In 1996, at the annual grassland conference in Oamaru, I presented a paper that examined the economic and productivity trends in New Zealand agriculture over the previous 50 years. At that time, there had been a steady reduction in the real prices received for our agricultural products for the previous 50 years, our animal productivity on sheep and beef farms had remained relatively static over the same period, while dairy cow productivity had been slowly, but steadily rising. The implication for farmers, and agriculture in general, was to reinforce the message that in order to retain profitability, one had to either: • Get bigger, as in scale • Get more productive, as in increased output per animal, or per hectare (while restraining cost of inputs) • Change to a higher value output (eg. chilled meat vs. frozen meat) In fact, over the past 10 years, our farmers, and the agricultural industry, have simultaneously achieved all three. The price received by New Zealand farmers for their lamb has increased 89% since the late 1980s, or 74% after taking away the benefit from exchange rate movements, at a time when the international price for frozen lamb carcases has dropped 12%. Our price for beef has dropped 5% while the international price has dropped 45%, and dairy prices have remained static during a time when butter prices have dropped 37%, all in real terms (Table 1). Crossbred wool, with a 54% drop, and wheat, with a 42% drop, over the same time period, has not feared so well. This is a remarkable achievement for lamb, because of the scale of the price increase, and also for dairy, because it occurred in tandem with a massive (108%) increase in product volume in the same 1990 to 2003 period. Also, we have experienced productivity gains unsurpassed in the history of New Zealand farming, particularly in sheep farming, with lambing percentage increasing 26% and lamb carcass weights 20%, and wool weight per head by 10% since 1990 (Figures 1 and 2). These increases have resulted in total lamb production increasing 10%, despite a 32% decrease in the national sheep flock since 1990. Milksolids per cow has increased 21% over the same time period, as well as a 9% increase in cow stocking rate. At the same time, farms have continued to decrease in number, and increase in scale. The best example of this is in the dairy industry where the average herd size has increased 70% (Figure 3), and there are numerous examples of multiple unit ownership.
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