“Live it and love it” x factor in farm success

Opponents to foreign investment in farmland are concerned that too few farms will be left in New Zealand ownership.

No-one has defined how much is too much and for some any farm land in foreign ownership is too much.

But Finance Minister Bill English says the owner-operator model is likely to be the one which continues to succeed here:

Large-scale local and foreign corporate farm owners soon realised they had to ‘live it and love it’ in order to make any money out of farming in New Zealand, English told the Victoria University-Peking University Conference on Contemporary China in Wellington. . .

. . . Speaking to media after his speech, English said New Zealand had experienced waves of anxiety about foreign ownership of Kiwi farms.

“They come and go. At one stage the Japanese were going to buy all our farms, then the Indonesians were going to buy all our farms, and both overseas and local corporate owners have never really succeeded in making very large farm operations viable,” English said.

“So while the Crafar farms have been high profile, if you look back over thirty or forty years, large scale farm ownership often fixes itself because the owners find that they can’t do as well as the owner-operator model,” he said.

“I think the owner-operator [model] is how New Zealanders see their agricultural industry based.”

Rabobank in Australia found that $10 to $13 million dollar farms were the most profitable and I wouldn’t be surprised if the same applied here.

These are larger family farms. Smaller ones lack economies of scale and bigger corporate ones tend to have problems over governance and management and/or take a lot of money to make money.

Landcorp is an example of the latter. It has a good record for animal welfare, environmental practices, staff training and retention but it makes a very small – about 2% – return on capital.

We’ve got several dairy syndicates in our area in which investors have made little money and some in which they’ve lost lots.

Family farms aren’t all successful, the Bell curve operates in farming too, there are good, bad and in between ones for all models. But most farms in this country are still owner-operator ones.

It’s the model which works well here and that live-it-and-love-it factor is a very important ingredient in their success which no amount of outside investment or expertise can replace.

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