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The impact of tenure review on the output of Crown Pastoral Lease land -- a confidential report by Glen Greer, Lincoln University, to MAF Policy

Category: Merino industry
Download: Greer_report__Final__Feb_04.pdf (249,831 Bytes)

The Greer Report

CONCLUSIONS:

While it may be argued that the loss of agricultural output from CPL land to be allocated to conservation following tenure review is not great in the context of the value of national agricultural production, significant ramifications may be expected in other contexts.

Farm business viability: The loss of 31 percent of the value of output on average is a significant challenge for any farmer. The exact extent to which costs will fall in association with the change in stock numbers is not known, but it will be by a considerably lower proportion that the change in gross revenue. Examination of the itemised costs obtained in the MWI annual surveys suggests that a reduction in cash farm expenditure of no more than 20 to 25 percent could be expected. The average ratio of cash farm expenditure to gross farm income on high country farms over the last five seasons has been 76 percent (MWI, various years). Changes of this magnitude would increase that ratio to 83 percent, moving the \\\"average property\\\" into a position that farm management guidelines would not consider to be viable. Forty percent of crown pastoral lease properties would be in an even worse position.

Merino Industry: The majority of the stock units lost as a result of tenure review will be  merino sheep, which comprise a high proportion of high country sheep, particularly in Otago and South Canterbury. Much of the land traditionally grazed by the merino wether flock will no longer be available for productive use. In addition, it may be expected that some farmers      will change away from merinos as a response to the need to change their entire farming system to adapt to a distinctly different balance of country after tenure review. It is not unreasonable to assume that that the reduction in merino numbers as a result of tenure review could be as high as 750,000 stock units a devastating change for an industry presently comprising approximately three million animals.

Rural Communities: The initial loss of revenue and labour from the high country following tenure review may be expected to have some negative impact on the rural communities servicing high country areas. Even if alternative enterprises are developed, most developments will take some time before they reach stable levels of output and in the short to medium term damage to small rural schools and businesses may be expected.