKhenua Hill Country Soil Types

2.4 _Rainfall Distribution

3. 1 Distribution of' Survey Farms

6.1 The Ef:fect of Investing Income in F arm Development

Between Pages

22

<J..l"ld

²³

23 and 2!j.

25 and 26 26 and 27 52 and 53 168

and 169