Copyright is owned by the Author of the thesis.  Permission is given for 
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 
ACKN 0\vLEDG El'IE�TS 
The author wishes to thank Professor A.Ro Fra mpton 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 survey s 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 
INTRODUCTION  AND THESIS GUIDE 
Introduction 
Objectives of  the Study 
Thesis  Guide 
THE HOHO\vHENUA DISTRICT AND HILL COUNTRY 
DEVELOPMENT STUDIES 
Introduction 
Location 
Physical Features 
Topography 
Soil Types 
2 . 3.2 , 1 Main Soil 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  
Climate  
Auxiliary Services 
Roads,  Communications and Transport Services 
Agri cultural Contractors 
Fertili ser Works 
Freezing Works and Saleyards 
Farm Exten.s i on Services 
Lending Institutions 
Slmllllary 
Hill Country Development Studies 
The P rofi tability of Development Programmes 
Ex pos t e  S tudies 
Ex ante S tudies 
Combined Ex poste and Ex ante Studies 
The Generalised Model 
The Approach Used 
Page 
17 
1 7  
20 
2 2  
2 2  
2 2  
23 
23 
27 
27 
29  
29  
29 
30 
3 1  
32 
3 2  
35 
35 
38  
38  
39  
40  
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  
Summary 
PROCEDURES USED 
Page 
4J 
Introduc tion 46 
Farm Surveys 46 
Descriptive or Enumerative Surveys 4 7 
Interview or Management Surveys 47 
Horowhenua Hill C om1. try Surveys 50  
The Survey Area 50 
Identification of Survey Farms 50  
Selection of Survey Farms 5 1 
The Survey Method 51 
Interview Technique and Experiences 54 
The Survey Data 5 6 
The Value of Representative Farms as a Research 5 6  
Technique. 
Financial Analysis of Development Progranmws 5 8 
Gardner's Financial Evaluation Program 
Program Limitations 
THE RANDON SURVEY FAID1S 
Introduction 
Farm S ize 
Topography 
Land Use 
Drainage and Water Supply 
Bui ldings 
Tenure of Farms 
Management o f  the Survey Farms 
Farm Owners 
F arm Labour 
59 
6 1  
65 
65 
66 
67  
67  
68  
69  
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, 15  
4 . 15.1 
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 
4,16. 1  
4, 1 6. 2 
4,16.3  
4.16,4 
4. 1 6.5 
4.16.6  
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 86  
Breeding Ewes 86  
Discussion 89  
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 Pa s ture Improvement 1 05 
Reversion 1 05 
11' eed C ontrol  1 0 6  
Pas ture Pes ts 1 08 
Swnmary 109 
THE PURPOSIVE SURVEY 
Introduction 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  
Case Farm A 
The Development Programme 
Factors A��e cting Development 
Conclus ions  
Case Farm D 
The Development Plm1 
Conclusions 
Case  Farm C 
The Development Progranune 
Conc lus i ons 
Case  Farm D 
The Developr!">ent Programme 
Con c lus ions  
Case  Farm E - Random Survey 
Farm I\ umber 20. 
The Development Programme 
Conc lusions 
Swmnary 
THE FEASIBILITY OF FUTurt.E DEVELOPHEST FOR 
REPHESESTATIVE F.t-'JU'I F. 
Introduction 
Development Progra1mne Asswnpti ons 
Pri ces  
Cos ts  
Taxation 
Lives tock S tandard Values 
P ersonal Exemptions 
L ife Insurance Premiums 
Development Exemptions 
Page 
11 2 
11 3 
1 1 6 
1 1 6 
1 1 7 
1 1 7 
11 9 
1 20 
1 21 
124 
125 
126 
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 onal Draw-ings 
Representative Farm F 
Description o� the Farm 
Devel opment PrograJJIDle One 
Financ i al Evaluati on 
Base Year Data 
Produc t i on Data 
The PI1.ysical Deve lopment Years 
P age 
140 
1 40 
1 5 1 
6.�-3, 1 The Debt Free  Situation 
156 
1 58 
1 59 
159 
6, 4. 3t 2 The In�luence o� Farm Indebtednes s  1 63 
6,4,4 The P o s t  Development Si tuation 1 65 
6. 4.5 The Pro�itabil i ty o� the D evelopment  Progranwe 1 65 
6.4.5, 1 Evaluat i on Under Conditi on A 1 67 
6. L�.5. 2 Evaluat i on Under Condition 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��ect  o� the Fertiliser Subs idy 172 
S mrunary ·1 7 5 
Development Progranune T11·o 1 77 
Financial Evaluation 1 8 1 
Produc t i on Data  18 1  
Tlle Physical Development Years  182 
The P o s t  Development Situat i on 184 
The Pro�i tabil i ty o� the Development Programme 1 86 
The Ef�ect  o� the Fertiliser Subsi dy 186  
Summary 187  
Devel opment Progran®e Thre e  189 
Financial  Evaluati on 192 
Production Data  192 
The Phys ical  Development Years 1 95 
6.8.3 
6.8.4 
6.8.5 
6.8.6 
CHAPTEH. 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 
Page 
The P o s t  Deve l opment Situation 196 
The Profitability o:f the Development Program e 198 
The Effect of the Fertiliser 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 Fa:cm 202 
The Development Programme 204 
Financ ial Eva .lua tion 207 
Base Year Data 207 
Production Da-ta 211 
The Physical Development Years 211 
The Post Development Situation 214 
The Profitab ility of the Development Progranm1e 21 !.j. 
The E:ffec t of the Fertiliser Subsidy 217 
Sununary 21 7 
Representative Farm A 218 
The Development Pr ogramme 219 
Financial Evaluation 221 
Base Year Data 221 
Pr oduction Data  223 
The Physi cal  D evelopment Year s  224 
The P o s t  D evelopment S ituation 225 
The Pr ofitabil i ty of  the Development Pr ogramm e 227 
The Effect  o f  the Fer tiliser Subs idy 229 
Swmnary 229 
7.8 
CHAPTER 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 . •  
Introduction 232 
Potential Stockine; Rates on IIorowhenua Hill 
Country. 232 
Potential Increases in Stock Nwnbers 235 
Inputs Required to Achieve Production Increases 236 
The Feasibility of Increasing Production. 240 
Undeveloped Hill C oru1. try Units 24 ·1 
The Small Hill Country Property 242 
The 1Adequate Income' Farms 
The Likelihood of Potential Production Increases244 
Being Achieved. 
The Alternatives to Development 
Conclusion 
GLOSSARY OF TEIDIS 
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 Breeding Cm,·s on 
Horowhenua HiLL Country. 
E The Cost of Clearing Weeds on the Horowhenua Hill 
Cow1. try. 
F The Present Value Measure of Profitability 
G Supplementary Evaluation Data for Representative 
Farm F. 
H Supplementary Evaluation Data for Representative 
Farm G, 
I Supplementary Evaluation D ata for Representative 
Farm Ao 
BIBLIOGRAPHY 
Table  
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 
LIST OF TABLES 
Climatic  Data For T110 Haj or T o,,·ns in the 
Sur·v-ey Area. 
Size and Topography of Random Farms 
Land Use on Random Surv ey Farms 
Tenure and Responsibility i' or  Hanagement of  
Random Survey Farms. 
Age Distribution of  Survey Farmers 
Conversion Coefficients For Sto ck Wintered 
Breeding Stook on Random Survey Farms 3 1  . J.  6 9 
Sto cking Rates  on Random Survey Farms 3 1 . 6 . 69 
Stock Performance on Random Farms 
Recent Produc t i on Increas es on Random Survey 
Farms. 
Page 
28 
66 
68  
70  
70 
75 
?6 
78 
80 
Surv ey Farms 1d th Reg-ular Topdressing 1 00 
Programmes, 
C as e  Farm A - Land Development Progranun e and 1 1 4 
St ocking Rate  Increase . 
C as e  Farm B - Development C o s t  o f  Tauhinu Land 1 1 8 
Case  Farm B - Total Development C o s t  1 '1 9  
Cas e Farm C - Stock Increases Achieved by 1 22 
S ubdivis i on . 
C a s e  Farm C - Land D evelopment Programme and 1 2J 
St ocking Rate  Increas es . 
C as e  Farm D - Increas es  in Stocking Rate 1 28 
Asso ciated  wi th Development . 
C as e  Farm E - Land Development and Sto cking 1 29 
Rate . 
Ca s e  Farm E - The Effe cts  of  Doubling Stocking 1 JO 
Rate on Sto ck Performance .  
C as e  Farm E - Stock P erformance After  Stocking 1 JO 
Rate Increas es . 
P ri ce As sumptions 1 J 8  
Table 
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 
Page 
Livestock Standard Values 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 Principa1 Repayments 155 
Programme One - J3as e Year 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 
Program e.One - Prof'itabi1ity Under Condition A 168 
Programme One - Prof'itability Under Condition B 169 
Programme One - The Ef'f'ect of' the Ferti1iser 173 
Subsidy on Aru1.ual Overdraft Requirements, 
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 
Development Costs  1 82 
Prograrmne Two - Production Data 1 83 
Prograrmne Two - F inancial Data for the Debt 184 
Free Situation. 
Programme Two - The Effec t  of'  Farm Indebtedness  1 85 
on Overdraft R equirements During Development . 
Programme T1vo - P o s t  Development Sununary 185 
Programme T1vo - Profitabil i ty Under C ondition A 1 87 
Table 
6 . 25 
6 . 26 
6 .  27 
6. 28 
6.29 
6.JO 
6' 31 
6 . 32 
6.33 
6. Jli. 
Page 
Programme T\w - Profi tabili ty Under Condition B 1 88 
Reprcsentati...-c Farm F - Development Programme 192 
Three. 
Progran®e Three - Stock Reconciliation 193 
ProG'rarnme Three - Development Costs 1 93 
ProGramme Three - Production D<lta 1 9� 
Pro c;ranune Three - Financial Data for the Debt 196 
Free S ituatio n , 
Programne Three - The E�fect  of Farm Indebted- 197 
ness on Overdraft Requirements During 
Development. 
Programme Three - Post Development Swmnary 197 
Progranm1e Three - Profitability Under Condition 1 98 
A ,  
Programne Three - Profitability Cnder Condition 199 
B. 
Representative Farm G - The Development 208 
Programme. 
Representative Farm G - Stock Reconc i l iation 209 
Representative Farm G - Development Cos t s  210 
Representative Yarm G - Base Year Data 2·10 
Representative Farm G Production Data 
Representative Farm G - Financial Data 
For the Debt Free Situation . 
Representative Farm G - The Effect o f  Farm 
InclebtecLYJ.ess on Overdraft Requirements 
During Development. 
Repres entative Farm G - Po s t  Development 
SUllLmary, 
Representative  Farm G - The Profitabi lity of  
Development Under C ondition A.  
Repres entative  Farm G - The Profitability of 
Development  Under  C ondition B. 
21 2 
2 1 3 
213 
215 
215 
21 6 
Table 
7 . 1 1  
7 .  1 2 
7 .  1 J 
7 .  1 5  
7 .  1 6  
7. 1 7  
7 .  1 8  
Representative Farm A - The Development 
Progrrumne.  
Representative Farm A 
Representative Farm A 
Representative Farm A 
l1epresentative Farm A 
Representative Farm A 
Debt Free Si tuation. 
Stock Reconciliation 
Development Costs 
Base Year Data 
Production Data 
Financial Data For thB 
Representative Farm A - The Effect of Farm 
Indebtedness on Overdraft Hequirements  
During Development. 
Representative Farm A - Post Development 
S UIIUllCJ_ ry • 
Representative Farnt A - Profitability of the 
Development Programme.  
C .  1 Actual Computer  Printout 
C , 2  Hand Dudceted Comparison of Data in C . 1  
E.1 Land Development Costs 
G ,  1 Progranune One - Annual Overdra:Ct Requirements 
G.2 
and Interest Charges For Various Equity 
Levels. 
Progranune One Pos t  Development Data 
G.J Programme Two - An ual Overdraft Requirements 
G , 4 
and Interest Charges For Different Equity 
Levels. 
Progranune Tlvo Pos t  Development Data 
G, 5 PrograiiUlle Tlvo - The Effec t  of  the Ferti liser  
Subs idy on Annual Overdraft Requirements .  
G, 6 Progranune Two - The Effect  o f  the Fertili s er  
Subsidy on the Profitabil i ty of  Development . 
G,7 Progranune Three - Annual Overdraft Requirements 
and Interest  Charges For Various Equity 
Levels . 
G,8 Progranune Three - Post  Development Data 
Page 
2 21 
222  
222  
223 
2 24 
2 25 
226  
226  
228  
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. 
LIST OF FIGURES 
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 
Farm Development 
Between Pages 
22 <J..l"ld 23 
23 and 2!j. 
25 and 26 
26 and 27 
52 and 53 
168 and 169 
CHAPTER 0:.'\E 
I\TROTJLTCTTO.:; i\�D THESIS Gt-:IDF: 
---- ----·---�--- ·---�·-----
1. 1 Introduction 
1 7  
The Horo1dtenua district, l(hich compris es an occupied area 
oi� 209, 629 o.crcs, ( 1) is an important food producinG region for 
the cities of �ellington and the Hutt Valley. ToKJ.!. milk 
production, 'narket gc:Lrdening and s mall f'rui t f'arming are 
continually expanding in order to cope �ith an increasing food 
deman,�. Associated ,,·ith this expansion has been the 
development o.f an inte nsiYe farm advisory service. 
This c; ervice has enabled detailed knm,·ledge to be obtained 
about 'rarious aspects oi' lowland .farming. Ho�ever, over the 
same period o:f time on.ly limi tecl contact has been made with 
hill country fanners. As a re s ult detailed krw1..-J edge of hill 
cow�try farming is lacking. 
It �as this lack of b1o�ledge \\"hich \\"as primarily 
responsible for this study. The study l\·as encoura ged hy the 
Department of' Agriculture whose officers gave valuable 
assistance to the author. 
1. 2 ObjcctiYes of tbe Study 
At the time o.f the study rising costs and falling prices 
were begiru1ing to erode farm pro fits. On areas o f  hard hill 
c ow1try the problem was being accentuated by fac t ors pe culiar 
t o  this clas s of' land( 2 ) . The c ontinuation of' this  c o s t  pri ce 
squeeze will result in a c ontinual decline in real farm incomes 
( 1 ) Source: Statistics  of  Farm Produc tipn For the Seas on 
1 966-67. Department of  Statistic s  Publication. 
unless some action is taken to of:fset it . One method of 
maintaining :farm incomes is to increas e production. Hence 
for many hill country :farmers development may be a means of 
economic survival. 
The study therefore had three main objectives. These 
were:-
( i) to determine present mar1agement practices and 
problems. 
1 8  
to define the development techniques being used and 
the stock increases being obtained. 
( iii ) to ascertain the likely pro:fitability of future 
development. 
The first t�o objectives: in addition to providing back-
ground in:formation 011 Horoi,-henua hill cot.mtry farming, had t,,-o 
other important roles. These �ere to define a mru1agement 
system representative of district practices and to determine 
the potential :for increased production. The third objective 
aimed at determining the :feasibility of future hill cow1.try 
development, 
To be meaningful, an estimate of potential production has 
to be made in relation to three factors. These are the 
farming environment, the ability of the farmers themselves, and 
( 2) These factors include low stock performaJ:Ice, the sale of 
predominantly store stock and the dependence on wool for 
40 to 50 per cent of the income. Rikys and Glenday ( 1 )  
have stated that this class of farm has alw·ays been the 
most vuliierable - both to falling prices and rising costs; 
to lower wool prices; to a poor season; to a fall in 
prices - all these can be passed on to the store farmer 
by the farmer on the better country paying less for his 
replacement stock. 
1 9  
the present level o:f technical la101'1"ledge. Consideration o:f 
these :factors should result in the determination o:f a potential 
stocking rate which ,,,ill be reacli ly attainable by the :farmers 
concerned . 
Potential production levels were dotennined :from three 
sources o:f information . During the course of a random survey 
:farmers were asked ,,-hat did they consider to be the potential 
s tocking rate for their :farm. These views were reinforced by 
information obtained :from a purposive survey o:f :farmers 1iho had 
completed development programmGs, (J ) Finally account ,,•as 
taken o:f an estimet e made by During (J ) which ,,-as based on soil 
fertility and climatic aspects, 
Variation in :factors such as resource structures, atti-
tudes, and the degree o:f management skill make it impossible to 
devise a blueprint :for hill cow1try develo�nent. D<."tsic 
principles can be defined but the actual development j)rogramme 
,,-ill depend upon the in.di Yidual farm situation, 
In order to analyse tbe profitability o:f :future hill 
country development three representative farms Kere selected, 
These :farms ,,·ere considered to be typical o:f three of' the :four 
main types of hill country :farms, (4) Development programmes 
were devised :for the representative :farms and the :feasibility 
of :future hill country development determined  by analysis of 
these progra1mnes. 
After evaluating the :feasibility of :future hill country 
(3) This survey also provided information on the rate at which 
stock increases are p ossible. 
(4) See chapter six. 
... 
development the alternatives to  development >vere c ons idered . 
1 .3 Thesis Guide 
This section des cribes the content of the remaining 
20 
chapters in the thesis. The Horo1vhenua hill country environ-
ment is des cribed in chapter two. Also contained in this 
chapter is a revie1,� of past hill country studies an.d a dis-· 
cuss ion on methods of analysin� the profitability of development. 
Chapter tlu�ee is concerned ·h'i th procedures us0d in the 
study , Fanu surveys are briefly revi ewed and the two surveys 
UJ.1.dertakc3n by the author described. This is  followed by an 
outline of the place of representative farms as a research 
teclmique, The chapter concludes wi tll a brief' description o f  
Garc1ner1 s computerised evaluation  program, This program 1-:as 
used by the author to financially evaluate the development 
progra�nes devised for the representative farms. 
Information gathered in the random  survey is contained in 
chapter :four. This information includes details of manage-
ment practices as well as obj ective data, 
A description of development programmes undertaken by 
survey farmers can be found in chapter five, 
Chapters six and seven describe and evaluate development 
prograJmnes  devised  for the representative farms, The 
profitability of the prograJnmes is analysed under tw·o methods 
of  financing development. 
The potential for, m1.d the feasibility of increasing 
production on Horowhenua hill country farms is analysed in 
chapter  eight, Potential sto cking rates are determined 
together with the inputs required  to obtain this potential, 
2 1  
The l ikelihood  of  s ignificant production increase s  o ccurring 
in the near future i s  als o  examined . The chapter  c oncludes 
lvith a dis cus s i on on s ome of the alternatives to  hill  country 
development . 
Definitions  of conunon farm t erms are c ontained in  a 
glo s sary .  
Throughout the thesis  references  to  bibliography are 
made thus (o)  lvhile foo tnotes  are indicated thus . ( o )  
CHAPTER T1W 
T'H 8 J I O ROII'IJ E \: UA DI STRICT  .\ XD  I IT LL C OlT.\TRY DE\TELOP'IE�T 
STUDlLS 
2 . 1 Introduction 
The ini t i <:-:t l  part of  thi s chapt er  out lines backgrow1.d 
22  
information on  the Horo,,·henua hi l l  c ountry . This i s  fol l owed 
by a brief review o.f p a s t hill  cow1try studie s  and a discus s ion 
on methods o f  analys ing deve lopment progranunes .  The chapter 
conc ludes with an outline of the approach used  in  thi s  s tudy . 
2 . 2 Location 
The Hor0i..-l1.enua ( 1 ) distric t  i s  a narrm1' coastal area on the 
·wes t  coast o:f the s outhern part of the Korth Is land. The 
dis trict extend s from Shannon in the north to Paekakariki in 
the s outh ; a dis tance  o f  approximate ly 45 miles . At 
Paekakariki t h e  hills  ris e  sharply from  the coast and the 
dis trict narroKs to  a point , 
The ea s t ern boundary of the distri ct is for:uwd by the 
Tararua ranges iihile to the ,,- est the Tasman s e a create s a 
natural  boundary , In the north the Hanmva tu river divides 
the region f:':"'om the l'-lana,,·atu district , 
The lo cation of  the region in relation to the rest of the 
K orth Island is shoKn. in figure 2 . 1 .  
2 .  3 P hys i c a l  F' ea  tures 
( 1) Horowhenua is a Haori name ivhich means 1 1  the great land-
slide . "  A c c ording to  Haori l egend the area from Levin to 
the Ohau river was a gravel deposit . It \vas a fan of 
detritus which had the appearance  of an enormous landslide  
from the Tararuas. 
Figure 2 .  1 Location o f  the Survey Area 
Auckland 
Paekakariki 
if ellington 
North I s land of New Zealand 
Legend 
� I Survey area 
23 
2 .  3 .  1 ]'apograph;: 
A s  indicated in figure 2 . 2 five ma j or landforms c an be 
i dentifi e d  in the survey area , The s e are the coas tal  s and 
dw1es , t he c entral plain , the clay loam terra c e s , the greywacke 
hill c ountry and the range s  c overed in nat ive bus h .  The land 
forms are dis s e ct e d  by four rivers . To the north the Hana1va tu 
rive r flows out to s e a  a t  Foxton . The Ohat.l , 0 taJci and 
liaikanae rivers have their  heacl11a ters in the Tararua ranges and 
flow w e s tward to the T a s man S ea .  Thes e  three rivers and thei r 
as s o c i a t e d  valley s  divide the hill country and t erra c e s  into 
four blocks . The c ontour o f  these blocks varies from eas y  a n d  
rolling to s t eep and broken . 
I n  e arly years broad  l eaved-podocarp fore s t s were predom-
inate . Thes e  fores t s  m erge d  into B e e ch fore s t  a t  1 , 0 00 fe e t  
above s ea leve l and into l oh·land s hrubs and swampland vegeta-
t ion n e a r  the coas t .  Today mos t  of the land below 1 , 200 feet 
has b e en c leared and replan t e d  in pas ture . 
2 . 3 . 2  S o i 1 T}..:.J2 e � ( 2 ) 
The hill cow1try soils have b e en largely derived from 
greywacke and some ash depos i t s , The s oils c an be  divi ded in-
to  two maj or types , vi z the s oils of the upl ands and the s oils 
of the hi llv and s teeplands . 
The upland s o ils o ccur on flat to  undulating terraces and 
on rolling and hilly lands with an annual rainfall of 32 to  45 
inches . Nutrients are c ontinually being lost from these soils 
( 2 ) Information appearing in  this section was obtained  from 
reference  ( 2 ) .  
Figure 2 . 2  Haj o r  Landf'orms 0 ±� The S urvey Area 
Hanawatu 
River 
Legend 
Survey Boundary 
Coastal  sand 
and sandy loam 
S ilt  loams and 
s tony s ilt loamt 
Terrac e  country 
( c lay loams ) 
Hill c ountry 
( Grey'\.vacke ) 
Ranges w·i th 
native bush 
ei ther by erosi on or  by l ea ching . Thes e  l o s s e s  are however ,  
partly c o unter-balanced  by the Keathering and recirculation of'  
nut r i en t s by p l an t s  cu1.d s o i l  organisms , 
S o i l s  of  t he hillv and s t o e p l and s are  generally free  
d:rainine; s oils . Differen ce s  are chiefly r e l a t e d to  the pareD t 
rock and to  the climate . The upland s o il s , lihich are formed 
from greyKacke , are no table  :for their  contribution to succ e s s-
ive zones  of land . Thi s pa t tern i s  due t o  the  influence  of  
c lima � �  on  s o i l  fonnation . There  i s  a trans i tion from a 
mild and sub-hwnid  climate  at  the c oas t  t o  a c ooler  and wet t er 
c l imate  inlcu1d . A s s o ciat ed  wi th  this i s  a progres s ive 
de creas e in b o th the c lay c ont e n t  and the min eral  nutri ents of  
the s o i l s . Thi s oc curs as  a result  of  s lower w e a the r ing and 
greater  l eaching . 
The :foll owing subs e c t i on l i s ts and brie f'ly di s cus s es the 
chara c teri s ti c s  of'  the hi l l  c ountry s o i l  types . 
2 . J . 2 , 1 �Ja j n S o i l  Types_ ( J ) 
( i ) B l emon t and R a m i h a  ::: o i ls ( JJc ) 
Thes e  s o ils  are :form e d  on mi x e d  greyKacke l oe s s and ash 
depo s i t s  beneath the  c o o l er and wetter  c limate of  the uplan ds . 
Drainage varies  from s lightly res tric t ed  t o  unimpeded . A 
continual l o s s  of nutrients o c curs under  the moderate rainfall . 
The s oi l s  are brO\\rn friable s i l  ty or sandy loams and they have 
a low natural fertility . Applications of phosphorous , calcium 
and molybdenum are required to  maintain productive pas tures . 
( J ) The s o i l  reference numbers quoted e . g . ( JJo ) are s tandard 
for New Zealand s o i l  maps , 
25 
The as s ociated Renata s oils  are very s trongly leached  and their  
profiles  show dis t inct c lay coatings on  the subsoil  and the 
formation of a thin iron pan .  Thi s i s  indicative of  weak 
podzolisation . Thes e  s o i ls are lo cated in the hill  c ountry 
region between Paekakariki and W aikanae . 
( i i ) Makara - P ahoa s o ils  ( J5a ) 
These  s o i ls were developed on s teep s lopes under mull  
formi� �  broad leaved podocarp fore s ts. The s o il s  are more 
bro\vn and friable than the Paramata  s o ils  and are only moder-
ately leached . The rainfall i s  abs orbed evenly and erosion 
under grass land is  l imit ed to  a few s lips s ituated  above 
s e epage s i tes . 1>li th phosphate , l ime and molybdenum top-
dres sing the s oi ls will maintain r eas onable quali ty pas tures . 
This is  the main s o i l  type of the hill country region and 
extends from Paekakariki to Shannon . 
( i i i ) Ruahine - Rimutuka s oils 
( a ) Ruahine S oils  ( 1 23 ) 
Beneath the native rimu,  the beech or kamaki fores t ,  the 
surface cons is ted of two to  three inches of reddi sh  brmvn raw 
h�mus . This organic s tore o f  fertility was maintained under 
forest  but rapidly eroded when the land was c leared for 
pas toral farming . The ero s i on expos ed a s oil  which was 
deficient in many plant nutrient s . Frequent topdress ing with 
phosphate and lime i s  required t o  maintain pas ture s . _  I f  this 
i s  not done ferns and manuka rapidly invade the pas tures . 
These  s oils  are well  suited t o  fores try .  
( b )  Rimutuka S oi l s  ( 1 24 )  
Locate d  above 1 , 500 fee t  thes e s o i ls consi s t  o f  s trongly 
Figure 2 . 3  
Ohau River 
O taki River 
Horowhenua Hill C ountry S oil  Types 
/ 
Y.. 1 .... '{. 
i- i 1. 
'1- y..._ 'f.. ! 
-
- -
- - -
- -
-
. . 
.. 
. 
. • . 
. 
. 
� \ \ 
Legend 
Survey Boundary 
Belmont and 
Ramiha s oi l s  
Levin and Ki1vi tea  
s ilt  loam 
Makara-Pahoa 
s oils  
Ruahine s o i ls 
Rimutuka s oils  
S ource : S o i l  Bureau D . S .I . R o  
acid  loams 1\'i th a thick c overing· of  humus . 
26 
The ferti li ty i s  
very low and they are be s t  retained for pro tection f'p r e s t t o  
cons erve wat er supplies . 
( iv ) L ev i n  a n d K i wi t i e a  S i l t  L o a m  ( 6 6c ) 
Hany hill  c oru"ltry farms have areas of  flat  land , These  
areas  c ons is t of  this s o i l  type which is an examp l e  o :f the 
v e l l m·;- b r o ,,-n e a r t h s  a nd in t e rgra d e s . The s e  s oils  ha ye been 
formed from mixed gre}n;,·a cke ill"ld volcanic  ash  s ediments m1 d e r  a 
mild huJnid c .lima te . They are moderately l ea ched and Khe:n 
topdre s s  ed ,,- i th phosphate : lime and mo lybdern .. m1 they wi l l  main­
tain highly productive pas tures , 
The di s tribution of  the vari ous hill  coru"ltry s oil  typ e s  i s  
s ho1·:n in  figL<re 2 .  J . 
2 . J , J C l im a t e  
The rainfall  dis tributi on for  the  survey a r e a  i s  given i n  
f'igure 2 . 4 .  The map indi ca t e s the wide variation in to tal  
rainfall  from the coas t to  the  Tararua Ranges .  A t  s ome 
coas tal plac e s  there is less than 35 inches  of rain per  annum 
compared t o  mo r e  than ·1 20 inches in tho Tararu.a Ranges . A 
large part o f  the hill  co ru1.try area has be tween 40 inches and 
60 inches o f  rain per an wn . 
The rainfall i s  reas onably well  di stributed  throughout  the 
year , How-ever swmner dry periods frequent ly o c cur from 
December t o  March , S erious droughts o c cur about once  every 
ten years , 
January , 
The 1-.rettest  month is  June and the dries t month is  
The mean temperatures near  the coas-t vary from a minimum 
of  45 degrees  in July to  a maximum of 64 degrees  in  December . 
Figure 2 . 4  Rainfall Di s tribution 
/ 
Hanawatu 
River 
Legend 
Survey Boundarie s  
�tf:J- Rainfall I s ohyet  
S ource : From N . Z .  Heteoroligical Data . 
27  
Greater  fluctuations  occur on the hil l  country due to  the much 
hi gher a l t i tud e . 
I n  the Kin t e r  s n o1-r .falls  on l an.d over 1 ,  000  f e e t  above sea  
leve l .  C o l d  s ou therly 11inter  winds in the s outhern part o :f  
the district  can c au s e heavy lamb l os s es . The pr evai l ing 
winds arc wes t erl i e s . 
The rainfal l  dis t ribut i on ,  mean t emp erature and hours of  
sw1shine for Levin and P araparaw1m a r e  li s te d  i n  table 2 .  1 .  
2 .  4 Auxi l i a ry S er;::,i c e s  
The survey area i s  ,,� ell  s e rved  11i t h  r e s p e c t  to e s s ential 
servic e s . This has greatly as s is t ed the deve l opment o f  the 
are a . The follo wing subs ections give a bri e f  o u t l ine of  the se  
s e rvi c e s . 
2 .  4 • 1 R oads , C oJmHnni e a  ti ons  And Tran s p o r! S e rYi c e s  
In  the survey area r o a ds are of a high standard wi th only 
a sma l l  minority being uns ealect . (4 ) This allows qui ck ac c e s s  
t o  and from cow1. try J'arms . Dy road all  hill c o un try farms are 
wi thin 1 2  mi l e s  o:f a maj or  t o 1m , (s ) Hence , the hill  c ountry 
is not  an is olat ed region a s  in some districts but rather an 
integral part of the 11hole district . 
Postal  and te lephone s ervices . to hill country farms are 
bo th adequat e and reliable ,  Only a few hill  country farms 
share a party te lephone line , Rural mail deliveries  occur s ix 
times a 1veek . 
( 4 )  This is probably a reflecti on of the shape of the region . 
Two main highways s erve as  central roads off which s i de 
roads service the coas t and hill  country areas. 
( 5 ) The major  towns of the district are Shannon, Levin, Otaki, 
1va ikanae, Paraparaumu and Paekakariki. 
Tabl e 2 , 1 
2 8  
C l ima t i c  Data F o r  Th-o ?'Ia j o r  ToK:rls In  The S urvey Area 
Non t h  ?>l � an R a i n f'a l l  
Ten� i:'-2.£.£ -( incl1.cS} 
H o u rs 0 f' 
�--------- --·------ - ---- r------ ----- r-----
-·- ----,..-
Levin J anuary 6 2  4 . 4  ( 2 . 8 ) 2 1 9 
1 9 6 
P a r a p a r aumu 
Kot es - 1 .  
2 .  
3 .  
4 .  
F e brua ry 6 1  
March 60 
April 54 
?-lo.y 5 2 
J1111.e 4 5 
J u ly 45 
Augus t 4 8  
S e p t e mb e r  54· 
O c tober 5 2 
Kovemb e r  
De c emb e r  
J anuary 
Februe:<ry 
March 
April 
i'lay 
JUJl.e 
July 
Augus t 
S eptember 
O ctober  
November 
De cember  
5 9  
64  
62  
60 
6 "1 
5 5 
5 1  
45 
4-4 
L� 8 
5 4  
5 2  
5 8 
6 J  
2 . 2 ( J . J ) 
1 . 7 ( 2 . 9 ) 
3 , "1 ( 3 . 1 )  
4 , 1 ( 4 . 1 )  
1 . 6 ( 4 . 3 ) 
1 . 9 ( 3 . 8 )  
4 ,  0 ( l� . 0 )  
2 . 1  ( 3 . 2 ) 
2 . 3 ( 4 . 1 ) 
1 . 0 ( J . 2 )  
5 . 0 ( J , 6 ) 
4 . 8 ( 2 , 6 ) 
"1 . 5  
0 . 7 
1 • 7 
3 . 5 
1 • 6 
1 .  8 
1 . 9 
3 • L� 
1 . 8 
1 . 5  
2 . 9 
( J , O ) 
( 2 . 8 ) 
( 3 . 0 ) 
( J . 5 ) 
( 3 . 8 )  
( 3 . 9 ) 
( 4 . 0 ) 
( J . 4 )  
( 4 . 0 ) 
( 2 .  8 )  
( 3 . 4 )  
Figures  refer to  the year 1 9 6 9 . 
1 3 9 
1 0 9 
1 26  
1 22  
9 1  
1 23  
1 6 6 
2 2 2  
1 9 0  
2 2 9  
2 1 5 
2 1 0 
1 J 8 
1 1  2 
1 l� 8 
1 2 2 
1 1 8 
1 32 
1 9 6 
2 6 3  
2 2 1  
Average rainfall  figures  are  sho1m in bracket s . 
N .A .  means no t available . 
S ource : " Extracts  from the New Z ealand Gaze tte . "  
There  is  a daily bus and railcar s e rvice  t o  and from the 
maj or t01ms in the dis tric t .  The main north railway line  
1vhich pas s es through a1. 1  t01ms in the  area is  in c lo s e  proximity 
29 
t o  hi l l  c oun t ry farms . Thi s  enabl e s  s t o ck to  b e  rapidly 
transported  to free zing �arks . A lot o f  s tock  i s , h owever ,  
s ent by road.  :."; wn e r o u s  road  transport c oJ11panie s s i t u a t e d  a t  
S l'tann.on , Levin , O taki and P a rapa raunm ext end a l' e l iab l e  s er-
vic e  to farmers . 
2 . LJ '  2 Agr i c u l t u ra l  C ontrac tors  
The r e  a r e  an  adequa te nwub e r  of  agri cul tural c ontractors 
in the regi on . Thes e  c ontrac tors w1dertalce harves t ing , 
spraying , cultivation , drainage and :f e r t i l i s e r  s pr e a ding . 
I n  additi on to  the s e  s ervi ces  c ontr a c t s he a ring gangs a s  
lle l l  as indivi dua l shear e rs a r e ava i l ab l e  throughout the  y ear 
:f o r  shearing and crutching . ( 6 ) S ome shearers als o provide a 
fencing s ervi c e during the au twnn <::tnd win t e r  month s . 
2 . 4 . J Ferti l i s e r  K o�z s 
There  are  no fertilis er �arks in the area , The bulk of'  
the :ferti li s er  i s  purchas ed from the Kempthorne cLnd. Pre s s er  
fert i lis er  � a rks at  W anganui . The f e rti l i s e r  i s  rai led  t o  
the depot  neare s t  to  the particul ar farm and then trucked t o  
the farm ga t e . Lime i s  obtained :from Amners Lim e'J o rlcs at  
Pakipaki , the Hatuma Limeworks at  Takapau and , in  s ome in s tan-
ces , :from the Gorge LimeKorks at \•l o o dvi ll e . During the c ours e 
of  the s tudy the author did not hear of  any s erious delays in 
fertiliser deliveries . 
2 . 4 . 4  Free zin� Works And Saleyards 
Within the Horowhenua region the main saleyards for 
bree ding and s tore s tock are s i tuated at  Levin . 
(6) See  glo ssary of  t enns . 
In  the 
JO 
s outhern part of the regi on Glens ide and Pauhatanui sale·yards 
provide other outlet s  for bre eding s to ck .  S ome s to ck from 
the northern part  o� the survey area are s o ld  at  F e i l d ing . 
Three  :fre e zing works and one abattoir p rovi d e  the main 
s laughte i'ing and :free zing :fac i li t i e s :for s t ock :from the region .  
The three  free zin� works are  s i tuated out s i d e  the surv e y area 
at Longburn , Pe tone and Ngauranga . They are ow11ed by the C o-
operative \vho l e s ale  S o c i e t y , the  G ear 1'-Ieat  C ompany and the  
:t\gauranga Heat  C ompany respe ctively . 
2 . 5  Fc::trm F:xtens i on S e rvi c e s  
Farmers in  the di s t ri c t  are  well s e rve d  wi th te c�1ical  
inf'ormation .  
sourc es r e . g .  
Thi s informat i on c omes :from a w i d e  varie ty of  
the Department of'  A gri cul tur e , ( ? ) t h e  � ew Z e a l and 
Dairy Board ,  ( S ) Farm Improvement c lubs , priva te adYi s ers , s t ock  
firms , machinery firms , s e ed  firms , ve t erinarians , o.nd  
ac c oun tants . 
Has s  media  ext ens i on s ervi c e s  to  farmers inc lude farming 
j ournals , newspaper arti c les and radio broadcas ts from the 
nat ional broadcasting s tation .  I n  addition sheep and dairy 
farmers ' fi eld days have b e en inaugurated in the dis trict  by 
the Department o f  Agri culture . Ha.ny farmers from the di s tri c t  
als o travel to  Palmers ton North  :for the Mas s ey Univers i ty dairy 
farmers ' and sheep farmers ' c onferences .  
In the pas t management and financial advic e ,  given by 
advisers of  the Department of  Agriculture , Da.iry Board and 
( 7 ) Offices  s i tuated a t  Levin and i{e llington : 
( 8 ) The Dairy Board consulting o fficer s ervicing the dis trict  
i s  bas ed  in Palmers t on N orth.  
3 1  
Farm Improvement C lubs , has  been largely direc ted to1,·ards t own 
mi lk producers . ( 9 ) As a r e s u l t  hi ll  cowl try .farmers hav e 
be en In r c c 0 n t  y e a r s  s ome hi l l  c ountry 
farme rs  have j o ined the F a rm Impro\·cment C lub in order  to  
obtain  regular management and finan cial advi c e . 
hill cow1 try farmers cann o t  financiaLLy afford such a s ervice . 
There i s  therefore , a need  for an improved hil l  co untry 
advi s ory s ervic e  from the Department of  Agri culture . 
2 . 6 L e n d i ng I n� t i tut i on s  
Short term f' i n an c e  i s  available  from s t ock  fi rms , (mainly 
for s t o ck purchase ) insuran ce c ompan i es and tra.ding banks . 
The trading bank:s are  the mo.in s ourc e of  short t erm credit . 
However ,  s hort term financ e d o e s  not  provide s ui t ab l e  capi to. l  
for hi l l  c ountry development . For  this  purpos e  the prin c i p a l  
s o urc e s  of capi t a l are the  S tate  Advanc e s  C orpora t i on and 
Margina l Lands Board . Thes e  two ins t i tut icns  have l ent  t o a 
nw11ber  of  hi ll c o w-L t ry farmers for  t he purchas e of  propert ies  
and for  development . ( l l ) 
----------------------- · ·- · ------
( 9 ) 
( 1 0 )  
( 1 1 ) 
This has been due t o  the greater  re lat ive importance o f  
the to,,n milk indus try in the area and t o  the greater  
demand for management advice  from thi s group . 
The respons ibi lity for the lack of  advi s ory s ervice s can 
be  at tributed  to  bo th  hill  c ountry farmers and advi s ers . 
Hill  c ow1try farmers  do not  s e ek outs ide  advice as much 
as  tmvn mi lk farmers . This m a y  be because they are 
unaware of the advi s ory s ervices availabl e to them . If  
this  is  true then the  Department of  Agri culture has been 
remiss  in allowing advisory s ervic es t o  thes e  farmers t o  
de teri orate . 
At  the t ime of the s tudy eleven survey farmers ( 4 4% ) had 
rec eived government finance. 
2 • 7 s UJll�£2 
are : -
The important points that have ari s en from this s ec tion 
( i ) The hill country is  of  lm\' natural fertility and 
variable topography , 
3 2 
( ii ) The t otal rainfall vari es  from 35 inche s to  1 20 
inches  with an avera g e  rainfall  of  40 to  60 inche s  
on the hill  country farms , 
( iii ) Summer droughts can o ccur and sno1 · falls  on the hill  
country in the liinter , 
( iv ) The hill  c ountry is  readily acces s i bl e  and w e l l  
supplied  wi th e ssent i a l  s e rvi ces , 
( v) B e c au s e of'  the proximi ty t o  r o ad and rai l ,  transport  
c o s t s  in re  la  ti. on  to o ther hill  coun t:L�y areas , are 
l o w .  
( vi ) There a r e  no fertilis er  or  fre e zing works  i n  the 
area , 
( vii ) Finance has been readi ly available to  hil l  country 
fanners  for  development . 
( viii ) The1;e is  need  to  improve advis ory services  to  hill 
country farmers . 
2 .  8 Hill C o1.mtrv Deve lopment S tudies  
Detailed s tudies  of  hill c ountry development have been 
published only in the las t decade . This has oc curred  as  a 
result of  the nee d  to  increas e agricultural production and the 
realisation that the ma j or part o f  this increas e would come 
from the hill  c ountry. Nost  of  the investigations into hill  
country development have been concerned 1vi th aspects  o f  
profitabil i ty .  
33 
The c a s e  s tudy ( 1 2 ) approach , invo lving e i ther 
an ex po s t e  or an e x  <tn t c  ana lys i s , has been the t c clL""lique  mos t  
c ommonly us e d  t o  analy s e  profitability . 
In  1 963  l1"right ( LJ ) invc s t i t;ated  the re  la  t i  ve non a c c ep t --
anc e  by :farmers o f  t h e  Te  A\·.·a type o:f  hi ll c ountry de·ve .l opmen t .  
( 1 J ) The phy s i cal  and e c onomic aspe c ts o:f  devel opment and t h e  
factors res tri c ting or  preven t inc; development ,,�e re  s tudi ed by 
means o f  a farm survey . The survey , .limited  t o the hill  
country of  the  iianganui-Rangi t ikei-Hanm,·a tu region , indicated.  
that lack  o f  knowledge ,,-as probably the great e s t hn.n di co.p t o  
:fas ter  hi l l  c ountry deYel opmen. t . On the bas is  o :f  two ca s e  
s tudies  b oth budge ted  in t o  the future Wri cht c oncluded that 
development i s  only marginally profitable to  the  individual 
fa rmer . 
A s tudy w1dertalcen by Holden ( 5 , 6 )  in 1 9 65  aimed at 
analys ing bvo a spects  of  11i l l  c o1.u.1try deve l opment vi z the 
J20s t  t a x  profitabi l i ty o:f  dev e l opment and :fac t ors prevcntine; 
inc r eased produc t i on on hil l  c ountry . An e x  po s t e  analys i s  
us ing current pri c e s  ,,· a s  carri ed out on d eve l opment programmes 
impl emented  on North I s land hi ll  c ountry farms . From the 
s tudy Holden concluded that after allowing for  pri ce  changes  
75 per  c ent  of  the programmes were profitable . O f  the fac tors 
influencing profit ability the principal de terminant appeared t o  
( 1 2 ) This  involves a study o f  a development programme implem­
ente d  under an actual farm situation . 
( 1 J ) This type of  development involves adequat e  subdivis ion , 
topdres s ing and overs o ,,ring with l egwnes , c ontrol of  
gras sgrub and Porina and the complete  uti l i sation of  all 
pas ture grow·th . 
3 4 
be the rat e of  s t o ck increase  per  annum , 
Feas ible  development proc edures  �ere  devi s ed by F renGl ey , 
Tonkin and J ohns on ( 7 ) for t·h·o hil l  c olm.try prope rti es in 
� orth C anterbury . The phys i ca l  and financial  impl i cati ons of  
the s e  proc edures  Ker e  then ana lys ed  us ing an � ante ana lysis . 
The analys i s  indi ca ted  that the progran@es  would  be  profitable 
under the as swnpti ons made , P o s t s crip ts to  bo th s tudies  
de tailed the change s  made t o  the deve lopment progrrunmes  as  a 
re su: t o f  tmfores e en fac tors , e . g . a drought and a fa l l  in 
·wo ol  pri c e . 
J ohns on ( 8 ) examined the e:ffe c t  of  falling woo l  pri ce s on 
Taranaki hill  country development . T,,·o re tro spec t ive s t ud i e s  
were undertaken on  farms where  deve lopment had been suspended  
and t1;o  :for1-.·ard s tud ie s  where the d evelopment pro c e s s had been 
altered , J ohns on c oncluded  f'rom thi s s tudy that 
" in general the cheapest  form of deYe l o pm e n t  is adding 
more  s to ck t o  already developed farms " 
and that 
" further prudent deve lopment wi ll  s till  give a s ati s :factory 
return on the addi ti onal capital  spent , 1 1 
A Jna j or s tudy o f  the po t ential  for increas ed pro duc t i on on 
hill c ountry sheep  farms in the \{airoa county was made in 1 967 
by Cartwright ( 9) . 
s tated that 
From the results  of a survey Cartwright 
" w·i th the pre s ent level o f  te chnical and managerial 
knowledge the area has a pot ential  stocking rate of five 
e\v e  equivalent s  per acre . "  
The profitabili ty o f  pas t development  programmes 1vere  analysed  
us ing a combination of  e x  E_o s t e  and e x  an t e  anr:1lyses . A 
hypo the tical  farm deve l o pment programme wa s then cons truct ed 
and evalua ted . From this  analysi s  C n r twr ight c onc lud e d  
deve l o pment should r emain profi tabl e to  the  na t i o n  o v e r  
. t 11  11  f bl  . 1 . t .  ( 1 Lj ) 1'h v1r ua y a ore s e ea e pr1 c e  com Jlna·  1 ons . · e 
35 
analys is sugges t c:d  development should be  proi'i table  t o  farmers 
over s ome  pric e  combinati ons . 
There  are tl\-o  m Cl. i n  me thods of ana ly s ing' the profitabili ty 
of  deve l opment progro.mmes ,  ·\"i z .  the case s tudy approach. and the 
us e o f  a generalised model .  
The r e  are  two t y p e s  of cas e s tudi e s . Thes e  are  the 
ex po s L e o r  retrospec tive s tudy and -r.; h c  ���  or  fon-.-��d 
s tudy . The ex p o s t e  s tudy i s  a his tori cal s tudy usually bas ed  
o n  the analy s i s o f  farm acc ounts . An ex ant e s tudy i s  based  
o n  :fon,rard budge ting me thods , 
2 .  9 .  1 Ex pos te S t udi e s  
Th e profitability of  pas t deve l opment programmes  has been 
af'fe c ted  by e c onomic c onditi ons during that  lJeri od . The l e ve l 
o f  prices  and c o s t s  operating a t  that t ime have influenced the 
dec i s i ons made . In  order  to  i s olate  the development progranune 
:from the c onditions governing i t , two c onventions are pos s ible  
with respect  to costs  and prices . The s e  are to  us e ac tual 
( 1 4 ) In his s tudy C artwright varied  the pri ce  of  1vo ol  :from 27d .  
per pouJ1d· t o  5 1 d .  per  pound . Thi s  range do es  not  however 
include the pres ent  price  l evel for wool . Thi s  s i tuation 
indicates  the di:f:ficulty in accurately :forecas t ing future 
pri c e  l evels . 
J6  
cos t s  and pri ces converted to  r e a l  terms ( 1 S ) or  to  us e 
s tandardis ed cos t s  and pric e s . 
I f  all plry s i cal quantiti e s  us e d  in the development p r o -
gramme  are available then a s eri e s  of deflated  pri c e s  can be 
applie d  to  the s e  quantitie s  in order to  o b ta in the required  
real  value s .  Un:fortuna t el)' mos t  ac c ow1.t ing data does  no t 
provide thi s informG.ti on . ( 1 6 ) The deriva tion o:f  r eal value s 
therefore relies  on the us e of a pric e  index . ( 1 7 ) The s e  
indic e s , like mo s t  general indi c e s , have a nwnbcr o f  Kcaknes s e s. 
The mos t important o :f the s e  i s  that they are bas ed on a specific  
input mix 1vhi ch may no t be repres entative of  the input mix us ed 
in the particular programme 1.mder revieK.  
The s e c ond c onvention is  to u s e  s tandardi s ed cos ts  and 
pric es . Thes e  arc applied  to the re corded phys i cal production 
data , B o th Cartwr:L e;ht and Holden us ed  this c onvention in the ir  
s tudi es . C o s t  indicies  were applied to  previ ous expenditure 
and the output K a s  given a l ong t enn expected  value . 
Cart11right s tat es  that bo th advantages and dis advantage s 
acru e  from u� ing standardi s ed  co s ts and price s . The advantages 
are two-fold . Firs tly the effects  of  short  term marke t force s  
on prices  and c o s ts are avo ided . S econdly i t  prevents  the 
analysis  of one farm being bias s e d  '"i th respec t  to  o ther farms 
( 1 5 )  
( 1 6) 
( 1 7 )  
In order t o  convert  actual c os t s  and prices  t o  real  terms 
i t  is ne c e s sary to choose  a bas e year .  Indices  o f  pri c e  
changes from this bas e y ear are then us ed  to  bring c o s ts  
and re turns to  c ons tant values or  real  terms . 
Farmers ' a ccounts  have in the pas t be en prepared  for tax 
purposes  rather than for  management us e .  
For  example  such as  the one published  by the Ne1v Z ealand 
Heat and 1fo o l  Boards Economic S ervice . 
37 
by virtue of  i t  rec eiving high or  low premiwns by c han c e . 
The disadvan-cages are that genuine prewi Lwts o b t a in e d  by :farm e L' S  
through trading skill  are  el imina t ed and th<J. t IJri c e  v. n d  c o s t  
fore cas ts  may be  y; �_ . or . Thus a plan s h own t o  b e  -f E' a s i b l e  at  
s tandardi s ed  c o s t s  may b e  infe<:ts iblc at  inflated  c os ts . 
The us e of  s tandardi s ed  c os t s  and pr i c e s  allow s t a t em e n t s  
such as  
1 1  this i s  the profi tabi lity of  the de\•olopmen t programme 
i f  undertaken noi\� 1 !  
, ( 1 8 )  t o  be m a o e . 
I t  i s  dii'fi cult t o  attach  much import anc e to  the s e  s tate-
ments . Th e deci. s i ou making environment has been ch<:u1t;ed  and 
time has a l t e r e d  such ±'a c t ors  as : -
pr i ce s and c o s t s , 
the degree  o f' t e c hn i c a l  knmdedge , 
( i )  
( i i )  
( i ii ) 
( iv)  
the  availability of ,  and the terms fo r ,  loan mon e y , 
the e conomi c c limat e  and the finaac ial  pos i t i on o1� 
indivi dua l farmers . 
The s e  fact ors  profolu1.dly ini�luence  the 2. c tual deve lopment 
programme implemented by individual farmers . There :fore exac t 
replicas of  pas t deve lopment programmes are lill.likely to  be 
repeated in the future . The author believes that ex pos t e  
s tudie s  of  pas t development progranunes should be  made us ing 
actual pri ce s  and cos ts . I t  was the se  prices  and co s ts which 
influenced the speed  and type of  development undertaken . 
( 1 8 ) Thes e s tatements  imply that  all  as sump tions 'vil l  hold 
into the future .  
Such 
38  
analys es  ore , however ,  o �  a c a demi c curios i ty only . Thei r  
contributi on to  de ciding hm.- c api t c.l l  should be allocated  to  
f'uture agricultural development i s  l il1li t e d ,  
Ex ante  S -b.J <l i e s  
Ex ant e  s tudies  avoid the price  prouJ_em by as suming-
current pri c e s  or s ome c ombinat :Lon  o� pr e s en t  and pas t pri c e s . 
The for.-.-ar·d budge ting tec lmique  enables  the analys t  to  evaluat e  
now the profi tabil ity o �  a �ea s ibl� future development pro-
g r a.nune , The etn alys i s i s  however dependent upon the pre s ent 
level o f  knoKledge . This means that b e c aus e the fu ture c anno t 
be  predicted accur a t e ly , pric e  and t e chnology cr1anges 1v i l l  
a�fe ct : -
( i ) the p r o p o s e d clevo l o puwnt pl an , 
( ii ) the profitability  o�  the deve lopment . 
As  a r e s ul t  de t a i led financial evaluat i ons mus t be t enta-
tive becaus e any deviation from the original dev-2 lopment plan 
means that the financial evaluation i s  no longer applicable , 
S ome :c e c ent ex  ante  s tudie s  
( 
1 9 )  have incorpora. ted  ri s ing 
input pri c e s . In t he s e  s tudi e s  the co1nputational burden i s  
increas ed . The bas e year s i tuati on has to  be  reas s e s s ed for 
each year of the deve l opment plan , I f  this i s  no t done , the 
bas e year does  not re�lec t  lvhat 1vould have happened in the 
abs ence  o f  development ,  
C ombined Ex P os t e And Ex Ant e S tudies  
I n  s tudies where the development process  i s  incomplet e  
( 1 9 ) S e e  reference  ( 1 2 ) . 
39 
( 20 ) s ome workers \ have u s e d  a combined e x  pos t� and e x  an t e  
analy s i s . This type of  ana lys i s  involve s the us e of ac tual 
and pro j e c ted c o s t s  and pri c e s . The s e  are app l i e d  t o t h e  
comple ted  part of  the progranune and to the future l i ke ly plan 
respectively . 
Cronin ( 1 1 )  has s t a t e d  that such analyses  cm1. ma.ke allow-
ance  for  u.nfors e en variables  \·.-hich  entered  into the deve lopment 
programme as  it  pro c e e de d .  Furthermore ,  the results  already 
obtained  can be u s ed  ·11-i th a greater degree  of c ertainty than 
hi s ( Cro:nin 1 s )  pro j e c ti on o :f  future results . 
The author however , does  no t believe that the s e  c ombined 
analys e s  proYide in:format ion relevm1.t  t o  future d e ve l o pment . 
The bas e :from ;.,-hich development \\' ill  s tart h<::.s been changed as 
has the decisi on mal<:ing environment . The l evel o f  t e clnwlogy 
has als o chc::mged thereby altering the l evel of  production 1d1ich 
is  te cJ:> . ni cally feas ible . Hence  devel opment progrc::umne s "LU1.cle r-
taken in i. lle pas t a r e  "Lmli l -.e ly to  be repli cated  in the future , 
2 . 1 0  The G e n e ra l i s e d  }Iodel  
The pro:fi tabili  ty  of hill  c ountry de"\·e lopment can be  
examine d by formulat ing a generali s ed model o f  a development 
programme . ( 2 1 )  The s ens i tivity of  pro:fi ts t o  changes in  one 
or  more  variable s ( 22 ) can then be studied .  This type of 
( 20 ) 
( 2 1 ) 
( 22 )  
For example Cart1vright ( 9. )  and Cronin ( 1 1 ) .  
That is a development programme 1vhi ch 1vi th s light 
modification could be applied to a number of farms . 
Thes e  variables include price forecasts , costs , spe ed of 
development, interest rate, and degree  of equity . 
40 
analys i s is bas i cally a :financial  evaluation of one devel op-
ment p r o g r amme , S u c h  o. model  mus t be  able t o  take into  
acc ount the  phy s i cal  chance s  ma d e  to  th.e deve l o pment programme 
Khen important  variables  a l t e r . 
In  theory the  generali s ed mode l i s  us eful in indi cat ing 
the  range  over whi ch vari able s  caa a l t er  ,,, i thout the programme 
bec oming w1.profi tabl e . I t  does  no t h o w e v e r  inJ i cat e in 
prac t ical  t e rms ho•·: f'armers  should alter  development t o  o ffs e t  
the � � fe c t s  of  the s e  changes o n  the pro :f i tabil ity o f  deve lop-
men t .  From a f'armers  po int o f'  vi el\" thi s i s  an important 
aspec t of  d evelopment plannint;; . 
F a rm e r s  are int ere s t ed  in  the profi tabi l i ty o f  future  
devel opment . For  thi s r e a s on the author be l i eve s an ex  ante  
analy s i s  o :f  deve lopuent  programmes  . ( 23 )  l S  n e c es s a ry . Khile  
the future  c c:mnot b e  predi cted  accura t e ly fon,·ard budge ting 
does  make the  bes t us e of  pre s ent  k.no,, l edge . C ons equently i t  
aids  in de termining the mo s t  effici ent us e o f  res ourc es . 
I t  i s  hm,·ever ,  impo s s ible to  furni sh a blueprint for  hill 
cot.mtry deve lopment . The s pe ed  and the direc tion of  the 
developmen t is de te rmined by the individual farm s i tuation .  
Most  o f  the important d e c i s i ons concerning development involve 
( 23 )  The development prograrrune so analysed  is one whi ch i s  
feas ible under the exi s t ing farm s i tuation .  Analys i s  of  
pas t deve lopment programmes  us ing pro j e cted costs  and 
pric es should not  be used �o determine whether future 
development wil l  be profitable . The principles of pas t 
development programmes e . g . st ock increas es , may be 
appli cable to the future but it is unlikely that the 
actual develop�ent programme i t s e lf  i s  applicable under 
pres ent price  s tructures . 
4 1  
change . This leads to w·1c o rtainty about fu ture events and t o  
uncertainty about the impa ct  of events on  a :feas ible  cleYclop-
men t pro granm1e • 
Despi te the uncertain-Ly , cle c j s i ons  have t o  b e  made now 
about deve lopment to be  w1.d ertakcn in the future . Us ing 
pre s ent knowledge  a developlllent plan can be formulated  to  
achi eve s ome future goal . As the plan i s  impl emented  throug-h-
out t ime , addi ti onaJ. information 1dl l  bec ome availabl e . This 
information 1dll  inevi tably mean ,  in a dyn<:nni c  agriculture , 
modification.s ·e o the basi c pla...YJ. . Thus by the time  the r;oai 24 )  
i s  reached the c ompl e t ed progranuue may be s ig11.i fic a.ntly 
diff'erent from the original plan , As a result  a detailed  
:financial  evaluation of  profi t abi l i  t·y i s  likely to  be  of'  
academic  interes t on ly . 
The ma j or dif'ficulty 1d th an �� t e  analy s i s is ho11 to  
inc orporate the e:f:fe ct  of changing pro duc t pric es in the 
analysi s . S everal problenlli are involved. The first problem 
i s  a s s o c iated  1dth the .!_iming of the s e  price  changes. Thes e  
changes can o c cur a t  any po int in a development progrannne and 
the remedial action taken will  vary according to the point at 
1·:hich the change occurs. 
( 25 )  
The extent of the price changes a lso influences the acti on 
taken. It is however ,  difficult to accurately forecast e ither 
( 2L� ) Narked changes in variables affecting development may 
result in the completed goal being . different to the 
proposed goal before deve lopment. 
( 25 ) A price fall  in the year immediately after the imp lemen­
tation of the deve lopment programme is l ikely to have a 
greater effect than a price fall at a p o int where 
development is generating additional profits . 
4 2  
the extent o f ,  o r  the timing of pri c e changes . I f  accurate 
forecas t s  were pos s ible  there s till  remains the que s tion of  
·'i'!hat a c tion the farmer 11-i l l  take . Individual  farmers vary i n  
their managerial  abi lity (
26 ) and hence in the a l t e ra t i ons they 
1vill  make to devel opment p l cm ..s unde r  changing c onditions . 
Thus the effe ct  of  pri c e  changes  can be  analy s ed  in a �=!:!l.!.§lt :i.v� 
s ense  but no t in a pos i t ive s ens e . 
Today , becaus e o f  the lUlccrtainty about the effe ct  of  
future price  falls  on  de-.-elopment , farmers may s till  refra in 
from unde rtaking <leve lopment . ( 2? ) This is  de spi t e  the fact  
that development c ould  be  shm·.--:t1. to  be  pr-ofitable ,  Thus i t  
ntight b e  cons idered that s ome a t t empt should be made t o : -· 
( i ) 
( i i ) 
incorporat e  changing produc t pri ce s , 
indicate  the remedial  action that s hould be  taken t o  
offs e t  pri c e  fal l s  and prote c t  the capi tal  already 
inve s t ed .  
Hmv-ever the problems involved in acc1.n�ate ly forec t:ts ting 
:future price  trends and hence  changes t o  the deve l opment 
proc,-ram.rne lllake this a difficul t as s igr.Jnent , For  this  rea s on 
the de s irability o f  future Horowhenua hill cow1.try development 
has been analys e d  us ing c ons tant product prices  and c o s t s . 
The development programme with the highest  profitability under 
( 26 )  Nanagerial ability is  an important input in any 
development programme , 
( 27 )  This  is  probably true of the ma j ori ty of  Hormvhenua hill 
c ountry farmers who prefer the s tatus quo s i tuation  to  
the possibility of  los ing the limited capital they have 
and at the s ame t ime increasing their indebtednes s. 
43 
these  as sumptions can then be s el o cted , ( 2S ) 
The e f :fe c t s  of  f'uture p r i c e  changes c<:.tnno t be s atisfa c-
t o r i ly ana ly s ed by budge tary me thods . Anr.ual revi s i on and 
evaluation of  �:..>..:._�nt� proc;rammes  i s  there:fore an e s s ential 
requirement . I n  r c a l i  ty the plam1.ing of'  future development 
progro.mmes inY o lvcs de tailed  planning :for the ini tial years 
and broad  pl a.Ju1.ing f o r  the latter  y ears . As  price s  and 
teclLno logy chunge so  mus t  the deYe lopment progro.nm1e if  the 
e f fe c t s of non benefi cial ch<.1nges  ( 29 )  are to be minimi s ed and 
benef'icial  ( JO ) changes  maximis e d .  The s e changes l!lay no t  
re sul t in the opti.111i s at i on of'  profits . They wi l l , however ,  
ensure that profi ts  1d l l  b e  greater  t han tho s e  that Koul d occur 
in the abs ence  of' r e vi s i o n .  
From a financing po int of v i ew l ending ins titution s a re 
likely t o  ha,_-e greater confidence in development 1d1.i ch is  
arn1.ually revi s ed  and evaluated . They may als o b e  m o r e  wi lling 
to provide a d d i t i on a l  capi tal if  thi s i s  required .  
2 . 1 2  S un mJa rY __ ___,__ 
The f o l l owing points have emerged from the review of  hi l l  
country s tudies  and from the methods of' analys ing development 
( 28 ) This method of s e l e c ting the development plan to  be  
rmdertaken is , in theory , s imilar to  the s election me thod 
o f  a profit  motivated farmer .  Frequently however ,  sub­
optimal inves tment decis ions are made be caus e farmers are 
lllllvilling or lliJ.abJ_e to  inves t  on a s cale  which will earn 
the optimwn return . 
( 29 )  Non beneficial changes l\rould include falling product 
prices  and advers e c limatic c onditions e . g . drought . 
( 30 )  Increas es  in product prices  and a technology change 
resulting in higher productivity are examples  of  
benefic ial changes . 
programmes : -
( i ) Hil l  c ountry development s t ud i e s  hn.Y e been publ i shed  
on ly recent ly . 
( i i ) 
( i i i ) 
( i v ) 
P r e d i c t i o n s  a b o t, t  the profi tahi l i ty o f  f1 t ture 
dev e l o p tnont  ha v e  r.:1ne;ed  f' r o m :  
" ma rgin a l ly pro .r i  t ab l e  n ( I\ r i ght 1 96 3 )  
t o  
" development 1\· ould  be  profi table  over ,,· ide  pri c e  
ranges "  
( Cart� right 1 9 67 ) 
Bo tl-1 the  cas e s t udy app roa ch aud the gener a l i s ed 
model  have been us ed  by r e �  earch '' orkers in 
d e t ermining t h e  p r o fi t a b i l i ty of deve l opment p l a n s . 
The ca s e s tucly npproach  involves  the  us e o f  an 
ex p o 3 t e  or  an ex  ant e  analy s i s . 
( v )  There  a r e  probl ems invo lved i n  u s in� both  type s  o f  
( vi ) 
( vii ) 
a n a l y s e s . I f  an e x  p � s t e  analy s i s i s  us ed the  
problem i s  i n  cie c iding wha t c os ts and pri c es t o  us e .  
\{ i th e x  a n t e  ana l y s es the  probl ems revo lve arow1.d 
uncertain k.nm,· l edge of  the future . 
The ma gn i tude o f  these  problems are increased  with 
c ombined  ex po s t e and ex  ant e  analy s e s . 
Us e o f  a general i s ed development model i s  in theory 
us ef'ul in indicating the range over which pri ces  can 
alter  without c aus ing the development programme to  be 
unprofi table . The problem is  that i t  do es  not 
indi cate  how farmers should alt er their deve lopment 
plans in respons e to the s e  changes . 
( v i i i ) Tlle au t h o r  has us e d  c on s t a n t  p r i c e s  and c o s t s  
i n  an e x  cH1 te  s t u d y  o i'  J l  o r o �d w n u <.t h i l l  c o un t r)' 
deve l o p m <:. n t .  
4 6  
C HA P TER THH EE 
PH O C EDl' R ES GSED 
The s tudy o r  t he p r o :f i t a b i l i t y o :f  f'ut "Urc  Hormdwnua hi l l  
c o un t r y deve l opment in,·o lYed t h e  us e of  f a r m surveys , 
r e p r e s c n t a t i Y c  :farms and a c o m p u t e r i s e d :f i n a n c i a l  eva luat i on 
progralll . 
The :farm surveys enabl ed e s s e n t i a l  i n :f o rm a t i o n t o  b e  
c o l l e c t e d  on such  aspe c t s  as manac;emcnt pra c t i c e s  and problems 1 
produ c tive p ,:;rf'ormance  an d hil l  c o w1.try deve l opment  t echniques . 
F eas ibl e devel opment programmes  ( 1 )  '''ere t h en formulated  :for  
f a r m s  repre s entat ive  o:f  hi l l  c ow1. try s he ep :fa r m s  in t 1 t e  r e g i :J Jt . 
Later  the :financial i mp l i c a t i ons of  t h e s e programmes  K c r e  
eva l ua t e d  us ing Gardner 1 s  c omputeri s e d  evaluc:t t i on program . ( 2 ) 
Thi s  chap t er  begins  1·: i  th  a brief  summary of  :farm surveys . 
The surveys w1dertaken by the author a r e  then des cribed  and 
t h e  p l a c e  o :f repre s en t a  t i  ve farms as a res earc h t e c lu1. i q u e  
di s cus s ed , The chapter  c onc ludes  1vi th an out line of  Gardn e r ' s 
program a n d a comm ent on s ome limi t ati ons that be c sune a p p a r e n ·t 
Khi J .e  us i ng the progrn.m . 
J . 2 F arm S urveys 
Farm surveys are  one  form of  f'arm management res earch and 
involve the c ol lec t i on and analys is of farm data . They may 
( 1 ) \l e refer  to  a computer " program" but a development 
"programme " .  
( 2 ) This program was s lightly modified t o  include data  from a 
cattle  breeding program . devi s ed by the author . This 
program Kas devi s ed becaus e Gardner ' s  program did not 
allow for  a cat t l e  bre eding policy . The program i s  
outlined in appendix B .  
47 
form the bas is for s tudying particul a r farm prac ti ce s , for  
de  termininc; impedimc;nt s t o  inc rea s e d produc t i on an d for  
evaluating n e \•i t e chllol ot;)' in fa.rming . C andl c r  e mphas i s e d the  
importance  o f  farm s urvey s 1d-1 en he  s t o  t cd 
"Farm surveys  may be  tb e be s t ,  inde e d  t h e  only \ c a y  of  
lll 
c o l l e c t ing informat ion on the suc c e s s of  ne1-.: pr2.c t i c e s  at  
t11 e farm level . "  
As  a r e s e a r c h  t e c�1ique s urveys have be en us ed  s ince  the 
begimdng of t h e  c entury . ( J ) The surveys carried  out  by early 
,,- o rk e r s  \ :E:: re of' t ,,-o types v i z .  des cr iyt i v e  o r  cnum c r a  t i  Y e  
The c h a ra c t e r i s -
tics  of  thes e type s o f  surveys  are bri e fly outl ined  in the 
fo l lowing subs ection s . ( lj )  
J .  2 .  1 pes cr�pt i  ve or E n um c r a t i  , - e  S n r,rey s 
The maj ority of  farm s u r v e y s ha ve be en of  this s o rt .  
Such surYey s are de s i gned t o  find out about farms and farmers , 
They cons i s t  e s s entially o f  the c olle c t i on of  farm rec ords 
e i ther by mai l  quc s t i oru1.aires  or  by farm vis i ts . The 
informat i on required  i s  rigidly defined  by means of a s e t  
ques tionna ir e . The main us e o f  thes e  surveys i s  probably t o 
provide de s criptive informat i on on farming ,  They can als o 
indicate  where further de tail ed  res earch  .!!.� be required . 
J . 2 . 2  Interview or  Management Surveys 
This type of survey is  bas ically a means of  tes ting a 
( J ) A comprehens ive revi e1v of  these  early surveys can be found 
in ( 1 J ) , 
( 4 ) For a dis cus s i on of the limitations of these  types of  
surveys the reader is  referred to  ( 1 4 ) .  
48 
hypothes i s . ( 5 )  I t  involves the collect ion o f  both sur�j ec tive 
( 6 ) and ob j e c t ive ( ? ) data . Candlor ( 1 5 )  h a s  formally defined  
man a g ement s u r v (� y s  a s  
1 1 A s crie s of intervi e 11'S wi t h  farmers to ci ve informati on 
about s ome one management prac ti ce . 1 1  
During the  interview dis c us s i on clsually ranges from topic  
to topi c . A s e t ques t ionnaire i s  not us ed  but in s ome ins tances 
intervi ewers may us e a s chedule o r  l i s t  of  topics . This ac t s  
as an aid to  remembering the p o ints they wi sh  t o dis cus s . A 
hic;h d e gr e e  o f  intervie1iing skill  and agri cu l tural t r a i ning i s  
neede d  for the s e  surveys becaus e of the s ub j ect ive nature  of  
muc h  of  the data . Hanagement surveys o re l ikely to  improve 
the understanding of'  differences  in farming performance  and 
henc e p rov i de n means of formula ting us e fu l  reconmwnda tions for 
farmers . 
Three  types  of management surveys have been identified  by 
Candler ( 1 6 ) and the s e  differ only in their  ob j e c tive . 
Bri efly they are : -
( i ) R e s e ar c h  o r  Pre-re lease  surveys 
Thes e are de s igned to  de termine whe ther there i s  
likely t o  b e  a place :for a ne1v produc t o r  for a new management 
prac -t ice . They involve a survey to  determine current 
management practices follo1ved by an analy s i s  of a management 
( 5 )  For example more c ows and more fertil i s er mean greater 
profit s . 
( 6 ) This involves information on such aspects  as intentions , 
motivations , expec tations and at t itudes . 
( 7 )  Data of  this s ort  i s  specific  data such as  
fertili s er usage and number of  acres . 
s tock numbers , 
sys tem which inc ludes  the new pra c t i c e  o r  pro duc t . From this 
an es t imate  of  the l ike ly proi'i tabi lity o f'  the neK pra c t i c e  o r  
produc t can be  o b t a in e d , ( B ) 
( i i ) P o s t --R e l e a s r.· o r  Early A do J2t i on S u:c_�  
This type of'  survey i s  des igne d to  obtain in:formation 
on farmers experienc e s  wi th a new managc1ae n t  prac t i c e , To be  
us eful  such a survey n e eds to  be  carri ed  out b e fo r e  the bulk of  
farmers  have changed t o  th e  new prac t i c e . The aim i s  t o  
e s t ab i i s h  the profi tability o f' the new pract i c e  and t o  d e fine 
the c ond i tions nece s s ary for suc c e s s , The t i minG and w i d e 
publication of  r e s ul t s  are  two important a spects  o f  this  t y p e  
of survey . An early adoption survey h<'l s b e en carri e d  out  by 
Grahame ( 1 9 ) ,  
( ii i )  K on A do p t i o n o r D e ll.n v i o ur i .:; t S u_rYeY s 
----'--'-"--'--'-....;;.·-'-------....;.:_..._;. ________ -
In thi s t y p e  o f  survey the res earch Korker ,,- a n t s  t o  
find out Khy s ome farmers  a r e  refraining from ado p t ing a n e w  
pra c t ic e  o r  product ,  S 1.<.ch  surveys involv 0 cli fficu..l t i e s  o:f 
obtaining t h e  real  reas ons for  nonadoption ( 9 ) and in che ckine; 
for c ons i s t ency of repl i e s . ( 1 o ) 
The reliability and value of  the resul ts  obtained from 
interview surveys  depend largely upon the training and 
intervi ewing skill  of the res earch worker . This point has 
( 8 ) The results  of such analyse s  depend largely upon the 
assumptions made . P re-releas e surveys have been carried  
out by Frampton ( 1 7 ) and 1vi lliams ( 1 8 ) , 
(9 ) N o  farmer i s  likely t o  admit t o  a lack o f  drive or  to  
ignoranc e .  
( 1 0 ) Cronin ' s  ( 1 1 ) s tudy of  the fact ors preventing high 
production on s ome dairy farms in the Rangitaiki P lains 
deals with this point in some de tail .  
been made by S chapper  ( 1 4 ) who s tated  
1 1  • a hich deg-re e  o f  intervi e1d.ng- s k i l l  an cl 
apprec ia t i on o f  int e rvi ewing as  a s c i e nt ifi c proc edure 
are pre- 1.'equi s i te 1 s for re liable  r e s u.l t s . 1 1 
50  
T,,-o surveys  were w1. d e r t aken , Th e ini tial  s urvey in¥o lv e d  
a r a n d o m  s u r ,: e y  of hi l .l c ountry she ep J'arms in  o rder  to 
( i ) obtain phys i c al  and pro duc tion da t a  
( i i )  d e f ine ma.n. a e;emen t prac tice s  8. n cl. hence  a management 
s ys t em typi cal  of di s trict  prac t i c e s  
( i i i ) de t .. ermine a t t i tu d e s  o :f  farm e r s  t o  dcvelo rJmcn t 
( iv ) pinpoint fac t ors  hindering or  preventing development . 
The purpo s  i ve s u r Y c y  '·: a s undertaken in  order t o  :::. t udy 
development me thods currently be ing- us ed  b-y p r o gr e s �; i vc hill  
c ountry she ep  farm e r s . This s urvey 11· a s c onduc ted  on a cas e 
farm ba s i s . Ea c h  farm and farm e r  1va s  treated  a s  <.u1. cn·t i  ty a n d  
c onc lus ions Ke r e  dra1·.11. on the bas is  of thi s and r w t  f r o m  
aggregated  d a t a . 
J ,  J .  l 
The sur,·ey area included all  the hill  c ow1.try be t>Veer.. 
Shannon in the north and P a ekaka r i k i  in the s outh .  The t o tal 
area  of  approximately 70 , 000 acres  r e p r e s e n t s  a small  portion 
of the hard hi ll  cow1.try of the North I s land . Such hill  
country has frequently be en referred to as s e cond c las s hill  
country . ( 1 l ) 
J . J . 2 Identification of  S urvey F a rms 
With the as s is tance of Mr R o  Gill ( 1 2 ) all  she ep farms in 
the survey area  were  identified .  Of  the s e  70  were c las s ifie d  
a s  h i l l  c ountry sheep un i t s  ( ·t J ) including 1 4  Khos e O'i\"Il e r s  
d o r i v e cl  in c o m e  i'r01:1 o t h (' J.' s ource s , ( 'i 4- )  The s e  l a t t e r  
propert i e s  �ere  inc luded in  t h e  random survey for t�o r e a s o n s : 
they formed a. s i gn i :f i c an t  percentage ( 20'% )  of  the s heep  f·a rms 
in th e s u.rvey a r r:) a  and  p hy .'3 i c a l  a n d mana g e m e n t  informa ti on 
only � a s  required  from the survey . I t  wa s thought that 
s i gnifi cantly different  t o thos e  us e d  on s elf- c ontained  she ep 
, 'I r: ) uni ts . '- :.J 
I d e n tifica  ti  on o f  purpos  i ve ::: urvey :f a rms ·Kas more  
dif:fi cul t .  A s  there  ha d been li t t l e  ad\ris o ry c ontact  with  
hi ll  c ountry s h o c p  f' a rm e r s , tho s e  und e :c takin[;· deve lopment ,,- a rk 
1·;ere gen e ra l ly unJm o \,Tl t o  l o cal  advi s ors . For  thi s re a s on 
as s i s t a n c e  ,,rn s obtained  :f r o m  acc owrtants , s t o c k  :firms and 
p r o du c e  m e r c 1l.an ts in i clen tifying :fa rme rs ,,-ho had or Ke r e , 
carryinc; out hi l l  c ow1 try development . S ome  o f  the s e  farmers 
i•; erc  l a t e r  e x c lud e d  f r o m  the surv e: y be caus e of  e ither an 
( 1 1  ) 
( 1 2 )  
( 1 3 )  
( 1 4 ) 
( 1 5 ) 
Th i s  h•J s been de i'ined by the 7'\ e,,- Zea land }I e a t  and 1v o o l  
Bonrd 1 s E c onomi c S ervic e  a. s  hill  c ountry carrying 
approxima t e ly two she ep per acre plus c a t t l e  ( approxi-
mately one beas t to s even or eight she ep ) . Wool  
provides  s ome 40 per  cent of  the revenue and the balance 
is  derived in about equal proportions :from the s ale  of  
s t ore  sheep and s t ore cattl e . 
Live s t o ck Instructor  :for  the Department of  Agriculture 
in Levin . 
For  the purpo s e  of  the s tudy a hi ll  co1.mtry prop erty was 
defined as a :farm with 60 per  cent of its  area s te ep and 
unploughabl e . 
Thes e  s ources  inc luded t own. milk products , agricultural 
contrac ting , opo s sum trapping and shearing . 
The results  of  the random survey proved this assumption  
t o  be c orrec t .  
unsys tcmat i c  approach  to deve lopment or  unsui table records . 
J , J , J S e l e c t i on o:f S urvc·': F a r m s  ----·· ·--·······--------·--"------
5 2 
Twenty thre e  :farms ( l G ) were s el e c te d for the  random s urvey 
in the :follm·.·ine; l ! lar.ner : -
( � ) \ .L numbers  Kere  a s s i gn e d  rm1clomly to  the hi ll  c rnu:J.try 
s he e p  :f arms 
( i i ) nwnbered  di s cs c orre sponding t o  individual :farm 
nwnbers  were then placed  in a barrel  
( iii ) a di s c w<::t s dx-m,·n :from the b i.l r r e l  a :f t e r  i t  had been 
revolved ,  
The :farms s e l e c t ed  inc luded five Khich derived in c ome from 
s ourc e s  o ther than sheep farming , 
Initially s e ven :farms we r e  s e l e c t ed  as  b e ine;  s ui t ab l e f o r  
t h e  purpo.s ive survey , T�-.·o o:f  the s e  �-: e r e  later  re j e c t ed 
becaus e of  w1 sui t ab l e  rec ords and the abs enc e  of  any r e a l  
deve l o pmen t plans , The small numb e r  of  purpos ive farms i s  a 
ref'lection o :f  the abs ence  of  planned development on thi s area  
of  hill  country . ( 1 ? ) 
The l o c a t i o n  o :f  the survey farms i s  shol\11 in figure J ,  1 .  
J , J , 4  The S u rvey ::.r e t h o cl  
· F arme r s  in  tbe Horo1,·henua dis trict  1,·ere firs t made aware 
of  the propo s ed hill  cow1try survey b y  means of a newspaper 
artic'le . ( 1 S ) This article  was written two months pri or t o  the 
( 1 6 )  
( 1 7 ) 
( 1 8) 
This s i z e  sample  of  farms was taken in order t o  ensure an 
adequate coverage of  hill country farms throughout the 
survey area .  
The author i s  reas onably certain that n o  hill  country 
she ep  farm Khich had achieved s ignificant production 
increases  in recent y ears was omit ted  from the survey . 
Levin Chronicle  J ovember  1 968.  
figure 3 . 1  Dis tribution O f  Survey Farms 
. L evin 
. Hanakau 
. Otaki 
. Te Horo 
. Waikanae 
Shan on . 
Legend 
� Survey Boundary 
Extent of hill 
l-L--''-� country 
• Random survey 
J---� farms 
® C as e  farms 
5J  
survey and was followed by a l e t t ar( 1 9 ) outlining the reas on 
for t h e  s u rve y . ( 20 ) S urvey f'arm e r s  1ve r e  then telephoned  and 
asked i f'  they ·\\"ished t o  par t i c i p a t e  in the s u rvey . T n  m o s t  
cas es  f a r m e r s  were pleas ed  t o  c o-operate  and a t�ne and date 
for a mee t ing 1,"as arrange d ,  
Of  the 2 3  random � u rv e y  farms 20 1,·ere  vi sited . The 
rea s ons given by the thre e fa rmer s  :for non-participa t i on in the 
survey '''ere -
I \ � )  no t interes ted  - the fa rme r concerned did  no t believe 
that the survey 1\"as l i k e ly to be  benefi c ial  to him . 
( ii )  ill health - the O l·.n e r  o f  the farm 1·:as s erious ly i l l  
in hospital . 
( i i i ) the farm h a d  j us t  been s old  - the OI\Ti e r  K a s involved 
in shifting and did  no t hav e time  to  par t i c i p � t e  i n  
the s urvey . 
After  the random S UJ:.'Yey :farms h n d  been vis ited  the 
cas e s tudy farmers ''' e r e  c ontacted . The pro c edure f'o l l o1ved  
Kas s imi lar to  that empl o)' ed  iv"i th  the random survey farmers  
with  one exception .  A s lightly modified  l et t er Kas  s ent t o  
thes e  farmers i n  whi ch i t  was made clear that  financial a s  ,,,e ll  
as phy s i cal information ,,,as required ,  
The random survey was carried  out in February and Harch of  
1 96 9 . The purposive survey commenced in April of the same 
y ear and 1vas completed by June , 
( 1 9 ) 
( 20 ) 
The letter i s  reproduced  in  appendix A .  
This method o f  approach gave farmers time to thiru� about 
the survey .  The author believes that this  as s i sted the 
co-operation he obtained ,  
54 
J . J . s  
Each sur \-c-y c oPuneHced  ,,-j_ t h  atl inspcc  tion of'  the� f· a rm . 
T h e  ini tial part of  thi s period ·was  c oncerned K i t h  gaining- t h e  
:farmers c onfidence  ( 2 1 )  and obtaining kJJ.oKledge o f' the phy s i c;al  
properties Of'  1-h :r -- ( 22 ) ·c e arm , Tbi s  , .. -as follo;·;ed by a randma 
di s cuf.J s i on o f  t h e  vari o us managcnwnt prac tic e s  emp l oyed  by 
the farmer . ( 2J )  
Ini tially provi s i on was made :for ·h.-o s urveys per  da-y . 
Thi s · . .  r �:w tice  ;,·as di s c ont inue d a:fter  t h e  :firs t a t t emp t , The 
l ack of  vorkiug t ime ( 24 ) m e an t  t hat surveys  K e r e  rv.s h e d  and 
farm impres s i ons not  c l early defined in the au thor : s  mind . 
It  Ka s also  di ffi cul� to  adjus t t o  two d i :ffe ren t pers onal i ties  
within a short  peri od o f  t im e , 
and different approaches  Kere o f't en n e c e s s Rry in o r d e r  t o  
obtain  the required info:rmation . ( 23 ) 
---- -
( 2 1 )  This is  e s s en t i a l  i :f  a farmer ' s fu l l  c o - o p e r a t i o n  i s  t o  
b e  o b t a in e d , ii a r r e n  ( 1 0 )  reported  that i t  w c:t s e s s ential 
to  have rapport  be t\,· eeu the res earch K orker and the 
farmer .  
( 22 )  This i s  e s s ential  t o  the unders tanding o f'  manag-ement 
pr<1c ti �; e s . 
(23 )  This  pro c es s  allowed the farmer t o  t a lk more fre ely  
<1b o u.t the farm and in JX.crt i cular the  problem involved in 
farming i t , Grahame ( 1 9 ) hc:ts swmnarised  the advantages  
of  this fre e:flohr type of  interview , 
(24) In  general farmers preferred  their  farms t o  be vis i t ed 
be twe en the hours of  9 a . m . and 5 p . m . C onsequently a 
maximwn of  8 hours per day Kas available for  the .survey::: . 
This restricted  farm visit s  t o  one per day . 
( 25 ) For  example  one farmer may cons tantly diverge :from one 
parti cular topic  during the cours e of the c onvers ation .  
I n  such a cas e the interviewer  has t o  bring the farmer 
back t o  that particular topic  in o rder to obtain all the 
information required . On the o ther hand a re ticent 
farmer needs to be  draKn out in order than his vie;,•s 
are fully expres s ed .  
5.5 
Hore time 1vas spent 1-.ri th individual  farmers in the 
purpo s ive survey than in the random survey , As  1·:o l l  a s  
dis cus s ing manar;ement practi c e s , physi cal a n d  f'inanciGl  
a spects  of  deve l o pmen t �ve re  exGmined in d e t a i l .  H. c c o rds o f' 
development and f' inan c i al a c c o1m t s  were b o r row ed by the author. 
The s e  11ere  re turned after  a thorough examination.  
Certain topics  were dis cus s ed more on  s ome  properti es 
than on o thers , In general the author found mo s t  farmers 
1vere  knowl e d g e ab l e  on s to ck management , but le s s  inf o rm e d  on 
pas ture manag·emont . D eve l opmon t ,\-a s a s ens i tive subj e c t  1·:i th 
s ome farmers , The author made i t  c leary  bef'ore any d i s -
cus s i on on thi s as pe c t ,  that  he was no t there t o  criti c i s e . 
Thi s probably re sult e d  in a l l  f'armcrs freely expres s ing t h e i r  
vi e1·.- s o n  the que s ti on of :future dcve lopmen t ,  
During the c ours e of  the survey the author eained  the 
benef' i t  of  time spent in the area as a farm advi s er ( 1 9 67-68 ) , 
S ome o f  the survey farmers were  kr w·Kn t o  the wri tor  prior  t o  
the coJIL.rn enc emon t of  the survey , This greatly as s is t ed  the 
collection of  inf'ormat i on and the co-operation rec e ive d ,  
Overall , farmer co-op eration was excellent ,  A number  of  the 
random survey farmers o ffered financial information although 
this was not required .  Others provided detailed  information 
regarding personal dra1vings and the adjustments made to combat 
the c ost pric e  squeeze . 
The surveys created much interest. By the time the first 
fe1v visits had been completed a large peroentage of  hill  
country farmers had become a1vare of  the study. S ome farmers 
not included  in the survey were eager to participate . The 
wri t e r  ga i n e d  the imp r e s s i on that llill  cotmtry fanners would 
par t i c i p a t e  r e a d i ly in a n y  s tudy they tho uGht mi ght be 
l � .  . J ( 2 6 )  )ene:r  J.c:t.a  . •  · 
J , J . G  Th o S u rvev D<1 t a  -------... �----
D a t a  frol!1 the t1·;o s u rv e y s  can b e  foun d in chap t e r s  four 
2.nd :fi Ye . Chapter four deals  i·.'i th information colle c ted  .from 
t}:H) ranclo:11 .s u rve y ,  and includes da t a  on farm s i ze , s to ck 
numb e r s , produc tion performances and at titudes to  development , 
T.b.e inf o rma t �L on :from the l)Urposive survey is  c ontained in 
chap ter  i'iy e .  
T:h e par ticnlar to cJu·lique us e d  in  any res e arch s tudy i s  
de t e r:11i!1ecl by f o u:c main factors . These  :factors are the t �ne , 
funds and data a\ra i l abl e and the C OJ;J.p l e x i ty of  tlw problem .  
Fer  c e r t a i n  types  of  management p r o b l ems , e . g . d evelop�ent , a 
suf'fi c i on t  elemen t of s imi larity may exis t be ·bv·e en fa rJTis t o  
r e a l i s t i c a l l y  s p e c i fy a typical  or  repres entative :farm , On 
thi s farm de...-eloptnent  opporhmi tics  c an then be  analys e d ,  
Mo s t  :f a r m e r s  adjus t s lowly t o  n e w  condi tions and 
t e cbn o l o gy an.d <J.ll di f f e r  in their  degre e  of adjus tment , For 
this reas on farmers can be  clas sified into three  groups viz .  
( i ) the innovators these  are the pione ers in the 
farming world .  They arc the firs t t o  try out new 
ideas and are to the forefront in farming knowledge . 
( 26 ) A number of  :farmers \vere genuinely concerned \vi th the 
s tate of hill cotmtry farming in the area .  :Hany felt 
that a lot  of the hill  cotmtry had reverted over the 
years , and thought that s ome s ort of action was required 
to  reverse this trend . 
( ii ) 
( iii ) 
5 7  
the non adapters - this  group compris es men 1·:ho are 
limited  in their  i de a s  and manageri al ability , 
the ma s s  o :f  :f a rmers - thi s gr oup de termin e s Khat is  
mos t c omtllonly f ound as to  s i ze , organisation and 
farm prac t i c e s . 
GroUlJS one and tKo are minori ty groups  and it  i s  from 
group trrre e  that repres entative farms are chos en ,  This group ,  
hcn.-ever ,  do e s  no t remain s t atic , nor  do  their  :farming me thods , 
.A s  a re sult  typical  farming methods cannot be  d e t e rmined once  
and i'or all . By iden tif-,y' ing the primary fac to :cs l·ihi c h  
influence  the  parti cular cle ci c: i on Wld e r  s tudy refinements can 
b e  made in the s e le c t i on of  the repres entative farm , Thi s  
means tb.at the u s e  of  the repres entative farm mus t be  clos ely 
tied  to  the s t a t e d  purpos e  or  problem . 
The obj ect  of  the repre s entative farm is  t o  embody the 
attributes  of the farms that i t  repres ent s , Thes e  at tribute s  
include the quantity and quality o f  res ources , the c o s t  of' 
inputs and pri c e s  of  outputs and any other res trictions . 
The s election of' a representati·'V·e farm in-volves a numb e r  
of  difficulties . A single  farm model  is  lmlikely to  
adequately represent all  the  significant  charac teris tics  of  any 
group of'  farms . Each farm its elf  i s  unique in that the 
particular combination of  res ources and managerial ability are 
peculiar to that farm , This means that results  and 
recommendations from any s tudy mus t be  revised  or  adjus ted  
'�'hen applied to  a particular farm , 
Repres entative farm s tudies  are s tatic  in natu.re whereas 
the farm firm is operating in a d)�amic environment , A 
5 8 
typical :farm no lllatter how s elected  remains typical  as long as  
t e cru1.oloe;y a nd o t her a t t 2··ibu t ing fa c t o rs remain cons tant , 
Doubts can also  be rai s ed  a s  t c  1vh c th e r  any mode l f"ctrm c a n 
e f i'e c t ive ly pr ovi d e  guidance  to  indi vi d u a l  farme rs Kho dif':fer 
in s u c h  things as  managerial  abili ty , age and g o a l s  . 
Despi t e  the s e  problems t he repres entative :farm can s t i l l  
s erve as  a u s e ful educational to ol f o r  m<::tny kinds o f' management 
problems , Thi s is  e spe cially true -Khere the rcpres en tat:L ve 
farm ;.,ip i f'i e s  a narr O\,- or s peciali s ed  ty p e  o f" farming , I t  
c anno t 5  hm,-ever 1  :repla ce  individual farm an aly s i s  and p l an_n.ing 
as no tKo farms are icleni.;i cal , 
The three repre s entative farms s el ected  :f o r  this stndy 
are des cribed in chapters  s ix and s even , The :follo1dng 
subs e c ti on d e s cribes  the program us ed  t o  financ j al J_y c:u1aly s e  
development programmes deYised  for  the s e  :la.rms . 
J .  5 Financial  An<'llYs i s  o !� D e�c  l o pmen t P.:t_:.oe;rammes 
Once a phys ical development p lan has be en cons tructed the 
next task is  to determine ii.;s :financia.l feas ibi lity ,  Thi s has 
usually invo lved  c omplet ing a nwr1ber  of  repetitive caJ_culations  
e . g .  cash  budge t s , s tock reconciliations, Recently, however 
c omputer programs have been devised :for  financially evaluating 
plaD_ned development progrrunmes . 
These programs, c ompiled by Sanderson and Nac.Aurthur 
(Lincoln) ( JO )  and Gardner ( 1'-Iassey ) ( 20 ) , reduce the time 
involved in routine calculations and allm-v the scope of the 
analysis to be  extended , They do  not, how-ever , reduce the need 
for a full and detailed understanding of the development 
problem ,  Nor  do  they relieve the research worker of  the 
59 
respons ibility of  planning the phys i c al proe-ramme . 
In this s tndy Garclner '  s progr<tm \,·as used  to  financially 
evaluate  deYe lopment programmes  de�:is ed  :for  the repres entative 
farms . The program J. s brie:fly outlined in  the f'o ll ouing 
b S C C J.  _ ,  on ( 2 7 ) su  ' t_. l . - .  
J . 5 . 1 Gardncr 1 s F i nanc i a. l  Eva luu. t i o n ProG:x-·a;.:.! 
Das ically this p r o c;ram analyses  the financia l  
requirements  and prof'ita.bili  ty ( 28 ) of  deyelopment progranunes 
:feas i o.L e  for all res ources  o ther tha11 finance . D a t a  from the 
phys ical. deve lopment p r o granun e is analys ed by f' i v e  ma i n  
programs . Thes e are : -
( 27 ) 
( 28 ) 
( 29 ) 
( i )  the b .J. s e�ar__EE2£:r� - 1·;hich de termines a p r e -
( ii )  
devel opment c a s h  f l ow s i ·tuati on ,  D a t a  from :L ·i:: i s  
used  j_n eva lua t in g  the profitabili ty of  the 
development ( 29 )  progra1mnc us ing the pres ent value 
m easure . 
tl1 e fin anc i ng a n d  s t o ck re c onciliation n r o r·,T a m  -
us ed  to  c a l c ul a t e  s tock purchas es  and s ale s , cash  
For  a more  de tailed dis cus s ion of  G a rc:IJ.1. e r 1 s program the 
reader is  referred to  ( 20 ) . 
The profitability of  the development plan i s  determined 
by tlrree cri teria vi z .  the pres ent value , payback peri od 
and the increas e in pos t tax cl:cawing.s . The pres ent 
value measure i s  outlined in appendix F .  The payback 
period can be defined as the time tal<:en for the net cash 
proce eds from development to  equal the net cash outlay 
of  the deve lopment . 
No te  that for  the purpose  of  calculating profitability ,  
the  difference  be�ieen the bas e year cash  income and 
cash expenditure is as sumed to represent the l evel of  
pers onal drawings prior  to  and during development . This 
figure is  no t how-ever  us ed in the calculation of' annual 
overdraft requirements .  
60 
budgets  and ove rdra £t requirements for each year  
of  deve lopment . The sp ecification of  a pe rc enta ge 
( iY) 
change in ,,·o o 1 producti on c> nd in the price  o �f wo ol  
alloi,'S a parametric  evaluation o :f yearly overdraft 
requirements  to be  made . 
the bas e  year progrrun and de termines the cash  flow 
s i tuation � cleve lopmen t ha s b e en. c omple t ed ,  
the evalua tion ErocEam - us ed  to  calculate the 
p r o :f i -t a b i l i  ty o:f  the de\·elopment pla11 . •  
development plan has a posi tive pre s ent va lue this 
program ·undertakes a parame tric  evaluati on o:f  
profi tability for  a spe cifi ed change in 1,·oo l  
producti on and in  ,,· o ol  pri c e , ( JO ) 
Output data  from Ga r cln c r 1 s  program includes  produc t ion 
and :financial  data for  ea ch year of  developmen t ,  pre and p o s t  
deve lopment data and profitability calculations . 
Us e o f  this program reduced  the time require:;d to  anal-ys e  
development p r o granun e s  and enabled  a m o r e  de tai led ana lys i s to  
be "Lm.clertaken . Ho;-.'ever ,  during the cours e o:f  the s tudy s ome 
program limitati ons became apparent . Consequently the results  
of  the analys es had to  be  s tudied in relation to  these  
limitati ons . Such limi tations  do not ,  however ,  de tract  from 
the usefulness  of  Gardner 1 s  program . They are a reflection 
( JO ) The specified change is a plus and minus percentage of 
the expected  yeild and price  levels . 
6 1  
o f'  the inherent di :ffi cul ty  o i'  incorporn ting :farm mannc;cmcn t 
lo�i c in to  c om_pu t e r  t e rms . 
T h e  p r o gram r e qu i r e s  m<1 :x:imui11 and minimum cullinG' rates  t o  
be  s pecif'i ed for a ll c l a s s e �  o i'  s h e e p . This prov:L d e s  a 
certa in amount o f' flexibi l i ty but als o leads  t o  management 
anomalies . l�i th this sys t em small nwnbers  of'  bre eding e 1 1· e s  
can be  purchas e d  l n  any one  y ear .  I n  ac tual prac ti c e  a 
farmer \·;·oulcl e i ther cull l e s s  he avi ly or  not  bother to  buy the 
additional  ewes . S imilarly the Pl' O g:cnm a l l m1s the number o:f  
bre e ding eKes t o  b e  i n G re a s o d  rap i d ly hy retaining o l d  m-t e s , 
When the rate  of'  increas e d e c l j n e s  thes e o ld ewe s a r e  s t i l l  
reta ined , A s  a r e s u l t  <.m. 1..m r e a l :L .s t :L c  n1..m1b e r  o f  t1·:o t o o th 
e1.;e s are s o ld . 
S tock los s e s  cmmot  be  a l ter ed during the deve l o pm ent 
Thi s men.n.s that dir e c t allm·;aEce can..."'lot  be made 
for hi gher s tock l o s s e s  Kheu s to ck <:J. r e  being us ed  to n break 
in" land . Although lambing percentCLge s can be  altered  this 
do es  no t completely allo 1 - for the reduced  value o f  the s t a ck 
s old , Kor does  it  make any provi s o for the increas e d  nwnbers 
of replacement st o ck required .  
Development expendi ture for taxati on purposes  i s  deducted  
from the gross  income in  the year in  which i t  oc curs . 
result taxation payments cannot be  minimised ,  ( 3 1 ) This 
As  a 
( 3 1 )  Taxation laws alJ.mv development expenditure incurred  in 
any one year to be deducted  over several years . Such a 
provision can reduce the to tal  amount o f  tax paid during 
development and hence the o_verdraft required t o  finance 
development • . 
advers e ly a f f e c t s  the  ma.xinn.1.m overdraf't .figure , the til l le  t o  
r e pay b o rro·h· e d m o n e y  and the p r o f'i t a b i l i  ty o:f t h o  p r o gramme , 
Thes e  variables  a r c  als o  a f' f' e c t e d  by the <J.bs c n c e of'  n i l  
s t andard values i n  t he procram , ( 3 2 ) 
I t  i s  a s smned i n  the p r o gram tha t  t h e  interes t  rate  on 
6 2  
capi tal b o r r ol·.' e cl f' o r  deve l o pment i s  equal to  the d i s count ra t e  
use d  in de t e rmining the pre sent value . This as  swuption i s  
no t nec e s sarily true . For  example  wJ.1.cre there i s  a large 
degre e of' un c e r t ainty t h e  c or rec t di s c ount ra t e  to u s e  may be 
ten per c ent . Thi s may no t be  equal to  the intere s t  rate  on 
development finance  b o rr oi,T C d  from , for e xamp l e , the S t a t e  
Advances  C o rp o ra t i o n , The as sw1�tion do e s  hoKever ,  enabl e  
the s ens i tivi ty of  the pres ent value to  chang e s  in  intere s t  
ra t e  t o  be  explored .  
I n  evaluating the profitabi li ty e f  the programme th e  bas e 
year surplus ( 33 )  i s  used  as the f' i �:,"ur e  for pers onal drawings 
e .  g .  i f  the bas e year surplus j_s $ 3500 then this f'i gur e i s  
us ed  for pers anal dra11ings during dev e l o pment , 1d1.en c a l cula t-
ing profitability in t e rms of a pres ent value . This practice  
can render a development programme Ull.profitable  becaus e -
( i ) 
( ii ) 
all  development finance  has to  be borro·wed  
repayment of  borrowed money can only be  done out of 
( 32 ) Under  Ne1v Z ealand income tax lmvs , live s t o ck are treated 
as  trading s t ock and the taxable income i s  adjus ted by 
the difference in the value of the opening and closing 
s to ck .  However us e of  the nil value sys t em allows 
s tock increases  above the basi c  rating to be allocated  
a nil value . This reduces  the amount of  taxable income 
and hence the amount of taxation payable .  For further 
details the reader is r eferred to reference  ( 2 1 ) .  
6_3 
the add� t i o n a l  p o s t  t a x  in c o m e  generated  by 
I n. many ins tunce s  f' a rm e r s  are p r e p a r e d  to  d i v e r t  mon.Gy 
from p ers onal dra��ngs ( c onsumption) t o  deve l opm en t . This 
reduces  the amount o f'  off' f'arm c api t a l  required and a i' f e c t s  
the i'inancial feas ibi lity of'  the programme . In  th i s  s tudy 
a s i Jap l e  method  '''as us ed t o  :ceduce the bas e ·:y ear surpJ us and 
di"�.rert  income into clevelOl)Jnent . ( Jh )  
The parmEetric evaluation o f'  prof'�tab�lity calculates t h e  
chc-mge in t h e  pres ent  v<:1.lue , payback p eri od a n d  po s t  t ax c a s h  
surplus for  vari o u s specif'ied  chongc s in woo l  pri c e  and wo o l  
pTod:.J.ction .  For  the s e c�lculations t o  b e  relevant the 
f'ollowing mus t ho l d : -
( i )  the a s s wne d ch<:m.ge in the 1\ 0 0 l  p ri c e  and in the toi.::al 
wo ol  product i on ��E o c cur in year cne of'  
deve lopment � and remain at  these  levels f o r  the 
remainder  o:f  the development period .  
( i i )  the dl�ve lopment plan mus t not  a l t e r .  
( i i i ) the bas e year  surplus mus t repres ent the actual 
level  of' pers onal drawings during development • .  
I f  one o f  the s e  cri teria does  not  hold ,  the analys is  is  
no  l onger meaningful . 
The parametric  rinancing analysi s  de termine s  for each  
year  the affect  of'  various changes  in 1vo o l  price  and '"o o l  
( JJ ) That i s  the diff'er6nce  between total  cash income and 
total cash  expenditure  in the pre-development s i tuation . 
( 34 )  The method used  is  de s cribed  i n  appendix  c .  
6'-f. 
production on the annua l overdra:ft o r  cash surplus and on the 
cumu l a tive deficit  or cash surlllus . This calculation i s  
liasecl  on the as sumptior; .. tha t  in n.ny o n e  y e ar t he bucl[';e t e cl Ko o l  
pr i c e  and woo l  producti. on have b e en r e a l i s e cl in  the preced:i nc;  
years . The further into  the future the analys i. s go e s  tbD 
mo re: un:::'ealis tic  the as swnption becomes . The analysis  may 
therefore only be really relevant for the initial  years of  
deve J_opment . 
4 .  1 In  t r o d t � c  t i on 
CJ-Lt\PTEl1 F01JR 
TI-H� �A?\ D')i-I Sl:HV EY FAH�1S 
The f i r s � p a r t  o �  thi s chapter deu l s  wi th the bas j. c  
inf'ormat i on o b tained f'rom t J1 o random s u rvey farJll s . Thi s 
65 
i n c l u d e s  de ta i l s  o f  :fCJ.rm 0\\'11. e rs l l i p , r e s our c e s , s i z e ,  topograpll); 
s t o cking rat e  an c.i s t o ck perf'ormanc e .  T h e  s e c ond part o f  the 
chapter  deal ;,; with  t ll e  manace rial  prac "c i c e s  enc ountered  on the 
s urvey farms . S to ck and p a s ture J'lan a g e m o n t; pra c tices  us e d. t o  
maintain  pro d u c t i on a r e  ana ly s ed  in s o 1ne d e ta i l . ThE: 
imp o r t an t  we eds and p e s t s  fowl.d on tlle s urv ey fa rJ,iS and the 
me thods us e d  to c ontrol  them ur e also  d e s c r i b e d . 
Li . 2  Farm S i z e 
The s i z e  o f  hi ll c o un t ry she ep :farms in the H o r o 1d1.onua 
di s tri c t  vari e s  widely . The group ....\. :farms ( 1 )  yary in s i ze 
from 230 a c r e s  t o  4 oo a c r e s . Group B :fannt; ( 2 ) ran ge from J O O  
acres  to  9000  a c r e s . 0 f' the g r o up B : f a r m s  s e ·v c! l l  a r  o 18 s s  th::u1. 
1 , 000  acres  and s ix a r e  l e s s  than 2 , 000  acres  in s i ze . Thr e e  
of  the  group A f'arms are  l e s s  than J O O  a c r e s  and the  o t h e r  one 
i s  4oo a c re s  in s i z e . The s ize  o f  indiv-i dual farms i s  given 
in table  L� . 1 . 
The survey indi cated t h a t the maj o ri ty o f  hil l  c ountry 
sheep  farms in the Horowhenua dis trict  are l e s s  than 1 , 500 
acres in s i ze . Excluding the two large propertie s  of  6 , 000 
acres and 9 , 000 acres the ave rage s i ze is  1 , 0 9 0  acres . 
( 1) Group A farms ( 1 -4 ) are  thos e whi ch earn income from 
o ther agri cultural s ourc es as well  as from s he ep farming . 
( 2 ) Group B farms ( 5 - 20 )  are  s elf c ontained hil l  c ountry 
she ep units . 
6 6  
Tab l e  4 . 1 S i z e  a n d  T opography of  R a n d o m  S urvey F a rms 
Farm N umb e r  S i z e  - acres % Unploughable 
A 1 250 95 
2 230 86 
3 2 6 8  7 4 
4 1+00 75  
B 5 9 , 000 95 
6 950  65 
,.., 2 , 0 9 7  80 I 
8 420 . 67  
9 1 ' 2 1 3  80 
1 0  1 '  1 44 80 
1 1 5 4 8  7 0  
1 2 7 45 8 1  
1 3  850 75 
1 4  1 ,  85 8 67  
1 5  1 , 4 4 1  69  
1 6  3 1 7 65 
1 7  1 ' 045 86  
1 8 1 '  230 80 
1 9  6 , 000 68 
20 1 ,  4 1  2 95  
4 . 3 Topography 
The topography o f  the individual farms ranges  from easy  
hill  c ountry wi th s ome  flat land to  very steep  broken country 
with little  or no  flat  land . For each survey farm the land is  
c las sified  as  ploughable or unploughable . Thi s provides  an 
indication of the relative topography for  each farm . Such a 
c las sification i s  approximate  as  i t  i s  bas ed on farmers ' 
o pinions and the author ' s  visual as s e s sment . The c lass ifi ca-
t i on i s  given in t ab l e  4 . 1 .  
A l l  s urvey :fa rms have S O J '1 e  l a n d wh i c h  is p l o uc;hab J e .  
The a.:!.' e t.1 o:f  ploue;huble  l an d  varies  :from fiYe l""ler  c e n t  on t hr e e  
f'arm s t o  J5  por  c e n t  on t·v.-o properties . On m o s t  farms b et1·; (e;en 
1 ·j �'-n d 23 p e r  cent  o f  the to t a l l and i s  p l oughab l e . 
I I q . • '-1 L an d  'C :'::' c 
For  e a c h  :farm the land ar e a  i s  divided into three  
ca tegories -
( :t_ ) pz,.s ture - both na t b.re and S O \vTI pas ture 
( ii ) Unp.rocluc t i v e  l and c ap a b l e  o f  being develop (.) d  - l cm.d 
infe s t ed  Ki th f e rn , scrub and other weeds . 
( i i i )  V a s t e  - l and c overed  by bui l d i n g s , ra c e s , n a tive 
bus h ,  a s  1:e l l  a s  o t h e r  areas , .. -hi c h  c ann o t  lJe  
dcYe lovcd .  
The s e  cat egori0 s  a r e  app r o x ima t e  an d repr0sent largely a 
vi::: l�a l  a s s e s sment due t o  the l c::t c k  o f  reliabl e farm m a p s . 
D e t a i l s  of  l and u s e; a r e  gi ven in table 4 . .  2 ,  Five  of the 28 
:farmers  are ut i li s ing a l l  the procluctiYe land on thei r  farms . 
On t h e  o ther 1 5  f a rms t h e r e  are a r e a s  o f  lan d �hi c h  c o u l d  b e  
brought into p r o du c t ive us e . Large areas  o:f  nat ive bush  on 
s ix i'arms acc ount  for  a high perc entage ( 1 0% or  more ) of  the 
farm being c las s ifi ed as was t e . 
4 . 5 D r a i n age and Water  Supply 
Generally natural drainage is  adequate on all  propert i es . 
Only one farmer i s  c oncerned with hill  paddocks be coming very 
wet i n  the winter . Drainage i s  more of  a problem on the f l a t  
land with  five of  the survey fanners utilising vee ,  tile  and 
mole drains t o  advantage . 
Tab l e  L� . 2 Land U s e  o n  R a n d o m  S u r v e v  F i:l. rms 
6 8  
[_Far_� n N�:l�) e r  -- L a n d  in �:>-o-. s-i.-: ur:·-r--L--v.-n_d_;· o tcntially  P e nnan ent 1 ·------ --( 7;:. ) P r o J.u c tivc ( ;£ ) __ l·ias_t�_J?) _1
A ·1 
2 
3 
B 5 
6 
7 
8 
9 
1 0  
1 2 
1 J  
1 4 
1 5 
1 6 
1 7 
1 8 
l 
19 
-
20 
80 N i l  2 0  
7 8  9 13  
89  
9 3  
s o 
6 8  
6 7  
9.5 
96 
8 8  
95  
7 9  
8 8  
62 
6 1  
3 4  
9 ·'+ 
8 3 
5 
6 
2 6  
28  
I:\ i l  
Nil  
8 
6 
Nil  
Nil  
2 
1 1  
6 
8 
1 6  
5 7  
4 
2 
44  
6 
5 
5 
4 
4 
5 
6 
6 
3 
10 
6 
JO 
23 
9 
2 
In  very dry swnmers the natural ·h-ater  supply on s ome 
survey farms at  Paekakariki fails . Els ewhere  throughout the 
dis trict  ab1..u1dan.t natural \\-at er  suppli e s  exist  on all  
properties . On s ome fa rms where  further subdivis ion is  
envisaged ,  w·ater  supplies  will  need t o  be extended .  
4 . 6  Buildin� 
On all  the farms surveyed  woolsheds , sheep  yards and 
cattle  yards were adequate . F our farmers on larger and more 
broken c o1mtry had two or  m o r e  s e t s  of  s h e ep yards . This  
f'ac ili  tate (l handling o f' the  s "L o ck and reduced  t h e  t ime 
invulvcd w i t h  s to ck o p e ra t i o ns . 
o f  c: a t t l e  yards . C o t t l e  yards were genera lly poorer  in 
c o n lU. tion a nd l ay out than tho s h c� e p y a r d s . 
Acc omewdation :f o r  marri e d  p e rman e n t  lil G n  i s  of  a 
s a t i s fa c t o ry s tandard . Farm hous e s  ranee in quEt li  ty from 
hous e s  bui l t  more than J O  y e a rs a go to modern howe .s . The 
overall s t and c.� r cl of' f'a:cPl Jtous inc; i s  good . 
T e nul' C  o f  F a rn .s 
Tenu r e  o f  the individual :('arms is  l i s t e d  in � ab l e  4 , J , 
A l l  but t, .. -o f'arms are f:c e e h o l d  propert i es . The exeeptivns 
are a N a o r i  leas ehold  property and a Cro�n Land property . 
The �aori leas e property c ons i s t s  o f'  two blocks o f'  l a n d  
with leas e s of 1 7  and 1 5  years  r e s p e c t i ve ly , Thi s  property i s  
s i  tuc. ted  in  a n  a r e a  ,,-he r e  muc h o 1� the land h a s  been m .. ""11. C c1.  b;.l 
the �aori pe ople , Tho C roKn Lan.d pr o p e rty is  the Lands and 
Survey 1 s f8.rm � 1·."hareroa ,  s i tuated  at P a ekakariki . 
The respons ibi li ty for the management of  the survey farms 
is given in tab l e  4 , J ,  Individual 01\TIGrs  are respons ible for 
management on 80 per c en t  of  the farms . The o ther four farms 
are controlled  by managers . The degree  of absent e e  o wnership 
in the di s tric t is  small . Only five of  the 70  hill c ow1.try 
farms identified  by the author  have abs entee  owners . 
4 . 8 Farm 0Kners 
The age distribution of  the s ixte en owner operated  farms 
is listed  in table  4 . 4 .  
I 
' 
70  
Table  4 ,  J Tenur e  and R e spons ibiliE_�f'or N<.m <te;oment o i' Handom 
S u r v e Y  l' a rl'lS 
·-----"'::.......:.....;;. .:....:. 
I 
. -
Farm K1.:unber Tenure  H e s p o n s i bi l i t y  :for )1i:tl1cl(';e11len t I I 
A 1 Freehold  01·.Tw r 
2 No. o r i  l e a s e 0Kner 
J Freeho .l cl Owner 
4 Freehold O·h'Tler  
B 5 Freehold 01\·ner  
6 Freehold 0 Kn c r  
7 F r e eho l d  :Hanager 
8 Freehold Oioler  
9 Freehold O i,Tler 
1 0  Fre ehold  0\,':ll. e r  
1 1  Fre ehold  i'lanager 
1 2 Fre ehold 0Kn er 
1 J F re ehold Hana.ger 
1 4  Fre ehold  0 Kl'l e r  
1 5 Fre ehold  0 '1,'1.1.er 
1 6  Fre ehold  0 '1ol. e r  
1 7  Freehold 0 \\�.n e r  
I 
I 
I 
I 
1 8 Freehold 0\·:n er  
1 9  Freehold O·I\T!.er _j 20 Cro,,n �Land Hanager 
Table 4 . 4  Age D i s t r i bu t i on o f  Survey Fanners 
Age �rou;e J0-40  years 40-,20 xears ,20-60 years 
Number in 4 4 8 
�rOUJ2 
The farmers in the JO to  40 year age group tended to  be 
the more  progres s ive farmers . All these  farmers have recently 
7 1  
c arried  o u t  deve l o pmen t worJ.;·. and are keen t o  p r o g r c s  s f'u r t h e r .  
A LL farm e r s  i n  t h e  LJ O t o  5 0  y e ar ll g e  c;- r o u p hav e  t a kt.�n o·ver· 
the DlCLl1 3.[;<;;Jto.en t and then t h e  oKnership of  f'umi J. y  :farm s . Th i s  
{jTOUp t ends t o  b e  mo r e  C 011 S e rva t i  V t'.!  t han the )' O "Ltn g e r  age f.?,'l' O Up 
but have more res ources  at the i r  dispo sal . 
Ha.l :C  the 01>!1. e r  opera t o rs arc  m o r e  thnn 5 0  y e t:l.rs o i' ae;e . 
The a u t h o r f'o uncl  f a rm e r s  in thi s gr oup t ende d t o  have fi:·:ecl 
ideas  about management practi c e s . Five  of the eight f'<1 :rme ::.�s 
in thi s group will  e ·ventua .l l y  t r an s :f e r  c ontrol  of  the f'a nns 
to t h e i r  s ons . 
O f' the 1 6 01·.-n o r  operatccJ. farlJI.:.; ! eight hil.VG 0 1,-n e d  t h e i r  
farm s  :for  t en years o r  l e s s , four :C o r  t en t o  t K en ty y e a r s � and 
f' our m o r e  t han t h· en ty y e a rs , F ive o :f the 1 6 01'.""1 l e r  s have ha cl 
f'an:li nrs experience  i n  a r e a s  ou t s i de the Horo 1..-l18·nua di s t r i c t . 
The exp e r i enc e h�s range d from Jni x e d  c r opp ing �u1 d d a i ry i ng 
t hrough t o  s l1 e ep :farming . One :Carm e r  a l s o  h c:. s  prac t i c ::.t. l  
la.l.mv l e dgo of  ac c ountancy a n d  bus iness  mO.J1.ag cment . The o t he r 
1 1  m·:n e r s  are  f'a:nncrs 1v·ho have spent many years h-arking on 
farms in the di s tric t . 
All  four managers a r e  c apab l e  men with a number o f'  years 
of farming experi ence .  The wri ter cons iders that the 
managerial abil i ty o:f these  men is equal to that of the 
resident survey ow:ners . 
4 . 9  Farm Labour 
Permanent labour is employed  on 1 J of  the 20 random 
survey farms . On five o:f  the s e  farms the perwanent labour i s  
the owner 1 s s ons . 
from one to  :five , 
The nwuber  of  permanent men employed ranges 
Ten farms employ one , t1vo farms three , and 
one :fc:trm f'ive permanent men . 
7 2  
A J.l  o i'  the :fa rnts orc,anis ed  by 
rn<)nagers cwploy pPrmanent la·IJour . 
The mon omployod  on the f'arws arc usually e x p e r i enc e d  
shepherds . However l a rc;er 1.xn i ts  also  ewploy mccl1anics  and 
uns k i l L3 cl  labo ur , Fal.lint; pri c e s  and r i s ing c o s t s  have 
caused  two :farmers t o  r e duc e the numb e �c o :r permanent labour 
uni t s  on their  :farms . 
Fourteen :farm e r s  employed  e i ther c ontra c t  o r  casual  
shearers . C ontrac t fencers and s crubcutt crs 1·' e r c  hired by 
1 G .farmers . Four of'  the survey farms did no t employ o u t s i d e  
labour . 
A me a s  Ll r e  o:ften us ed  as an i:n.di c c.1 t o r  o f  labour 
pro duc ti v.L ty is  the nwnbcr o l'  bre eding e,\·e: s  p c �·:' l a b o ur uni t .  
Thi s  i s  a ra t io and a s  such suf':fers :frow a llwub c r  o :f  
disadvuntaces . One disadvantage i s  that i t  as s mne s the s i z e 
o f  the bre eding t·l o ck d e termines  the nwnber  of  l ab o llr lUli ts  
required .  Thi s  i s  o f t en not  the cas e as  i s  illus trated  by 
farm numb e r  1 9 . Be caus e all  development 1wrk i s  carried  out 
b y  farm l abour a me chanic/Helder  is employ ed ,  H en c e  i n  thi s 
ins tance  the s i ze o f' the breeding flock do es not  de termin e  the 
nmnber of  labour uni ts . Despit e  this the measure doe s give 
s ome indication o f  the · nwnb e r  o f  breeding ewes  being handled  
by labour uni t s . On the Horowhenua hill  country the number 
of breeding ewes  per labour uni t  ranges from 350 to  1 500 . 
The average i s  873  ewes per labour unit . The rati o  o f  1 , 000 
breeding e\ves  per labour unit  is  exceeded on ten farms . 
Casual l abour is  available  for work on hill  c ow1.try farms 
as all  farms are clos e to maj or tmms . However a few survey 
7 3  
�arm e r s  have di�ficulty in hiring e xperi enced casual labour . 
The avero�e  wa�e f o r  c a s ua l  � o rk e rs i n  the northorn and 
c entra l a r e a s  i s  o n e  dollar ( A 1 ) per hour . Competition ±'or 
labour wi th the indu s t r i a l  s e c tors of W e l l in e t o n  and the Hu t t  
V a l l ey forces  hi l l  c oun t ry :f<crnwrs a t  t h e s o u t h e rn end o f' the 
dis tric t  t o  p ay up t o  one do l l a r  twen -c y :five c ents ( $ 1  • 25 ) per  
hour for  casual l a b o u r .  
L� , ·1 0 S t a cking H a t e s  
S ev e r a l  c l<J s s e s o f  s to ck ( 3 ) are found on a l l  :farm s . 
Th e s e  have been c onve r t e d  t o  e1\ e  equi  valen tE::> ( E .  E . ) us ing the 
c o ef:fi cients  in t ab l e  4 . 5 .  The co effic ient s in t ab l e  4 . 5  
a r e  s imi l a r  to  tho s e  us e d  by C artwright except  that a fixed  
c o e:ff'icim 1t has l.1 e en us ed  r L!. ) i'ol ·  <J.dul  t 1\-e thers . \ · The c r i  t i c c.. l  
p e r i o d  for s to ck feed  is  in t h e  l a t e  1dnter  ·- early  spring 
period , For  thi s reas on all  s t o cking ra tes have b e en 
calculated  �ram the ,,·inter s t a ck nwnber.s . Tb e number of  
breedin g m-.-e s and breeding C O\\' S pres ent on  each survey farm 
is  show:n in table h .  6. The total nwnber of e1,Te equivalents 
is  al s o l i s t e d ,  
Of  the group B �arms one has l ess  than 1 500  E . E . and 
s even more than 2500 E . E . All  group A farmers have bet·l\·een 
( 3 ) For a defini tion of  the various s t o ck c las s es the reader 
is referred to the glo s s ary . 
( 4 ) This ass�wes that the marginal rate of subst itution of  
adult  wethers for  breeding e1ves is  c ons tant for  any one 
overall  s tocking rate .  Cartwright in his s tudy us ed  a 
diminishing marginal rat e  of  subs titution o f  breeding 
e,,Te s for adult wec;hers , i . e .  three breeding e1ves  and s ix 
adult  1vethers have equivalent fee d  requirements at a 
s to cking rate  of  3 E . E .  per acre . A t  a s t ocking rate  of  
6 E . E o  per acre  s ix ewes  and eight 1vethers have equivalent 
requirements for fe ed .  
Tabl e /. J . • .2_ C onv e r s i on Coeff'ic i cnts  f o r  S to ck l'f i n t c r e d  
C l a s s o :l S t o ck 
Ewe Hogget 
\\'" e ther IIogge t 
Breeding E:1ve ( 2 th and older ) 
Ram ( 2th and older ) 
Ke tller ( 2 th a.nd. olde r ) 
Ri s ing one y e ar cattle  
Ris ing two year cat t l e  
Cat t L e  two years and older 
rwe Lquivalent ( E , E . ) per 
An imal 
0 . 7 5  
0. 75 
"j , 0 0 
1 . 00 
o . s o 
J , OO 
s . o o l 
4 , 0 0 
\.------ -- ----
1 0 0 0  and 1 5 0 0  E . E .  The s to cking rate s  for the random survey 
farms are sho\\J.i in table  4 ,  7 , 
S tocking rates  in the tabl e a r e  express ed in four ways , 
Column two indi c<J.tes  the s t o cking rate  on c.;razeable pas ture . 
OnJ:y six  farmers a r e  achi eving a s t ocking rate  of  4 E . E .  p e r  
a c r e  or  better on this ba s is . :!'ive fa rm e rs have a s tocking 
rate  of  les s  than 3 E . E . per  acre . On mo s t farms ( 45%) the 
s to cking rate is betwe en J E . E .  and 4 E , E .  per acre . 
C olumn three  li s ts the s tocking rate in terms o f  e1ve 
equivalents per potentially productive acre . Thes e  fig-ure s  
allow comparis on between the farmer ' s  e s t imated  p o t ential  
s tocking rate  and the s to cking rate  pres ently being achieved .  
The number of  s heep e1\re equi vaJ_ents per productive acre 
are given in. column four , Only two of  the 20 farmers surveyed 
are carrying more than three sheep e1ve equivalents  per  
productive acre . The ma j ority ( 65% ) of  the farmers  have a 
carrying capacity o f  t1v0 to  three  she ep equivalent s . The 
remainder are  s to cking at less  than t'vo sheep ewe equivalents 
Tabl e L� . 6 D r e e ding S -r o c k on H a n d o m S urvev F <:1. rm s  .'3 1 . 6 .• £� 
r-· 
F a rm I\\unb o r  Bre e din g Ewe s D r e e dinc C oKs To t a l  
:C\1' 8 
7 5  
Eq-uiva l ent s 
A 1 650 - 82� 
2 350 - 5 4 8  
3 1+50 - 5 9 2  
4 1 000 4 6  '1 5 70 
B 5 2000 200 6 200 
6 900 66  1 627 
7 2250 1 70  L!- 663  
8 1 200 55  1 860 
9 20 1 0 90  .32 1 0  
1 0 9 63  96 24 1  L� 
"1 1 1 000  83  1 740 
1 2 1 050 - 2 lt- 1  8 
1 3  2000  1 70 3568  
! 4 I 2200 700 7 7 4 2 
1 5  2.250 1 20 37 1 0  
1 6 450  1 5  1 348  
1 7  1 250 60 1 898  
1 8  1 7 00 60 2396  
1 9 3500  1 50  7260 
20 5500  246 8534 
I I 
- -
F a rm D;,- e E quiva l ent s E1v-o Equiv a l o n t s  S h e e p  £1·.- e 
1'·Tum·b e r  ( E . E . ) p e r  P r o ·- p e r  p o t: c. :n t i o. l l-y Eq ui va 1cmts 
du c t i v e  a c r e  pro duc t ive a c r e  per p r o dl< c -
t i v e  a c r e  
( . ) 1 ,  ( ii )  ( :L i i )  I ( iv )  1--·-- --f-·-- -
T 1 �- ' 3·?C 4 , y:- 4 . 3 
2 2 .  9* 
J 2 . 5* 
l.j. 3 . 7  
5 1 ? . '-
6 2 . 7  
'7 3 . 4 
8 h . 9 
9 2 . 6 
1 0  2 . 4 
1 1 3 . 5 
1 2 3 . 2 
1 3 l.j . •  7 
1 L� L� • '7 
1 5 J . 4 
1 6 4 . 0  
1 7  2 . 9 
1 8 J , 2 
1 9 3 . 0 
20 4 . 6 
Average 3 . 3 
l 
Notes  -
1 . * P lus varying 
1vintered . 
2 . NA denotes  non 
2 . 6* 
2 . Y'" 
3 • L,. 
1 • 1 
2 .  1 
2 . 3 
� . 9  
2 . 6 
2 . 2 
J , J 
3 . 2 
h . 7 
� . 6  
J , O 
3 . 7  
2 . 6 
2 . 5 
1 . 2 
� . 4 
3 . 0 
numbers o f  town 
applicable ,  
milk 
2 . 9 
2 . 5 
2 . 9 
1 • 0 
1 0 . / 
2 . 9 
4 '  1 
2 . 0 
.. I ' :J 
2 . 6 
� r-
J (' I 
3 . _5 
2 . 2 
2 . 7 
2 . 9 
2 . 3 
2 .  1 
2 . 5 
J , 8 
2 . 5 
replacement 
Sho op_E·�· � 
r ·  · tl r ' ·  � v3.0� · C :... .._., ., 
( \- ) 
·------
N.A. 
?\A 
NA 
3 . 6 
5 I 2 . 3  I 
3 . 2 I 5 ' 1 
I J , 3 
1 . 6 
2 . 9 ' I I 
I 1 , 1 I 2 . 7 I 0 . 9 
J , 8 I I 2 , 6  ' 
3 . 8 
1 . 9 
s . o 
4 . 7 
3 . 1 
st o ck 
7 7 
per  product ive a cre . 
The ratio  of' sheep C\vc e quiv<t l cn t s  t o  e a  t tle 8\\-e 
equivalents  i s  given in c o lwm1 f' i v e , T h e r e  i s  c ons idcrnble  
variation i n  the s e  f' i  gur e s  and i t  i s  d Lff'i cul t t o  drcu,- any 
Korthidli l e c onc lus i on s . H o K e v e r  even on the mo s t  in�roved 
hi ll  c ountry property s ome cc:t.ttlc  are ne e ded  t o  c ontrol ,\-e e d s  
Khi ch sheep  1..-i ll  no t eat , 
L� , 1 1 S t ock P erfonnance  
.u�oubing p e r c e n tc:t.e;e , calving percen tc:t.ge ( 5)  ancl the 
p e r c e n t a g· e  oJ' lambs fa t t ened  are  lis ted  in table  L� . 8 ,  The s e  
figures  refer t o  the 1 9 6 8 - 6 9 s eas on .  Thi s s e as on was one in 
Khich large nwnbers  o f' breeding 
in t h e  H o r owhenua dis tric t , ( 6 ) This has 
on s ome proper ti es  
affe c t ed  s ome of  
the calving percentages  shown in the t&ble . 
Lambing p e r c en t a g e s  vary from 7 5 per c on t to  1 ·1 0 p e r  
cent , The hic;her fi gure ·\\Tas  obtained by a P erendale  flo ck .  
Sixte en o f  the s u rv e y  fanns h a v e  lambing perc entage s b e t w e e n 
80 per  c ent and 90 per  c ent . The average lambing percentage 
of 86 . 7 per c ent is  s imilar to  the Heat and lv o o l  Doard ' s 
figure for hard �orth I s land hill  c ountr)' o ( 7 )  
· There i s  a great er vc:t.riation in calving percentages than 
there is  in lambing percentages . The average calving 
( 5 ) For definitions o f  lambing and calving percentages the 
reader is referred  to  the glos sary . 
( 6 )  Due t o  fe ed  shortages large numbers of  breeding cmvs 1vere  
fed on  fern and o ther roughage . Prolonged  feeding of  
too  much roughage caused  malnutrition resulting in J_arge 
loss e s . 
· 
( 7 )  N . Z .  Neat  and Wool  Board ' s Economic Survey 1 96 8 .  
78 
Table 4 . 8  S tock Performance on Random Farms 
Farm Number Lambing Calving P ercentage of 
P ercentage P ercentage We ther Lambs 
Fattened 
1 75 NA Nil 
2 1 00 NA 38 
3 80 NA Nil 
4 80 80 Nil 
5 80 60 Nil 
6 90 75 Nil 
7 80 90 20 
8 90 90 90 
9 90 95 Nil 
1 0  85 80 Nil  
1 1 1 1  0 90 Nil 
1 2 90 NA 70 
1 3 90 90 90 
1 4  1 00 90 70 
1 5 90 80 90 
1 6  80 90 90 
1 7  80 80 Nil 
1 8 70 40 70 
1 9 85 85 80 
20 85 90 40 
Average 86 8 1 
Note ---
1 • NA denotes non applicable .  
percentage for the 1 6  farms is 8 1  per c ent with a range of 40 
per c ent to 95 per cent . Eleven of the 1 6  farms have calving 
percentages between 80 per cent and 90 per c ent . 
Only nine of the 20 random survey farms are s elling all 
s tore lambs . ( 8 ) The other 1 1  farmers are s elling as many 
7 9  
f'a t  lambs a s  i s  pos s ibl e . 
\{ o o l  pro  clu e t i  oll f'ie;-ures  have been  c oLL e c ted  from t en o :f  
the twenty f a rm.s , The s e  sho''' a ranr�·e o f  1 0-55  lb o f  ,,·o o l  p e r  
po t entially produc tive a cr e . The average fi g u r e  i s  2 5 lbs . 
This i s  :four pounds hi e·hc r  t han t h e  ::-r e a t  and 1·.' o o  l B o 2. .cd. 1 s 
f'igure :for  J\ o r t h  I s l and hard hi l l  c o lm t r y . ( 9 )  i� o t  t o o  much 
s ignifi cance should  be  a t ta ched to thi s fi �ure as  farmers 
sheep  poli c i es vary wide ly . The s e  poli c i e s  a:ffe c t  t l l e  h·o o l  
pro duc t i on from each  farm . 
l:- . 1 2  H e c en t  P r o du c t i m1 Tncre a s e s  on H Gt. n d o m S ·u rvey F h nn s  
This  s e c t i on deals  wi th rec ent  produc t i on increas e s , in 
terms of increas e d  c a rry ing capac i · Vy , achi eved by random 
survey farn1er �3 . Tab l e  � - 9  re c ords  the s e  i n c r e a s e s  in t e r m s  
of e·l\· e  equi Y a l e n  ts . 
In  the tab l e  c o lumn tKo refers  to  the  total  increas e in 
ewe equival ents  on indivi dual fa rms from t h e  ba s e year . I n  
mos t c a s e s  the base  y ear i s  the 1 9 6 l1 j5 s e a s on .  C o lu.11m three  
indicat e s  the number  of  ye <.1rs  over  \d1i cl1 increas e s in e,,-e 
equivalents ,,· ere  taken , i ., e . the number  o :f  y ears bet,,· e en the 
bas e year  and the 1 9 6 8/9 s ea s on .  The to t a l  increas e in ewe 
equival ents from the bas e year expres s ed as  a p erc ent a ge i s  
lis t ed  in c o lunm four . Variabi li ty in the change s in 
s tocking ra t e  be t\\een farms is shown by the average annual 
perc entage change in c o lwm� five . 
Annual s t ocking rat e changes over the las t five y ears  are  
( 8 ) S ee gl o s sary . 
( 9 ) N . Z .  Meat and Wool  Board ' s Economic Survey 1 968 . 
80 
R e c e n t P r o d u c t i o n  I n c r e a s e s  on H a n d o m  S urv ey f' a rms 
l 
-----
I I Farm T o t a l  I n c r e a s e  
I 
X u m b e r  o f' P e r c en t a g e  A v e ra g e  
I 
I 
I\ umb e r  I n  E < E .  �·' r o m  Y e a r s  I O l' J. n c r e a s c I nc r e a s e 
Bas e Y e a r  I n c r e a s e  r r o m  Ba s e  in E . E .  
Year  p e r  y e ar ( % )  
I 
( i )  ( i i )  ( i i i ) ( iv )  ( V ) 
1 I\ i l  5 X i l  N i l  
2 ::\' i l  r::· l\ i l  N i l  I _) I 
I 
3 1 �- 0 7 1 8 2 . 6 
4 286  5 2 7  5 . LJ 
5 -500 5 - 8  - 1 • 6 
6 1 50 5 9 1 • g 
7 850 5 22  4 . 5 
8 Not  
a v a i l a 11 1 e  
9 700 �- 30 
I 
/ . 5 
1 0  260  2 1 1 5 · 5  
1 1 7 00 5 6 9  1 Lt-
1 2 :0J i l  5 � i l  � i l  I 1 3 900 5 3 1  6 . 2 
I 1 �- 600 5 8 1 • 6 
1 5 1 000 3 -1> s e e  
below 
1 6 Kil  5 � il N i l  
1 7 5 6 2  5 4 2  8 .  �-
1 8 1 500 3 1 70 5 6 . 6 
1 9 4670  5 2 1 3 4 2 . 6 
20 3400 5 9 1  1 8 .  2 
Notes  -
1 . * Farm 1 5  had recently been enlarged through the 
acquis i tion of  more land s o  figures in co lunms 4 and 
5 are not meaningful . 
2 .  The me thod of development as s o ciated  'vith s t o ck increas e s  
on farm nwnber 20 is des cribed in chapter 5 · 
8 1  
shown for 1 8  farms . The figures  show that five o :f  these  
:farms have ll a d  n o  i n c reas e i n  t o t a l  e w e  equivalen ts  in  the  
l a s t :five y e a r s . S e v e n  .f a rm s  h � t v c  h a d  an a v e r n �- c  i n c r e a s e  i n  
ewe equivalents  o f  m o r e  than six p e r c e n t  per y e a r . On thc� s e  
lat t er :farms d e ve l o pment work has  been carri ed  out . 
The remaining s ix farms had nnnual C.,TO'.,·th rat e s  be tKe en 
one per  c ent  and s i x  per  c ent . Thes e  i'armers  :h a v e  ha d no 
fixed p a t t e rn t�J  the ir  increas e  in e11'e equivalents . The 
season , as much as  any thing,  has de termined  the y e a r ly 
increFl.s e in  s t ock nwnb e r s . 
4 . 1 3  Future P roduc t i on 
0 1v11ers o f  s urv ey farms w e r e  Ct s k e d  ,,·ha t  they c o n s i de r e d  t o  
b e  the p o t en. t i a l  carry inr; c apac i ty of  the ir  fe�.rms . 
r a n g e d  from 3 . 5  E . E .  p e r  acre  t o  1 0  E , E "  p e r  ( 1 0 )  acre . ' 
Mos t  farmers ( 75% ) cons i d e r  the i r  fan11S could  c a rry 
.5 E ,  E .  per produ c tive acre  \·:hen i'u l ly deve l o p e d .  C ompared t o  
the district  average of  3 . 0  E . E . t h i s r ep r e s en t s  a s ub s t an t i a l  
increas e in  carrying capac ity . The like lihood  o f  thi s 
increas e in carrying capacity b e ing achieved  in t h e  future i s  
s light ( s e e  pp 2l.j. 4/s) .  Only four farmers env i s age l a rge 
increases  in carrying capacity in the next five y ears . Thes e  
farmers already have development progranm1es  under \vay . Hos t  
o f  the survey farmers have no plans for subs tantially 
increasing product i on .  
( 1 0 )  The Lands and Survey farm i s  aiming at achi eving a 
c arrying capaci ty of  1 0  ewe equivalents  per  acre . The 
author does  not  consider  this  phys i cally nor  economically 
feas ible  wi th present  t e c hnology . ( s e e  P .  2Jl.J. ) 
L� . 1 L 1  A t ti t u d e s t o  D c v_e ]  o pl_!2.en t 
Al  thouc;h m a n y  survey farJ iler.s bel i c v·e s it,J.1. ifi c0nt  
82 
product i on increas e s  are pos s ibl e ,  f' e w  f'arm e r s  a r e  ai.;t emptinc 
to  achi eve them , Dur ing t he s urv ey the author at t empted  t o  
obtain informa ti on on  farmers ' atti tudes t o  development and 
their  reas ons for  n o t  increasing produ.c t i or1. . 
Fifty p e r  c ent o f' the survey :farmers  s a id that they arc 
int eres ted  in future d e v e l o pment , I t  i s  s ignif'i cant  tha t of  
the s e  half are prepared  t o  borro1v capi tal for deve lopment 
•wrk . ( 1 1 )  The o ther half  are only prepared  t o  develop their 
farms out of  income . This i s  becaus e o f  the un c e r t a inty 
surrow1.ding future  c os t and pTi c e  movemen t s . I :f capital  is  
borrO \·.-ed for deve lopment and pri c e s  c ontinue to  :fall  and c os t s  
to  ri s e , then i t  would be  di�fi cul t to  me e t  the �j na n c i a l  
c har r- e s  incurred . In  addi tion the s e  :farmers  beli eve tha t 
t h e y  c ould los e c apital  a lready inve s t ed  in the i r  £'arm . ( 1 2 ) 
This  group of  farmers c on s ider tha t i t  i s  unlikely t o  b e  
profi table to  borrow for future d eve lopmen t .  
However with  the pres ent pric e  c o s t  relati onship 
deve lopment out of income is  limi t ed . The amount o f  cash 
available  for  reinves tment in the  farm i s  decreas ing , ( 1 J ) 
( 1 1  ) 
( 1 2 )  
( 1 J ) 
These  farmers cons ider  that there i s  adequate  off farm 
capi tal available  for  development work ,  and that i t  would 
be profitable to  borrmv for development , 
This  could occur through the reduction in equi ty 
as s o ciated  1vi th a borrO\ving programme not being o ffs e t  by 
a profitable  development programme . 
This is  e s pecially true for farmers with low  incomes and 
l O\v equitie s . 
8J  
Rapi d increa s e s in c a rrying capaci t i es a r c  the refore mt l i k e l y  
t o  be  achieved  :from i n c o m e  a n d  any_ pr oduc t i on increati e i s  
l j kely t o  b e  s pasmodi c ,  
For  va ri ou�  r e a s o n s  t en :f 'armers ( _so% ) are  n o t  prepared 
t o  und e r t c:tkc development 1\'0 rk. in the :fo res e eable  :fu t ure . 
Three  :farll lcrs in thi s group c on.s idcr  a c ons o l i dn t i o n pho. s c ( 1 4 ) 
i s  es s ent i al  a t  t he p res ent t ime . Th e y  a r c  o :f  the opini on 
that  such a period  would improve their  financial po s i t i on ,  
I n  their vi ew development a t  pres ent p r i c es would be  
unprofi tabl e .  ( 1 S ) 
S in c e  they have :fre eho ld  :farms , t•,·o :farmers  a r e  c or. tent  
wi th their pres en t  :financ i a l  s i tu a t i on . At  t h e  present  
momen t t h e y  cons i der there  i s  n o  r e a l  inc entive t o  d e v e l o _!") 
their  :farms t o  hi f;her  produc t i \'e l evel s . ( 1 6 ) 
One :farmer s aid  he i s  t o o  old t o  c onsider  any more  
development work . He  i s  p r e paring to  give c on trol o :f t h e  
farm to h i s s on .  On ano ther  :fnrm the abs entee o1,r:rter i s  
preventing deve lopment . Surplus c a sh  is be inc used  :for  
pers onal us e rather than :for worthTdli l e  development , ( 1 7 )  
( 1 4 ) I n  thi s c ontex t cons olidation refers to  the improvement 
o f  the produc tive performanc e o f  the exis ting s t ock . 
For  the heavi ly c o�ni tted  :farmer this may be  the only 
p o ss ible  method o:f maintaining income levels . 
( 1 5 )  This s tatement was made intui tively by the three  :farmers 
c oncerned . N o  attempt had be en made t o  evaluate  the 
likely outc ome  o:f  planned  :future deve l opment . 
( 1 6 ) There  can be  no  such thing as  " s taying put " under  a 
s y s t em o:f  ris ing c os ts  and :falling inc omes . I :f  the real  
ne t income i s  t o  be  maintained  produc ti on will  have to  be  
increas ed .  
( 1 7 )  An  annual :fertilis er  application 12robably c ould rai s e  
c arrying capacity by 50 pe�  c ent on thi s :farm . 
84  
1'1,·o fa rmers c ons ider  this  clas s o f  hill c otmtry ,,r ill  no t 
l)e an e c on omi c propo s i t i on in a fe,,· y e a rs tim e , The reas on  
f o r  thi s lJ e l i e f  i s  ri s ing c o s t s  and  f a l l ing pri c e s . Deve lop-
m e n t therefore Kill  not  be c ons ide red  under any c ircumstance s . 
Thes c f'armers a r e  \lant ing t o  s e l l  t h e i r  farms and reinves t  the 
cD.pi tal  in i:\ c l o t h e r  indus try . ( 1 8 ) 
One fa rm e r  said he is  no t intere s ted  in deve lopment 
becaus e dev e lopment financ e is too c o s t ly ,  i . e .  interes t rates  
are t o o  high , He  said  that low interes t money should b e  
available  f o r  the deve lopment of  thi s c la s s  of'  hi l l  c otm try . 
Ho�ever if  deve lo�nent i t s e lf is  profitable then i t  should be  
pro:fi  table  t o  borrow f o r  deve lopment under the  .£�!inG il1.tcr -
e s t  rat e s . 
In  S lJJTllii et r y the reasons 1�o r  hill c ountry fanr:ers 
re:fro.ining from ea  rrying o ut deYe lopmen t are m::1ny and ',ra r i e d ,  
The three  mos t important fac t or s  are an avers i on t o  d e b t , the 
b e l i e f  tha t deve l o pment is unp r o f i t a b l e and w1.eertainty about 
the future . I f  farmers are  to be  encouraged to  increa s e  
production ( 1 9 )  then they mus t be  shm,'11. that : 
( i ) increas ed  production ,,· ill  increase  p o s t  tax 
( i i ) 
( iii ) 
profi ts 
it  i s  prof'i table t o  borro·hr for  development 
planne d  deve lopment wil l  no t be advers ely affec t ed  
( 1 8 ) The implicit  assumption is  that the capital releas e d  
wi ll earn a higher re turn in industry than in farming . 
( 1 9 ) From both the farmer ' s  and the nation ' s point of  view 
increas ed  production is nec e s sary in order to maintain 
the s tandard  of living , 
ss 
by further price falls . 
For  thi s purpo s e  greater euiplw s i .:;  mus t b e  placed  on :fo.rm 
man agement advi c e , H o  re ini'orma tion 1 m s  t b e  supp J_ied  to  
indivi dual farmers whi r-b. wi l l  enable  them to  increas e the i r  
man ag-e r i rLl a b i l  i_iJ:: ( 20 ) and hence thei :t' e fficiency , 
At  the t ime of the survey fa rm c o s t s 1-.r e r o  s t eadily 
increas ing and produc t  prices  1·:ere  :falling , During t h e  
c ours e of'  the surveys many :farmers menti oned adjns tmon·� � they 
h a d  made in an endeavour to maintain net  incomes .  The ac ti on 
t aken to maintain inc omes  va. r i e d  according to the individual 
farm s i tuation . ( 2 l ) The ad jus tments  m a d e  by the survey 
farmers arc  br:L e :fly li s ted  belcH : -
( i ) reduced labour :force  - many hill c o un. t ry f a rme r s  
have reduced  the nwnber  of  permanent la.bour un i t .s .  
This has increas ed labour pro duc tivity and :ceducocl 
fixe d  co s t s . 
( ii ) subs t i tuti on of  own labour :for  c ontract  labour -
s ome :farmers have j o ined t oge th e r  and a s sis t e d  e ach 
o ther wi th s t ock opera tions e . g .  shearing , This has 
reduced  cash  costs . 
( iii ) reduced  maintenance and deve lopment expenditure - the 
amount of fertiliser  applied ,  and the amount of 
( 20 )  This as sumes that managerial ability is a farm input i . e . 
each farmer has his own performance  level 1vhich differs  
from that of  o ther  farmers . 
( 2 -1 ) The l evel of  debt , s i ze  o f  farm , c o s t  s tructure , and 
pers onal income requirements  will  a ll affec t  the type 
and amount of adjus tment required . 
86 
fencing repairs has been markedly de creas e d ,  
supplemen ting farm inc ome by o ff' f a r , , 1  Kork . 
( v )  r e du c e d. p e r s onal drawings - c .  G .  f a rm e r  A $ I ,  J ? '·l t o  
$ 600 ; farm e r  B $; 2 ,  272 t o  $ ·i ,  4 9 1 , 
( vi ) increo. �:; e d  production . 
Up t o  the pres ent t ime t he c o s t pri c e  s qu e e z e  h a s  large ly 
b e e n o f:ff; e t  by reducing maint enance expend iture and p e rs onal 
drm1ings . The s e  m e a s ur e s  can o t ,  hm·:e,·er , b e  c ontinue d 
ind e :f i n i t c l y .  Inevitably :f<� . .L'mers ,.,-i ll  have t o  l o ok t o  
i n c r e a s e d  cffic i ency ( 2 2 )  and productiYi ty as a m e a n s  o :f  
ma:.i.n t a in i ng n e t  incomes . 
Thi s s ub s e c ti on deals  \vi th the s e a s onal r:1 a n :::. g e m e n t  o f  
catt le . 
Breedinr; E1·: e s  
___ ___,.______ 
( 75% ) o :f  s urvey farms . P erendale  eK e s  lv·ere be ing r a T.r-lo d only 
on f o ur propertie s .  On tKo of the s e  properti e s  the LJ.mbing 
percentage Kas s ignificantly ( 1 o% ) .1 li gher  than R0ll1!1.ey lambing 
perc entages . At  the time o f  the survey tKo farmers ,,-ere in 
the pro ce s s  of changing bre eds . The change ,,·as from the 
Ronmey to the P erendale  m1.d Coopworth breeds . This  was an 
attempt t o  improve lambing percentages . 
( 22 )  
Lambing date s  varied  from the 1 s t Augus t t o  the s ec ond 
Thi s  may involve increas ed output per 1.L11. it  of res ource , 
the elimination of' non e s s ential costs  and improved 
management • 
87  
week in S eptember .  On :four filrms l ambing c ommenced  on the 
1 s t  Augus t ,  o n  eight f'a nns the mi dd l e  week  in Aucus t ,  o n  s e v e H  
farms the b c giLuJ inc; of  S e ptember and. on one f a nn i:;he s c� c ond 
week in S eptenilicr .  ( ? ,, ) EKes ,,·ere  s e t s to cl;::ed  ·- .J  over lmnbin.g 
on all  survey f a rm s . W he r e pos s ibl e a l l  e w e �  were  l ambed on 
the :f l n. ts ilnd tlwn moved onto the hi lls . On farms 1d. t h  only 
s ma l l a r e a s  of fla t s  the maj ori ty of the lambing o ccurred  on 
the hi l l s .  
\l e aning ( 23 )  da t e s  varied  f'rom 1 s t Dec eJliber  t o mid 
January , On a nmnber  o f  fc=t rms the ,,- caning d a t e  ...-as determined 
by the e w e  s h ea ring d a t e ,  One farmer had the:  unu s u a l  pra c ti c e 
( :for tl1 i s  clas s of  c o<-mi'ry ) o :f 1·.· e an ing in December . 
lambs ,,· e; r e  t h en s ho rn in J an uary a f t e r  the l C.>.mbs had rec overed  
from the  e f f' c c t s  o:f  w e a n i n g . Only one  s urvey f"armer shore  h i �. 
ewes twi c e  a y e a r , This ,,·as done <l t  weaning time ( Dec ember ) 
and jus t  pri or to  tupping( 2 3 )  (April ) ,  The farmer said  that 
on his extensi  vc property  where  shepherding ,,-as minimal thi s 
prac t i c e  r e du c e d  ewe los s es . 
Elves  ,,·ere mobs t a cked ( 2 3 )  af'ter  wean�ng on  1 7 survey fanns , 
By doing this farmers hoped  t o  build up fertility and control 
rough pas tures , This prac tice  Kas no t undert aken on farms 
where there was inadequate  subdivision .  
The culling of  ewes vari ed according t o  whether s t ock 
numbers 1vere being rapidly increased .  In  es tablished flo cks 
a s t andard practice  ,,ras the s ale of  cas t-for-age ( C . F  .A . )  
ewes , ( 2J ) Hany of  thes e :farmers als o s old surplus t1vo t o o th 
ewes . 
( 23 ) S e e  glos sary , 
88 
The s e  ewe s were culled  on the bas is  o f  c ons t i tuti on ,  wool  ond  
teeth .  \{here s t o ck n u m b e r s  ''' ere  be in��- bu i l ·t  u p  rapidly  
culling  � a s  l es s ruth l es s . 
e1·: es  ,,· e 1.' e k e p t  f o r  a t  l 2 a s t a n o t h e r  o n e an d s o ll l e  t i 1 :: e s  t-1-:o 
s e a s ons . Two fann e r s  said  that  h i l l  country e�,· e s  \\ e r e  b e ing 
s o l d  t o o  e a r ly at  five y ears  o f  a�e . They s t a � e d  Tho t e � e s 
c ould be suc c e s s f'ully r c t o i n e cl  for o.Ho ther  y ear . Dry b·:o 
t o o th e v,· e s  1\rere  kept  on mos t  properties  but o l cl e r  e i,·e s i·:11i ch  
had not  pro duced  a l a mb w e r e  cu l l e d . 
H o s t  s urvey 
flushing . ( 21�- ) 
f' a rm e r s  e n d e a v o u r e d  t o  s ave 
d iff'icuJ t �o  manage  on  1 a rm s  i·:i th 
sma l l  a r e <cl S of f' l a t s  and in  s e as on s  Ki th  l ong dry s u mm e r s . 
r ? - )  
In  the s e  s e a s o n s  l a mb ing p e r c e n � a c e s  � e r e  b e l o �  av e r age . \ - � 
\{here s ubdivi s i on ,,· a s  inadequat e  f' l U !" h i n e· of E:' i 1' e s  c o n s i s t e cl o f  
moYing them t o  a n o t h e r paddo ck . 
The two  to o th e� e s  �ere  cenerally t u p p e d  s epara te ly to  
m i x e d  a c; e  e ,,·e s .  F a r m e r s  us i n g  P erendal e  r a m s  h ct d  a l o 1-: e r  rams 
t o  ewe s rat i o  ( 2 ·1 00 ) t han tho s e  :farmers  us ing Ronmey  r a m s  
( 2 . 5-3  1 00 ) . A tupping c rayon was us e d  on only one farm . 
The farmer believed  the effort  involved ,,·as ,,-or thKhil e  becaus e 
he Kas a b l e  to predi c t lambing patterns . 
Po s t  tupping management o f  bree ding ewe s was fairly 
uniform . Grazing management  on all  farms ,,-as tightened . 
Host  farmers  mobs tocked the ewe s  f'or s ix to  eight weeks and 
( 24 )  
( 25 ) 
S e e  glos s ary . 
In  the 1 970/7 1  s eas on lambing percentages on s ome survey 
farms ;-:ere  be tween 60 and 70 per c ent . Thi s was an 
aftermath of  the summer drought of  1 9 70 . 
then s e t  s t o cked , Three  fa rm e r s  mobs tocked ri ght throueh 
urJ.t i l  cru tching ( J u ly )  ancl t h c:n s e t  s t o c k e d .  T hi s  p r a c t i c e  
89 
r e s u l t e d  i n  an accumulation ol� fe ed  a h e a d of t h e  c.-: o s  1d1.i ch  1:c:; s 
utilised  j us t  prior  t o  lambing , 
Bre eding ewes ,,· e r e  f e d  ;.<u tumn s a Y c d pas ture J us -r;  pri or  
to  lambing- on  thTeo survey f o. rm s , To achieve thi s c� e s  � e r e  
res trict ed  t o  a maintenance  level of'  nutrition 1..m t i l  t hr e e  ·c c 
four 1ve eks before  lalllbing , The Cl\e s 11e r e  then m o v e d on to  the 
s av e d  pas ture  and a r i s ing p l ane o f  nutri tion .  The are rL o f  
p�s ture s av e d  va r i e d  acc o rding t o  the nwnb e r  o f' e� e s . A .s an 
cx<:�mp l e , one farm e r  c l o s ed  200 a c r e s  o f'  flat s  f o r  three  F i 0 /1 t hs 
( from Apri l to  J uly ) for 3000 e�e s . 
Inabil i ty t o  pro vi de s u ff'i c i en t  g r a s s  one mon th pri or  t o  
lawbing has led  t o  on e f'armc r f' e e din& hay t o  his e K e s . T L e  
am o un t  fed  varies  acc ording t o  the  s e as on ,  As much as  one-
thi rd o:f  a b a l e  per e1·;e per m onth h a s  b e e n feel ,  The r e  h a s 
b e en n o  dif':fi culty 1d t h  m1es  ref'us ine; t o  Nl.t the hc:t.y . This  
is probably due to  t h e  prac t i c e  o :f cuLL inG' e11e hogge ts  ,,,-y, i ch 
refus e to  cat  hay , 
The provis i on of'  a winter  crop for breeding e11e s had 
been a prac tice  on s everal f'arms in the pas t . A t  the time 
of the survey no farmer was growing a winter crop . 
4 . 1 5 . 2  Dis cus s i on 
At  the pres ent time there  are few P erendale  sheep being 
farmed on the Horohrhenua hill  country , C ons idering the 
phys ical  and climatic  condit ions this  is difficult t o  
unders tand . On the Horov;henua type of hill c ountry the 
Perendale  has a number o f' advantages over the Ronmey . 
Thes e  advantages  include : -
( i )  a hie-her lambing percentage  ( s e e  p .  7 7  ) 
( i i )  c;r c a t c r  hardin e s s  - 8.V e r a g e  s t o c k  l o s s e s  O n  :fa rms 
running P e r e n d a l e s  were s i{:;ni ficant ly ( 2';� ) l o \·.-er 
than on s urvey :f a rm s  carrying R o nliH) y .s , 
( i ii ) a l m,· o r  labour inpu t - there i s  l e: s s  shepherding 
with  Perendales . 
( iv )  
( 2 6 )  mo r e  sheep can b e  carried  per acre . ' 
Tho author c ons iders the:.:: on many s u rY e y  farms a chc::n.ge 
from R o mn e y s  t o  P e renda l e s  1v- o u l d  be one ' ' a y  in v.-hi eh : -
produc tion c o s t s  would be  reduced .  
gro s s  income  c ould bo increased . 
90 
( i ) 
( i :L )  
( i i i )  l a b o n r o utput a n d  h e n c e  t h e:-� numb e r  o:f  br e e d j n;� eKe s  
carried  increas ed .  
The ma j ori 1·y o :f  survey far111ers  11ere  a t t emp t ing t o  l amb 
according t o  feed  pat terns . !'-l.o1·:evor s ome f'a r m e r s  1·:ould 
benefit  by a d j us t ing the lambing date . W h e r e  the spring 
pas ture growth is s low laniliing s h o u l d  generally  be del�yed  t o  
the be�;inning of  S eptember .  On farms ��-11.ere  t h e  spring gro'.,- t h  
is earlier  farmers c an usually l amb earlier .  Thi s e;eneral 
concept  is  reinforced  by experiences  on the Lands and SurYey 
Department ' s  farm at Paekakariki . Increas ed fertility 
as s ociated with increas ed  fertili s er and sto cking rate s  has 
successfully altered  the lambing date  from the 28th Augus t to  
( 26 ) Survey farmers who have changed to  the Perendale  breed  
have s tated that on the s ame area they are able t o  carry 
more P erendales  than they could Romneys . A :r.·a tio  of  
five P erendales  to :four R omneys was menti oned . 
9 1  
the 1 s t Augus t .  
The divis ion of  Ci\e s in t o  l a t e and c u rly l aH1b c r s  has a 
n wnb e r  of  advantae;es .  I t  ensur e s  t h u t  mo s t  o f  th e eKes  Kh i ch 
are n e a r  l amb ing ge t the .S ct:v-c cl f e e d ,  i t  fa c i l i t a t e s  do cLing 
and the dry el·.- es  are in 1 a t e  l amb ing paddo cks . 
survey f'arms '.,· i t h in::-t de q u a t e  subdivi s i on thi s � .. -ov_ l d.  not be  
pos s ible . 
:Sar.ly ,,- e aning of  .lambs c onf'ers  f .l e x i  bili  t y  in s t o ck and 
pas ture  manac:;cmc:nt .  E1·: es  c an be  us e d  t o  c .ff e c t i ve ly c o n t r o l  
bra cken fern 1·.-hi l e  i i is  s till  in the vu.lnerable e aTly f'roncl 
.s t a g e , I f  fe e d is  s carc e early ,,- e a n i n g  m e an s  tJ1 a t  the el-.-e s 
do no t c omp e -c c  -�;- i ·th the l ambs f' o r  the avai lable  fe ed , Thi s l. c-�' 
pa r t i c u.Ltrly i mp o rtan t  in a r e a s  Khi ch a r e  sus c ep1; ibl e t o  s wnme r  
drougl J. ts . :'-1any survey f'armors m a i n -t a i n e d  i t  Ka s n o t  des irabl e 
to  K ean any e :=c r l i e r  un d e r  their m:1.nagemen t s y s  t ern , Evidence  
from the l1'ha t <-ti..-llo. ta  hi l l  c ountry r e :::; e.:;. r ch s tat i on d i sputes  thi 3 
c la i m , C l arkc ( 2 2 )  h a s i' o ttnd that irre s pective o f'  the q'cla l i ty 
of manageme n t  by J anuary later  ,\- e an e d  l an1bs a r e  no heav:i_ er  than 
earl ier  �eaned lambs . Where the bes t  pos s ible  provi s i on i s  
made f'or early Keaned  lambs they d o  better  than the later 
,,reaned lambs , 
For  mobstocking to  be  succes sful the author believes that 
minimwn s to cking intens i t ies  of  1 00 ewe equivalents per  acre  
and qui ck paddock changes  are es s ential . This c oncentration 
of  mouths and hooves effe c t ively utilises  all  groKth and 
impo s e s  tha l eas t hardship on the s tock .  1-Iany survey farmers 
are no t as  succ e s s�ul as they could be with mobs tocking.  
This lack of  success  i s  due to  insuffici ent  grazing intensi ty 
9 2  
and t o o  long a p�riod  b e tw e e n paddock chances . Thi r t y· t o  
forty ewe equivalents  p e r  a c r e i s  the mn.ximu..m s t o c k.i_ng 
int en s i ty b e ing a chi eved . }lany f'ar;n e r s  Et: !.' C! c;razin:c:; eKe s a t  
·1 0- 1 5  e w e  cqnivD 1 onts  p e r  a c r e . 
The us e o :f au b .. mm saved p a s  t u r 2  m e a n s  t li. 8. t a r 0 s  e r.....- e o f  
fe e d. i s  av8. i 1 <lb l e  f or  u s e in p e r i o d s o f  p o (J r  p zt s t LLt' e g r o 1d- h ,  
vi z ,  late , .... int er  and early spring . The a u t h o r  L e l i e v e �  t ha t  
thi s pra c t i c e  ��· o u l d  overc m'Je e a  t t l e  feeding p r o b l ems o n  a 
numb e: r  o :f 11  i 1 1  c oun t ry f a  nr, s  • 
Tl1.e breeding of  e·��-e r ep la  c enw n t s  \·T a s t h e  n c; rwal pr a c t i c e  
on a l l  survey farms . The management progran�e a f t e r  � eaning 
aime d at prov:L d ing amp l e  f e e d  in �1 11 e n d e a v o u r  to .; r o ;�- good  
s i zed  two  t o o th e w o s , 
ewe s t ended  t o  b e  ra t h e r smalJ . .  
drenching programme i1 .. a .s  c a r r i e d  out , The ;1.umb e :r' o f  drenche s 
and the drench us ed  vari ed . T�o a n d  up t o  :five drenches  per 
hogge t Kero c ommon on man y farms . The mo s t  popular drenche s 
'''ere  Thibenzole , Ces tagon and Ki lverm . TKenty-five per  c e n t  
of  survey farmers do s e d  t ll.e i :;.� lwgge ts  wi th s e l e niw11 , The se  
farmers found i t  helpful in  rearing e\\e hoggets , Rol·.'ever two 
other farmers had di scontinued this  practice as no growth 
responses were observed. 
Wintering systems varied. The more progres sive farmers 
wintered ewe hoggets with yom1.g ea ttle . On  mo s t  farms e�e 
hoggets were wint ered e ither in a s ingle block o r  in t wo or  
three  blo cks,  S even farmers provided supplementary >vinter  
�eed  for the hogge ts , Thi s c ons is ted  o :f  choumo e lier  and 
s1;cdc s in :five ins t a.n c e s  and h< l Y  in the o th e r  t-1,- o , Hay 
a n d  again the :follm;ing �larcb/Apri 1 a::� tlv o ( ' Y7 )  to o  t ll s . · - ' 
survey :f a rm e r  only shore in D e c embe r .  
old :for  s e c ond shearing , 
9J 
O n e  
Culling o:f ewe hogge ts  was largely  on we i ght and w o o l  
qv al i t y .  }!any :fann e r s  a l s o culled  � .. -o o l l-y :faced  hogget s , 
The :fe cwldi ty ( 2 8 )  o r  t h o s e  s h e e p i s  generally lm . or  th;:m_ O IJ O ll 
:f21. c ed  sheep . 
4 . 1 5 . 4  Dis cus s i on 
Thi s  i s  nec es sary if  go od  l ambing percentages  
and wool  we ights are  t o  b e  o b t aine d .  �Iany :C a r; n e r s  ,,-ere  
w·1succe s s ful in rearing good  s i zed  tw0  t o o tJ1 e -;,· e .s , Thi s  
fai lure no t onJ:y r e s u l t s  i n  a n  iuunediat e l o s s  L< product i on 
:from thes e she ep but a l s o l o·i\-el' productivi ty over their  
life time ( 2 �� ) .  
E\ve hogge ts are sus ceptible to  dis eas e ,  c limatic  
c ondi tions and feed  changes .  The ma j or  reas on :for poor  growth 
is the failure of the f'armers  to provide fe ed  of adequat e  
9-uality . The author c ons idered that the bes t two t o o th ewe s 
1vere :found on properties  where e1ve hoggets were g::cazed in 
( 27 ) 
( 28 )  
Hanika 1vodzicka-Tomas ze•,•ska e t  al ( 23 ) have shown. that 
pre-tupping shearing of  t•,•o tooths can often subs tantially 
increase  the lambing percentage by de creas ing the number 
o:f dry e1·1es .  
S e e  glos sary , 
a s s o c i ation with cattle . 
T11"0 non s urv ey f'armc rs have adopted  p r << c t i c e s  Khi cll a re 
aimed a t  o b t a inin g better quali ty tKo t o o �h c � e s . 
the s e  farmers hu y s  in replacement -t .-.-o t o o t h P \·: e s . 
O n e  o :f  
;-r e c ons i cl-
ers tha t the s e  sheep a r c  u e t t e r  th::-tn tho :r e p l a c omc n t .s he c an 
breed .  The o ther fa.rmer Grazes  l d  s e,,·e J�I O (;{:', e t s  on lowland 
farms in an endeavour to have b i g g e r  t w o  too �h eKe s . 
4 . 1 5 . 5  H e t h e r s  
A du l t  wethers  wore f a u na on thre e o f'  t h e  t�enty survey 
farms . The ind ivi dual pol .L c i e s  and the farw 2r 1 s r c a s o n s  :f o r  
us ing wethors Kere  as  fol l oKs : -
( i )  to  increas e managem ent f' l e ;..: i ll i l i  ty - t h e  �,- ether  lambs 
tha t w e r e  not s o ld  fa t K e r e  c a rri e d  tlrr ough a n d  s o ld  
a s  t1·-.-o t o o t h wethers . The 1�armer s 2. id  tha t o n  
( i i ) 
untopclres s ed hi ll  c o"Lmtry \lhere  the e f'i' e e; t s  of  a bad 
s eas on a r e  likely to be  more  s e v e r e , thi s pol i cy gaYe 
him increased  flexibility . I f  thoro Kas i n s u fF i c i en t  
feed  the we thers c ould be  s old .  Thi s would  a\ro id  the 
nece s s ity to s e l l  capital  bre e ding s t o ck ,  
to reduce  labour and fert i lis er requirement s - all  
w e t h e r  lambs are kept and s o ld as adult  we thors . 
The s e  we thers are run on an untopdres s ed i s olated  
block wi th diffi cult ac ces s .  The wethers are farmed 
for woo l  produc tion .  Each year the wors t wethers are 
s old.  The farmer said that  they give a re turn from a 
block '"hich  c ould not support  ewes without an annual 
:fertili s er application .  Their annual labour 
requirement i s  small and do es  not  interfere  with the 
95 
labour requirements  of  the breeding ewe s . 
( iii ) :for us e in duYe l o pmcn t a .l  1,·ork -· this  :f a r m e r  buys in 
four tooth � e t h e r s  a n d  th e s e are us e d  for developinG 
paddocks . They n. r o  s o.l d as  :full  mou-ch --;-;e thcrs and 
r e p r e s en t 1 7  per  c ent  o f  the to tal s he e p  pres ent  on 
tl1 e  prope rty , 
D i s c u s s i on 
In the author ' s  opini on 1,·e t h e r s  are only jus tifi ed in t h e  
s e c ond ins t ance  and then marl_? ..:.nally s o .  Ewes are  s t ill  the 
mos t  profi t a b l e  c la s s  of s t o c k  t o  carry on thi s t y p e o :f hill  
country • ( 2 9 ) They c a n b e  u s e d  succe s s fully :for de ve lopmental 
purpo s e s ( 3o )  and s t e p s  can b e  t ak en in advers e s eusons t o  
e n s u r e  s u ffi c i en t  :fe e d  i s  ava i l abl e f o r  them , 
The s e  a r e  p r 2 s en t  on s ixteen survey :f a rm s . The main 
bre e d  is A b e r d e e n  Angus . F i ve fann e r s  run e r a s ::: breeds , 
e i t h e r  Abe rde en Angus/Hereford ,  or  l!., berdcen Angus/Shorthorn . 
The s e  :farme r s  cons ider  the cro s s bre ed  is  a ha:cdi er ;:m.imal and 
better  sui t ed  t o  this  clas s  of  c ow1.try . ( 3 1 ) 
Calvinff oc curs mainly in S eptember  and O c tober .  Two 
farmers calve their  breeding cows out s ide thi s period  - in 
July and December . This is  to  avoid  c lashing with laniliing 
( 29 )  
( 30 ) 
( 3 1 ) 
See  appendix D .  
Inglis ( 25 ) s tated that the ewe i s  a better  developer 
than the hog get ,  t h e  lvether or  the ea ttle  beas t .  
American s tudies  indicate  that cros sbred cattle  will have 
greater vitali ty ,  fertility ,  milk production and higher 
grmv-th rate s  than purebred animals . However the extent 
of the advantages of' crossbreeding in Ne-.;,, Zealand have 
not  been evaluated .  
and t o  avoid  labour probl ems , The farmer 1d1.o cal Yes  his c m>s 
in ,July feed s  t l1 em on nutwun s a\' O d  pas ture lmtil  ,,· can :i. .nc; . 
Th e s : lJne f'armc:r clocks very early - ten clays a :fte :c c a lving . 
Thi s  i s  hoh·cvc r , an e xcep t ion t o  the c;eHer<:l. l practi c e . A:ftcr  
1veaning ( ?<1arch/April )  the bre ecliD g c o11s are us e d  to  c ontrol  
surplus :fe e d  and s e c ondary grm·:th , Cn s o m e  :La rms they a l s o 
play an important r o l e  in developing n m,· blocks . �Iany e :f  the 
older c o1vs deteri orate  in c oncli t i o n  un d e r  t h i s  t r e a t m e n t  and 
a r c  culled , 
The pro'.' i s ion  o f  fe e d  :for  brc� e ding cm·.-s in U1.e lat e ,,· inter  
ear ly sprinc; p2riod  i s  inadequc.. t e  o n  many survey :farms . ?-I any 
:fo.rm e r s  at t empt t o  winter  bre eding cm,-s on large areas  of  fern 
and o ther rouc;hage . A u t wn  s aY c d  pas ture  v:as p r o \-i d e d on 
thr c o  farms and h<ry on four fclrms . Th e b e s t 11in t c ring sy s t eg  
Gnc ountered  11as o n e  1dw r e  1 50 a c r e s o f' pc:ls turo i s  c l o s ed  in 
M a r ch and f e d  to 1 20 bre e ding co�s in J uly , Thi s et r c a  o f  
saved pas ture pro··vidcd suffi c i ent :l. c  e J. unti l  pas ture g-rm,·th  
reconunenc e cl in s pring . 
Of  the 1 6 properti e s  rwu1.ing breeding c o 11s , 1 1.1- rear 
their  m,n repl acement heifers . During the :firs t winter 
the s e  heifers are  fed s aved pas ture  and hay , The amow1.t of  
hay fed vari es according to  the s eas on , but ranges from eight 
to 20 bales  per  head . In the s e cond winter the two year 
heifers are not  fed quit e  as well .  He ifers are not  mated  
nnti l  t-...ro years  o f  age on  1 J of  the 1 4 farms . The 
ability to  provide adequate winter :feed for his yonng s t o ck 
enables one farmer t o  calve his heifers as two year o lds . 
9 7 
No  s e t  cul ling ( J 2 ) prac t i c e  c ould be determined on many 
:farms . C n t t l c  lo s s es are  high and thi s reduc e s  the numb er of  
cul l s t ock .  Surplus :female  repl <� c cmEmts  are s o ld  a s  t ·\\· o . -_y' f:! Ccr 
he i f e r s , y e a r l ing he i £a r s  and �eaner hei fers . 
In  re cant  y e a r s l i c e  have be en f'ou.J1 d on c a t 1; l c  on s ome 
s urvey farms . A .s a re sul t thre e farmers are s pray ing 
aru-n1a lly for li ce  and o ther farmers  a r e  c onsidering i t . 
4 . 1 5 . 8 D i s cus s i on 
The Horo>·:henua hil l  c o1..m try i s  r; o t  particularly sui t<J.bl e 
f o r  br e e d inc c a t t l e . The s t e e p  broken nature c r t :i1e land O t l  
mauy farms and the L.1ck of adequate  l.<J.te  i-.-inter  e <-< rly s pring 
f e e d  result  ill  los s e s  be ing high ( 7- 1 0% ) o 
the s e  farms s on1e  c a t t l e a r e  nec e s s ary to  as s i s t  in p a s ture 
r.wnagcmcnt . 
( J J )  
:=naclequa.te  ,,·in t e r  fe ed  contributes  to  l i:l. r s· e  l o s s e s o f'  
This is  e s pecia l ly s o  in �inters  �ith s erious 
fe ed  s h o r t age s f  e . g . 1 9 68/69 . R e s  oarch ( 26 ) ha s slwwn t h a t  
po or  fe eding o�  breeding co�s in late pregnancy can s ericus ly 
af:fe c t  calving percentages  and Fcaning \·: e i ghts . The o.u t h o r 
is  o f  the opinion tha t  inadequat e fe eding o f  bre e d ing cows 
could po s s ibly be the reason for low calving percentages  on 
s ome survey farms . 
The survey farmers were generally aware of  the need  t o  
provide more supplementary feed  for their breeding c ows . 
( 32 ) 
( JJ ) 
See  glo s sary . 
Te Awa results  indicate  that cattle  are  nece s sary to  
prevent reversion .  Sheep are unable  to  c ontrol  toe- to e ,  
and s e dges . 
Ho...-evcr s ome f'armers ,,rere  re luctant t o  buy iD lwy , O thers 
9 8  
fe l t  -t h� �t the J-n� o b l e m c o ul d n. o t b e  s o lve d un t i l  m o :ce fenc ing 
The phy s i. c 21 l c o ncli t i ons , as ,,-e l J_ as t l w  m<tnac;cmC:'nt 
prae ti  c e s  u s  e el ,  m c a Jl t tha t e :::t r l -:>' ma t ine; o f  he i f e r s  \\ a s  
qno u  t: i ty o f'  :feed  w a s  insuf:f'i c i  e n  t f' o r  b o t h  the c a l f' <:tJ l d  t h e  
h c i .L e r . 
4 . 1 5 .  9 D r v  C <';_ t t l e  _,_r  _ __ _ 
D ry C' a t t 1 e  ,,· e r e  f'Lt rm o d  on f' our s urvey :fa rms . On tKo o :f  
th C? c; c  :Ca n n s  t o wn milk S l '-pply c o�1;:; 1v e r e  us c cl t o  c on :: r o l  po s t u�_'<:' 
gr o •:; t h , The s e a1:. :Lmal s  c ould n o t  b e  gra :0 e d  h a : r d  c G l oi 
c o n s  e c-ru. e n -c ly p a s cure c ontrol  \·: a s  no t a s  t;o o d  a s  i t  c ould h:J.V•3 
b e e n . 
One :C a rm c r  1·:as v s ing Ile :�:- e :f o r d/F r i e s i an c r o s s  c at t l e  
·:) b t a i n c d  :from l:. i s  t m\-:�1 mi lk. s upv 1y h e r d. .  The s e  anim<.1 l .s '' f� r c  
r e a r e d  e i  t h c r  by nur s  c C 0 \\7 S o r  b y  ha:1. d , 
w e r e  us ed t o  c ontrol  [';TO\\th on tlw sheep  property· , They 11ere  
s old nt  t�o years of  ace . 
Th8 remcining :fa rm e r  buys in  e :i.gllt een month o ld s te ers and 
s e l l s  them a s  three y e a r  olds . The s e s te ers play an imp o r t � 1 t  
ro l e  in fern control  and o ther  deve lopmental work ,  Hature 
s t eers are us ed  in development 1\0rk on four farms running 
bree ding co1vs . All  o ther breeding farms sell the ir  s teers 
as weaners . 
1+ . 1 6 
On many farms pa.st.ure is  the sole s ource  of feed , 
Therefore the only contro l a farmer has over the nutrition of  
99 
his s tock i s  through pa s ture manaeement .  The aim should 
be to adopt a sys tem whi ch wi ll  r e s u l t  in greater pas ture 
pr o du c t i  vi ty and ensure  that  the animals' requircmen ts are me t .  
This i s  e specially import i m t in the critical  late  win t e r  early 
spring peri od .  The pas ture mana c; emen t tc cl:r1iques  b e ing us e d  
on  survey f'arm s  arc  d e s c r i l1 e d  i n  the f'olloi·:i2:g s e c tions , 
4 . 1 6 . 1  F e r t i l i s e r Pra c ti c e s  
lv i th the recent co s t - pri c e s qu e e z e  mc>.ny survey f'armers 
have e i the r r e d u c e d  the amo w : �  of fertilis er  applied ,  or 
s t opped  apply i ng it altogether . S in c e  1 9 6 6  s ix survey 
farmers have not  appl i ed a n y  f'ertili s er and a :further three  
have not  applied  fertili s er  to hi ll  p a d d o ck s . Thi s means  
that  t l.J.e hi ll  c ountry on nine survey farms has not  b e en 
t opdrc s s ed  f' o r  a t  l eas t thr e e  years . 
The quantity an d tyrJ e  of :fertili s e r  us e d  by farmers 1d t h  
annual f' e r t i l i s c r  progro.mmes is  given in table  4 . 1 0 .  
On these  farms the average app.·l_ i ca  tion rate  i s  b e tKeen 
t1\'0  and thre e bundredv-.-eight ( cwt ) per acre . Fert iliser is  
applied  to  the ,,-ho le  farm on n ine propertie s , On the o ther 
two farms l e s s  than half of the productive area receives 
fert iliser  annually . - Holybdic  superphosphate  i s  .us ed on 
four of' the s e  farms . O ther faiwers have s t opped  applying 
molybdic superphosphate  as they have no t obs erved any benefi t 
from i t .  One farmer reported  tauhinu c ountry as be ing 
responsive t o  this fertiliser .  
T1vo farmers apply manures  not  commonly us ed  in  the dis tri ct ,  
The Hanager o f  Lands and Survey farm a t  P aekakariki c onsiders 
the property is  c obalt deficient . 
u ; r  ' .., ( 
MA:s :;; ,' · . � . ·, :.:PSll'l. 
As  a result  in the 1 968/69  
·t o o  
Farm Qu ::mtity 
Nwuber P e r A c r e  
( Cld :; ) 
Typ e o :f  Fertiliser  P c, r c enta c; e  o :f  
P r o ch L c t i v e A r e a  ��pdres s e d-----1 
2 
J 
I' .:.> 
8 
1 1 
1 3  
1 4  
•J r.:: · ::>  
1 7 
20 
2J._ - 2  
J 
2 t 
2 
., .1_  "- 2  
J 
2�-
2 
2 
J 
Jl 
A e r i a l  supcrphospha t. e 
A o r i a J  
!·l o lybcEc  superphosphate  
A e r i a l  superphospha te  
.L\ e r i a l  .'3 , · : · erpho s pha t e  .;.:­
Aerial ,'3 Llperphosph2. to  
Aerial superpho sphate  
Mo lybdic  s up e rvho s pha t e  
Aerial  superphosphate  
C o bal t i s e d  aerial  
os upcrphospha t c?. 
1 00 
1 00 
1 00 
1 8  
1 00 
1 00 
1 00 
1 00 
45 
1 00 
1 00 
----- --L---- ---� ------- ----------------- -�--------------
·1 .  -t Eve ry third year ba s i c s l ac . 
2 .  * Every third year  n10 l·yb ::-l i c  s up e r . 
l 
J 
s eas on c obalti s ed  sup erphosphat e  wa s applied  for  the firs t 
time , E>.,-i dence for  a c a ba l t d c 1' i c i e n cy has come :from And:ce i,- s 
( 27 ) . He has s tated  that c ertain areas  of  the H o r m,-henua 
and Hutt co 1u1.ti es are  probably c o b a l t  deficient  in s ome years 
and in s ome circums tances . This defi ciency i s  likely t o  be 
more preval ent  in y01.mg she ep .  The deficiency re sults in a 
progres s ive .loss  o f  appeti t e  and a resulting loss  in 
condition .  
One survey farmer applied  bas ic s lag t o  his pas tures 
every third year . Res earch has shown the effec tiveness of 
basic slag depends upon soil acidity ar1d soil type . 
1 0 1 
On l ime and no lybdf:mum deficien t  s oils  mo lybdic superphos phate  
Give s a s  c; o o d  a r e s u l l as bas i c  s lag . A s  bas i c  s lu g  i s  
almo ;; t t\d. c e  the e o  f. t of'  mo :L�'bdi c superphosph::t t e  the o: ... uthor 
fee l s  i t s  u s e on hi l l  c otmtry i s  not  � a r r an t ed . 
?-Iany survey f a rm c .t' � believed the hill  cotu1try c ould be  
.fann e d  Ki thou.t fertilis er f o r  thre e years . A f t e r  this p o r i. o d  
the pas tures  would rte t e ri o ra t e , S ome survey farmers wi thout 
reg-ular t opdres s inc; programmes  acb11i t t ed  that c ertain pas tures  
had de t eriorated  over the y e ars . On many o .f  tho s e  farms  the 
autho r :fo w1d evi dence o f' r a  t r::: t a i l  in:f e s t a t  ion 1\hich i s  of' t en 
a s s o c i a t e d  �i th low f e r t i l i ty . The infe s tati on i s  p r o bably 
du o to a combination o:f lo1\� s t o cking rate and a L.'..ck o :f  
f e r  t i l :L s e :c • 
F0r  ne;·;ly  developed  bl ocks o .f  1-l.nd an ini t ial  ap p l i c <l t i oll. 
o :f 6 cwt o:f  superpho :: pha t e  Kas common . One farmer .from hi s 
experience  believes  that this  qu<lnti ty i s  inadequa te . :Ln 
future he intends to  us e 9 cKt o :f  superphosphate  a s  an ini t i al 
application .  
Ho s t  manure Kas applied.  by air and farmers preferred 
antunm appli cations t o  spring applications . Only one farm e r  
topdres s ed i n.  both the autunm and the spring . He s aid  that 
because o f  leaching , b etter  results were obtained from twice  
yearly applications of  fertiliser .  
'-t .  1 6 .  2 Discus s i on 
The natural fertility o f  the Horo1v-henua hill  c otmtry is  
low , especially in the Hanakau area • .  Thus fertiliser  i s  needed  
in  c onjunction w·i th s t o ck f'or  fertility buildup . The c omplete  
utili sation of'  the available  pas ture by the grazing animal i s  
1 0 2 
more important than the ex<::tc i.:  awount of  ferti lis er  appli e d ,  
:-ioKever shortae;cs  o .f bas ic  e .l e t n e n  t s  mus t b e  c orrec  t e cl .  F o r  
this cl a s s o f  hi ll  c 01 m t :1.--y , pho s pl ta t e , ::1nd i n  c ertain areas 
molybdenum , are the t 1-.:o main e l. cmen ts t ha t  a1� e  de f'i c i en t .  
App lication of  the s e  e l eme n t s  i s  therefore  nec e s s ary f o r  
improved fer ·f: i l .L ty , 
The autho:c gained the impres s i on tha t  on man.y of  the 
survey farms mm'lure 1-;as >ias  t e d ,  1fhile  many farmers Kere 
prep<-.J. ed  to  apply L1re;e quanti  t i e s  of' manure , n ot  a l l  ·i\·e r e  
prep c:.red  t o  � .ncreas c t h e  s t o cking r a t e  and h e n c e ut i l i s e the 
additiona l  ::'eed  gro1 .n .  A s  an example , one farmer believed i t  
Kas not  pos s ible  t o  increas e the s t o cking rate  on n e �  bl o cks 
w1.t i l  th:c ee  years  af t e r  the initial  app li c a t i on .  U nl e s s  the 
s t a c king ra t e  is high enough to innnl� d i a  t e ly cope  1d th  the 
extra gras s gro1·:th  no lJenefi t is gained  from the e xtra 
fertilis e r ,  In the development of ne� pas ture the mo s t  
importc:mt f'actor i s  u t i l i s a t i on . .  Thus an increase  in 
fert i lis er  appli cation and s t ocking rate mus t o ccur 
s imultaneous ly . 
Where only small  quant i ties  of fertiliser  are  applied  
each year at tenti on mus t  be .focus ed on ho 1·; this fertili s er  can 
be best  us ed ,  . By es tabli shing priori ti es the bes t  use o f  the 
available fertilis er is ensured. The firs t priority should 
be newly deve loped blocks . Naintenance dres sings mus t be 
applied annuall·f t o  these blocks to c onsolidate the gains in 
fertility made from previous fertili s er applications and good  
grazing management .  The next area to  receive fertilis er 
should be the well  es tablished pas ture . The bulk of the 
production c omes f' r o rn  t hi s  etr c a  and t o  wain t a i n  this r e [.,'ll l a r  
Ec r t i l l � c r application is  e s s en t i al .  
arc ;_-,_ s h a v e  b e e n t o pclrc s s c c..l s J  ould th0 c o.lrl ,  d ry o r  1.il l p r o < ln c -· 
ti·ve �� r c a s  c o n s  i dc' r c d .  The r e  l S  l i t t l e  p o in t  i n  applying 
fcrt i l :i. s er  t o  -,1n.rcspons ive p z.s turc � ,  e , g , pas ture s c on t a. ining 
li t t l •::: c l over . 
Th e quna ·c i ty o f  f e r t i l i s e r t o  appl.y t c  nain t<lin p a s  t Ll. r e s  
will  ,-<lry from i'arm t o  :f a rm ;  and Ki l l  dep end on  a n um b e r  o f'  
:fa c t o rs . Th a s o  fa o c; o r s  i nclude the l a v e l  o :f  pas ture 
produ c t i on ,  the :c· e m o ',ra l o _<: nut ri ents in the f o rm of animal 
P l ' O duc t s  .su.1.d the l o s s  of nu t r i en t s  from the s oil by l e a ching. 
R e c mrc A u s  tral.i wl v.- o rL ( J lr ) has s ho 1 .TI that the f'ertilis  e r  
r e qui r o m ent of  c. p a_ s turc o n  u.ny p<:Jrti cnlar s o i l  cle p cn<J s  
p ar t i  cul ;l.:c ly on t h e  s t o c 1-.. ing r e gimG . The he avi e r  the s t ocking 
rate  the l e s s  :f e r t i l i s e r t h e  p a s tur e r e qu i r e s .  
tha t hi gh e r  s t o c kinr; r a t e s  do not  impLy a g r e a t C:: r f e r t i l i s e r  
requi:ccment . I n  fa c t  i t  i s  l ikel-s' that the o p t imum f c r t i l i s  e r  
applica  t :L on. ;,-i 1. 1 "'::> c swallcr . 
4 . 1 6 . J  
1v i th the excepti on o i' three farms , subdivis i on on the 
survey farms was ina d e qua t e .  The r eas ons for this were 
va:r:-i e d . On s ome fa rms the natural t errain made the s i t ing of  
fences  difficul t .  X a tural fence l ines  lv-ere the rule rather 
than the exception on thes e farms . 
The maj or reason for the lack of  adequate subdivis i on was 
( J� ) S ource : J ournal of  Agriculture November 1 968  p .  1 00 .  
1 04 
undoubtedl;r :financ e .  Fen cing i s  c o s tly t o  erec t  and 
immedi ate  financi c.t l  re turn s  f'rom i t  are n o t  obvio us . Re c en t  
subd:L  vi s i on o n  s o m e  s u r \" e y  f ' a r m s  c ould have been c; r e a  t er . 
l' l a n  · f ' a rm e r ::;; are  s t i l l. ere c t i ng t h e  tracli t i ona l \\· c l l  ba t t en e d  
s e � en wire  f e n c e .  By us inc; the P ears e ten 1dre  :fc�1 c e  the 
c o s t  K o u l d  haYe be en substant ia l ly reduc ed  a l l o 1di1g  more  
f'enc ing t o  be ere c t ed . ( 28 )  The more  p r o .<;r e s s  i ve :fanners  in 
t h e  di s tri c t  o.r e  n m .� be ginning t o  us e thi s type o :r. f' onc e .  
�� - L n i o n s  about  the value o f  e l e c tric  fenc in g va r i e d .  
Th�o  survey formers  a r e  obtain ing c;o o d  resul ts  f'rom e l e c tri c 
fenc e 3 , O th e r  f a rm e r s  s ay that  they arc n ot s at i s :fac t ory on 
t h i s  c l as s  of hi l l  c oun t ry . 
l+ . 1 6 .  4 D i s c u s s i o n 
The lack o :f  subdi,- i s i on has c ontributed  t o  inc ompl 10) t e  
uti l i s at i on o�  p a s t u r e  and ine :f:fc c t ive c on trol  o f  weeds  on 
s ome survey  :farms . In  a dd i t i o n  an adequate  gra zin g i n t en s i ty 
has n o t been achi eve d .  This ha s l imited the ef'f'e c t ivcne s s  o :f  
a l o t  o f  mobs t o cking . 
The author i s  c onvinced  t h a t  p3_s ture produc tion would b e  
grea tly impro�ccl i :f  s uffi c i ent grazing int ens i ty was exerted  
all  the  y e a r  round . ( 35 )  Nany hi l l  c o cmtry pas ture s are 
nndcrgra z e d . S tock numbers , no t paddock s iz e , i s  the mos t 
important fac tor  in grazing management .  Te Awa result s  ( 29 )  
ho�ever ,  show that  subdivis ion can b e  us ed a s  a means o f  
increas ing the s t o cking rate . Thi s increas ed  s t o cking rate  
( 35 ) Results  from Whatawhata Re s earch S tat i on show that hard­
grazing of hill  blocks carrying 4 . 2 ewe s per  acre  and 
receiving 2-3 cwt of  superphosphate  annually '"'i l l  produce 
66% more available  dry matter  than lax grazing . 
1 05 
�i ll  r e s ul t in greater  gra z i ng pr e s s ure b e ing n pp J. i e d .  The 
e n d  r e s u l t  \•:i .l l  b e  :.1 c i H. l ll (.:',· c  i n  p3 :3 t u r e  m;a r cl s . �\ at i  v e  
t_; T a. s s e s  c .  c; .  ln.' O ':; n t o p  n n d  c ! a :..1 t l 1 o n i a ,, .i. l J . ;J o r e p l c ;_c c d  by J l ! O r e  
produc tive sp� c i e s . 
� . 1 6 . _5  
?-J any s u r Y e y  :f<J.J.'JJW r s  ha d O'-.rers o \\"11 hi J J. c: o un t l.'Y l >a s ·t Ln' e s  
c l o 'r e r . )l o s t  :f a nne r s  s <d. d tha t pas tur e improvement c o u l d  ·be 
a c h i  G V 0 U  by O Y C :r.' S  O ld.ng . T h e  gen e ra l  pa t t e rn w a s t o  apply 4 
lb o :f  p e l l ·? t  c d  Fhi t e  c l o v :-.::; r s G c d  w i th 1-t .(' O J. a e r �c. <•. l f3 u.p e r -
pho �. p�w t e  o r  moly bci i c  s up e r[>h o s pha t e . The c o s t  o �  thi s 
vari ed.  f'rom �; 8 t o $ 9 per a c :;.- ,� . One  :fa rJ; w r  o v e r s  o ·. : e d  hi ]_ 1  
pa s t u J:  e s  ''' i th 1 0  lb  o f  p e r 8 r,..n i et l  ry c t;-r3 s s  p e r  a c ro , 
Es t ab l i s l.:.m e n t  ,v· a s  p o o r  on s ome palldoc l� .s . On o ther .=; , l·: lv:-:r e 
gra zing m<:lnc-, t;emen t be fore  O '.TC J.' S md.ng had b e en be  t ·[; e r , r e  a s  o n -
:::1 b 1 e e s t a b  1 i s  l lm en t 
•'+ . 1 6 .  6 
( '") 6 )  o c curred . _) 
Th e d e g r e e  c :f revers ion tl 1roughout t. l1 e H o r o \ : h e nu a  hi l l  
c o m·1 t ry a r e a  vari e s . Revers ion i s  a c r c a t e r  p :c o l ) J . G m  in t h e  
HanaJ-:.a.u regi on than in o t h e r  areas . On s ome properties  
revers i on t o  na t i v e  bus h has o c curred .  A � c ording t o  the 
fa rme r s  concerned this w i l l  be le:ft . Els ewhere <:�dequate  
t opdre s s ing a n d  good gra zing m anagement is  ne c e s siry t o  
prevent revers ion to  fern , s crub and tauhinu . S ham.!. on 
( 3 6 )  Bes t results  from overs owing are obtained when the area 
i s  kept closely gra zed :for  s everal months . This  enab l e s  
the  yot.mg clover plants to  receive maximwn light and t o  
become properly es tablished . 
1 0 6  
sur<,rey fanners s <:.t id  that  w i thout t opdress in� i t  i s d i f' f i cu l t  
to  s t o p  touhinu inf'e s t n ti on .  
I n  parts  o f' the Reikorangi va l l ey revers i on has o c c u r r e d  
rapi dly . A r e a s  o n  s ome o f  the s e surv ey f'arms have been  
planted  in  pine  t r e e s . Greater  r e ve r s i on t o  fern , s c rllb , and 
other ,\- eeds  in th'_) �IanaJ.,:.au , O taki a n d  R e i J.-c o r<J.ngi are<J.s m e an s  
th<'l t mo11.y survey farmers h.:1ve l arge .:1reas  of virtual ,,·as t e  
l an d , ::J'2ve lopment i s  required  t o  bring t h e s e  are n s into 
procluctive use . 
}� . 1 6 .  7 \{ e ed C ontrol  
The main ,,-e e ds f' ound on  survey f'arrns Kere  gors e ,  tauJlinu , 
bracken :fc l�n , hard fern , :�.�a gKort  an cl rat s ta i l . The control  
::wasurcs  us e d  .:1nd the degree o:f  suc ce s s achi eved a1'e  l i s t ed 
( . ) , l  Gors e (Q1:_� europaeus ) -- t h i s -�-.-e e cl  , .. -as p r (:; s cnt on 90 
per cent of the survey farms . A prot-:;rarrnue o f  
spraying , burning and ove r s o ,,-ing 1..-i th 4 lbs o :f  whi t e  
c loi·er and 4 - 5  cKt of  superpho spha t e  i s  usual '''here  
dens e s t an ds are pre s ent . S ome farmers have been 
spending up t o  $ 800 per year  on gors e c o ntro l . Over  
the las t  few years  however this  has  been subs tantially 
reduced becaus e o :f  the lack of'  :finance . C ons equently 
on s ome farms money previous ly spent has been '"as ted .  
Areas whi ch were c leared of'  gors e t�o y ears ago have 
become rein:fes t ed .  Where  farmers have been able t o  
maintain spraying programmes c ontrol  has been 
ef:fective . One survey farmer  is  at  pres ent pl�Lting 
50 acres  in pine tree s  as a means of c ontrolling gors e .  
( i i )  
( . . .  ) \ ]._ ]._ J_ 
( iv) 
1 07 
Tauhinu ( C ;-l.S 5 ill i a  l ept ophy l l a )  - p r G S  en t on ha l f' o :f  
the s u r v e y  fa rws . O n  :farms ldl. C r e  i t  i s  s c et t t c r e d  
c ontro l i s  b y  c u t t i n g  a n d  pu l l int; . Kho r c  tm1hinu 
gro 1·rth is thi cker cut t ing ,  burning e:w cl o·,· e r s m.·in g 
wi t h  c l o v e r  a n d  s up e rpho s pha t e  i s  us e d  as a m e an s  o f  
c o n t r o l. , S at i s �ac t ory r e s u l t s  ct r e  a chi eved p t' OY i de d  
annual t opd1' e s s  ing is  carri ed  out i n  c on j 1.m.c t i on 1·;i t h  
g o o cl g r a z i n g  m cu1 a g e m e n  t ,  The author ga ined the 
impre s s i on t h a t  t a uL:· :;:-tu in:fe s ta t :i. oll 'I·: a s  increas  int; on 
s ome fa rms Khe.re g r a z i n g  is  ln.x and t opdres s ing 
ab s ent . 
l i ttle  cli. f.E' i c u l. t y :i.n c on t:roi .l lnc; tlii s ,,- e e cl .  C o n t r o l 
i s  e it her l. ,y the  j udi c i o u s  u s e o:f  s h e ep and b :c e c� d ing 
cattlc ( J? ) o r  by b u rninc; and 0\'. e J.'S O\,·in g i n  the <l u t unm . 
H a rd F e n(lJ�£a£0 i� �S:.::.'..l.2.E?n<l3:;) - survey farmers  i'o1.m d  
this f e rn mo re di .ff'i cult t o  �radi cate  t h an b r a c k e n  
:fern . The Ke ed  1\as pre s en-c  on t en survey f'arms . 
C ontro l  mea sure s  va r i e d  according t o  the degree  o .f  
burning in the pas t .  Burning , fo llo wed by fert i lis er  
and s t o ck has  been e ffe c t ive on areas no t previous ly 
burnt . C ontrol  by thi s  means was more effec tive than 
crushing , topdres s ing and overs owing as  pas �ure 
( J7 )  Prolonged gra zing o f' cattle  on bracken :fern can result in  
bracken fern pois oning , The main s ymp t oms which may no t 
be  s een until  s ome t ime after removal from the fern are 
dullnes s , emac i a t i on and l o s s  of appetit e . 
( J 8 ) Also  k.no"\\'11. as ringfern or carpet  fern . 
1 0 8 
e s t a b l i s hment was quicker . H o w e v e r  thi s latt er 
me thod o f' c on t :c o l  was :fow1.d t o  be better  on areas  
'"hi eh had  been f'requen tly burnt i n  t l v �  pas t .  
ef':fe c tive ly contro lled  by s he ep . ( J9 ) However on s ome 
f'arms there 1\'erc  many a r e a s  o:f inf'es  tation .  The 
author suspe c ted  graziDg- management \vas at :fault on 
the s e  fa rms . 
( vi )  
did no t mention rats tail as a ,,-eed although i t  ,,·as 
pres ent o n  a large nwnb c r  of' f'arms . The d egree  of'  
incidence  varied  but w a s  generally heavier  on lm\· 
f' er t i l i  ty f';:tr;n s ,  In  general rats tail  a r e a s  are more 
c l o s e ly c;ra zed w1.der mobs to ckinc , .  
(vii ) }Jinor weeds - 1\ e e els f'ow1.d on tKo or  three  survey :farms 
4 , 1 6 , 8 
were manuka ( Lepto..2.l?.ennum s c oparium ) , blackberry 
( Rubus f'ruti c o sus ) , barley gras s  ( Horcleium murinnm) ,  
dro oping s e dge ( C are_J:S sp . ) , tu tu ( c o r i e r :::t s armentosa ) , 
and variegated  thi s t le ( C irsiwn s p . ) ,  The usual 
me thod o :f  c on t r o l  was cutting and/or  spraying . 
Pas ture Pests  
The incidence of'  porina and grass  grub varied  on  survey 
f'arms . Porina was more prevalent than gras s grub but re ceived  
the l eas t  attention :from farmers . Grass  grub was a lways 
( 39 )  Too great  ru1. intake can result  in a large ac cumulation 
of'  c opper in the liver and death can o ccur as  a resul t . 
Care should be taken to  ensure the sheep  are not grazed 
f'or t o o  l ong a p eriod  on ragwort , 
1 0 9 
c ontro l l e d  e i ther by DDT s up e r  o r  by DDT prill s . O_f the 
1 �� :f a nn e r s  Yho repo r t e d  porina i n .f e s  ta � ion  on ly t l1 r c e  
a t t emp t e cl t o  c on t r o l  i t .  
Hany r<·t rmc r s  \\·ere un <::n-1 a r c  P o r ln a c o v :l d s e r i ous ly r e duc e 
pas ture produc tion ancl henc e  carrying c ;J_p , � c:L  ty . The au tho r 
cons iders  thet t P o rina in:fe s t a t l. on i E:> p r o b a l ; l y  pr cv::.:t l e n t  
thr ouc-lwu t t ll e  Horo1d1.01J.ua hill  country , On the lightly 
s t o cked pas tures  many l'armers are unaware o:f its  pre s ence . 
1-J . 1 7 S ummary 
The impori.:an t points :from thls chapter are : ·-
( i )  The s i z e  o f  the rand om survey i'arms r"ange  :frcm 250  
( :L i )  
D cres  t o  9 , 000 acres  1 1d. th an E_�c r;�go_ o:f · 1  , 090 acre s . 
On average 7 8  per  c en t  o f  the a r e a  o :f the s u rv e y  
:farm s is unp l o u c;ha b l c . 
( ii i )  Perma,.-wnt Kc• s t e a c c oun t s  :for  t en per  c ent  o f'  the 
to t:.:t l area of' survey :farms . 
( iv )  One in  five o:f  the s u r v e y  farllls is c ontrolled  by a 
uianager , 
( v ) Ha]_ f. t h e  survey farm e rs <J.re m o :r e  tha..'1. 50 ye ars o f  
age , 
( vi )  Permanent labour i s  employed on 65 per  c ent  o f  the 
random survey farms , 
( vi i )  The average nwnber of  ewe equivalents per  potentially 
productive acre i s  J , O .  This i s  l o1v c ompared t o  the 
c ons idered potential of' 4 . 5-5 . 5  ewe equivalents , 
( viii ) Calving and lambing percentages  are lmv ,  averaging 
8 1  per cent and 86 per  c ent respect ively , 
( i� ) S t o ck sales  consi s t mainly of  breeding and s tore 
s tock . 
( x) Only s ma l l  increa s e s  in pro duc ti on are  being a c hi eve d 
( xi )  
( xi i )  
( xi i i ) 
( xiv ) 
( xvi ) 
( xvi i )  
(xviii ) 
( xix ) 
(xx ) 
on the maj  o :c i  ty of  fanns , 
been  un d e r t a k e n  C i1r e equiva l e n t i n c .�·c o. s e s in exc e s s  
of  s i x p er  c e�1 t p e r  aruuun have b o cn. achieved . 
P l ans f' o r  f u t u r e  pro ,luction increases  ar e n e g LL gi b l e . 
L a ck o f  c onfidence in the future , avers i on t o  
borro�ing and t h e  belief  that deve lopment i s  
unpro .fi t able  are t lJ.c thr e e  in1p or-tan-t f"a c tors 
inh�biting deve l opment . 
The R o Fmey i s  the main bre e d  of  sheep  on thi::; h a l"d 
hill  c mm try and there is general] ·:.- li ti: le varia t j  on 
in s h e e p  management pril.c t i c e s . 
: I any farm e r s  have cU. :ffi cul -cy ill gr m·.- ing co o d  s i z e d  
t H o  t o o t h  e\\ e s  Ct n. d  r e p .l il. c c m e n  t hoi:fe :cs . 
Proc;res s ive :fa rm e r s are m<1 k i n g  us e o :f  autwm s av e d  
pas ture for  b r e e ding e � e s  a n d  bre e ding c ows . 
P r o v i s i on o :f  l a t e  w inter early spr�1g fe ed  :for 
bre eding c ows is iuad.equate  o n  many :farms , 
Forty-five per  cent of  the survey :farmers ha,-e no t 
appli ed :fertiliser  to  the hill  cowttry s ince 1 96 6 , 
On many :farms s to cking ra t e s  are not  high enough to  
completely utilis e all the feed  gro�� . 
Subdivis ion i s  inadequate on the maj ori ty o:f  farms 
for  go od  pas ture ma.J.1.agement . 
There is  a s lo111 acc eptance of  the Pearse t en wire  
fence by farmers .  
favoured . 
The " conventional"  fence  i s  s till  
1 1 "! 
( xxi ) A l o t  o £  expendi ture on eors e control h a s  b e en was t e d  
( xxii ) 
(xxiii ) 
on s ov1e fo.rms t hr o u r;h :finC�nc i a l  innbili  ty to  c o n t inue 
follow-up s prays . 
The mo. j or '"e cds are gors e ,  "G au.hinu ctnd hard :fern . 
P o rina c a t e rp i l l ar i s  p r e va l ent thr o ughout the 
district . 
,.... •'\' 
"") . ' -"' . . I n  t r o c.l.nc t i. c: n  
C Hl1 P TEH F I VE 
The aim o f' t l"! e  pnrp o s i v e  s urv ey Kas t o  identi:f;,; 
1 1  2 
de velopment t c cl m :i. quc s ·;xd.n.g u�. e (l hy farm e r s  a1.:..d tl1 e. p r o CJ.u.c -c J_ on 
increase s  b e ing a c h i e v e d . 
of  thi s survey , The de s c ription inv o l v e �.; a de tailed  ou.tli11.e 
of  tlJ.e physica l pro graJruu e s  and a di s cus s i on on ,-a r:i. o tls a s p e c t; s  
o :f the s e  p r o graHme :::: , T h e  autl10r llas mc:tde r:. o  at t;eop t  t o  a2w J.y s e  
profitabili ty . An c c o li. omi c a na ly r,; i. s  1\·ou]_ d ,  i.:n m o s t  i n .s t an c e s  1 
in.vo l""�.r e b o th n.n ��-post£ and an �:s._0!1 t c  EcnaJ.y s i s .  S u c h  :.�.n 
ana .lys i s  i s  1u1..likely t o  prov·i de any 1·: o r t l1.1·:hi l e  infon: 1a  t i on 
c on c o n ling t h e  p r o f'i t ab i l i ·ty o f  furure hi l l  c oun t ry d e Y e l o ptiH:.: n t , 
5 . 2 C a s e  F a cltl A 
Thi s f"ann i s  si tun. t e d  in the T e  Horo  Lli .s tri c: t  ancl cons i s ts 
of· 870  a c r e s  o f' s t eep  hi l. l  c ountry , The fa rm ri s e s  f r o m 250 
fe e t  a l. t h e  :front t o  ·1 ,  JOO fe e t  at the back , Only 2 .5 Zt C l'e s 
are ploughable .  Khen d evelopment c ommeu c e d  in 1 9 65 there 
•�·e r e  5 20 p r o d u c t ive a c r e s  a n d  t auhinu infe s ;: a t i cn Kas 
increas ing • .  
The average annual rainfall of 50  inches is  unevenly 
spre ad throughout the year . Droughts can occur , either in 
early swnmer (Kovember ) or early autumn (February ) . The 
prevailing winds are wes t erlies . 
The soils are derived from gre}��acke . They are 
class ified as Hakara s tony loam and Ruahin.e s tony silt  loam and 
are of lo1� to mediwn n.a tural fertility . The subs oils are 
1 1  3 
p o or C: l' �t nd m o r e  n c i d . Su ch l � n d  t e n d s  t o  r e ve r t  readi ly to  
fern a n d  t auhinu . 
a l t i t u d e . Cn t ile !Li. g· J t� r  s l o p e �; abo....- e 1 ,  000 .fe e t  t h e  GT O\·.� i nc 
s e a s o n i s  s l w r t e r . S p r i n g- g r o L  L h  c omlJH�nc e :> l a  t o r  <n 1 d  au twnn 
I' s e d  
s h o r t age s are m o s t  s erious  i n  Augu ::; t  a n d  e FI. r ly S e p "L e mb e r . 
Th i s  n e c e s :.::; i t a t e s  l a t e  l ; l.mb i n g ( S eptember )  < m d  l a t e c a lving 
( O c t ober ) . 
The farm i s  fre eho ld  a n d  0 1\TI E: r opera t G d . 
5 .  2 .  1 The D eve l opJqen ·t P r ogra;nme 
At t h e  t i m e  of t h e  s u r v e y  ( 1 9 6 9 )  deYe J. opment ho.d been  
c a r1 i e d out  for  four ye�rs . The bas ic  pa t t c� rn. o .f  ci e v e J. o p m c n t; 
had c ons i s t ed o .f  bringing in� o pro duc t 1 on l and c overed i n  
light  bush ,  manuka , tau} t :Lnu and  .fern . Thi s was a c h i c Y e d  by 
trampl ing , ,-i  t- 1 1  e a  t t l e , burn ing an d overs o \d nr�· "'i th molybdi c 
superphospha t e  and c lo \"er s e e d .  
Th e  me tho d o f  development c ons i s t ed c f  fen ci n g o r� f  C:l 
s m a l l  un p r o d1.: c t i  ve b J  o ck .  Hi�h c on c entra t iGns o �  cat t l e  a n d  
ewes ,,-ere tlj 8H us ed  to break do 1·.'11 l ight bush ,  remove fern and 
crush s crub and tauhinu . Depending on the amou.'l.t of  fern and 
s eas onal c ondi t i ons , burning Ka s carri ed out in the autwnn . 
Whi te  c lover s e e d  was spread by hand onto the burnt areas .
C 1 ) 
In the spring s even hundredweight ( cwt ) of molybdi c super-
phosphat e  was applied by air and another J cwt in the following 
( 1 ) I t  Kas cons i dered inprac ti cal t o  overs aw small blocks 
( 20 to  JO acres ) by air . 
autuum . The block t l 1 e n  rccci  ved an annua l main tunance  
dres s ing O J'  2 C i1't of  superpho s phate . 
The l c."Ln<..l d e v e l o pm en t proer(lnune ancl the a s s o c i a t e d  s t o c k 
increas e s  arc s h011'll in t a l) l e  5 .  1 .  
S t o c k  incre a s e s  in t e rms o f  tota l  e ·\\' 8 e q uiva l en t s  ( E o :S . ) 
have b e en s ma l l . There  has been an iucreCl.s c o f' 67J  E o E o  in 
five yeCl.rs . Bre eding ewe s bCl.ve i n c r e a s e d  by ? O  per  c ent , b u t  
the numb e r  o l� br c e diug C O \·.' S has been r e duc e d  by 20 per � r--n t . 
Thi s has o c curred  be caus e o f  increased  compe t i t i on b e t w e e11 
sheep  and c a t t l e  fo r fe e d  suppli e s . 
has been e l imina t e d wi th dev e l opment . 
Tab l e  5 . 1 C 8. s  e F o. Tm .!-... 
r---· 
L cl n d  P r ocr sl!!� 1 9 65  
Fertili s e :c ( t ons ) 80 
Subdivis ion ( chains ) 
Tracks ( do llars ) 
S tock  \�,' in  t a r e d  
Bree ding e\,re s 9 3 7 
Sheep ewe equivalent s  1 h0 2  
Bre eding C ows 5 2  
Cattle  ewe equivalents 4 1 0 
Total ewe equivalents 1 81  2 
Ewe e quivalents per 
potentially pro duc tive 
acre 2 . 2 
1 9 6 G  
75  
3'J 
7 6  
1 0_5 0 
'1 5 3 1 
39 
3 7 7  
1 90 8  
3 . 2 
noughage s uch a s  fern 
Y e a :c  ----
_l_967 I 1 9 6 8  J 9.§..2 
L� 5 I 30 80 
3 0 6 0  
1 0 6 
·1 350 1 h 00 1 5 00 
1 6 98  1 7 9 8  1 874  
85 4 4  43 
5 05 266 246 
2203 2073 2 1 34 
3 . 7 3 . 5  3 . 6 
--
1 1 5 
A s s o c iated  ,,- i th deve l opment have been a numb e r  o f  man<J gement 
change s .  
c n o u c;l1 c cJ. u s e cl t h e  o l':n e r  t o  c hange to  a huy in r;- ·Ln p o l i cy . 
I n- c a l f  r j  .. s i n g  t hr c-> o  year  lle i 1�f:"'rs  c:t r e  11 01-.- ]) LE' C l J <:l s c d in t h e  
a u t wnn . To aYo i cl rw1J1.inr; lurge  numt: c, )' S o :f dry s ·t o c k cull ing 
o f  ewe replac ements  no1·: o c c u r s  ;::: t t h e  e ,,- e h o c; g o t s tage . 
B e c 2m s e  tJ 1 e  m·: e .s  KeJ.'e usuu lly l m1 in coHdi L i on at  l<n: Jbing 
S in c e  t hen 
b r e e cl i n t:"  e i i C S have l.J c cn rotati ona l. ly  r;ra z o d  up t o  �,Ia.y a n cl then 
s e t  s t o ck e d  lU1 t i J  ·1\·c;:;_ninc; . F o rme r ly t h e ewe s  �ere  
ro �..;a t i ono. l ly gra zed  t hr o ugh t o  l :""Lmbin t; .  
T h i s  d c ve l o  pl:J I)J� t programne resulted  in 80 2� c r e s  o f  n e 1,· 
land b e i n g  b r o u gh t  i n t o  produc t i on . 
by a S "G a t e  A dvan c e s  .l o an of'  $ 2 , 000 <t1Hl by s ur p l u s  inc ome . 
Fai l ing w o o l  pri c es  and t h e  d e s i r e t o  r educe a short  t e J � n  l o an 
aff'e c t ecl t he p r o bTanmw in t l! e  las t three y e a r s , f ertil i s e r 
app l i ca t i on i·:as  l O i\ e r  t h a n  pl ann ed  an d the in c r e � s c in C ll e  
e q1..1.i va l e n t  s ,,Ta s not  wet. :Ln t a in e cL 
The abi l i Ty t o  finance  d e ve l o pm e n t  large ly o u t o f  income 
\·;as achi eved b y  reduc i ng pers onal dra 1dngs a n d  e l i m i na t i n g-
labour c o s t s . Farm operat ions such as  shearing , crutching , 
lambing and 1�enc ing  ,.,·ere all  done by the owner .  
At the time o f  the survey the 01�1 e r  was c ons o l idating on 
the development  work already completed .  Future development 
�ill  cons is t o f  intensification on the exi s t ing productive 
land . I t  i s  hoped through increas ed fertiliser  appl i cation 
t o  lift ewe numbers t o  1 , 900 by the year 1 97 5 . Cattle  numbers 
1vi ll  remain s tatic , The c o s t  o f  deve lopment has been $ 1 8 per 
. 1 t . ( 2 ) ewo e qu1va e n  1nc re a s e . 
The mo s t  i m p o r t a n t  :f a c t o :;:" a i'i' c c  t inr:; d GI' P �. o p;; • ;; n t  '' a s  t ll e  
de s i r e  on  the p ar t  c• .f ·t h e  i' a rm e r  l: o ll e \r e l o p  o u ·c; o f' J 1' c o;;w , 
The u s e o 1. '  c a t t l e� ;-t s 1.Jul l d o z c r s  r e � u ·:_ t e (l j n  h L ::�; ll c a t t l e  
l o s s e s  ( 1 o;� ) a n cl be l o \-.· �1v c r a r;- e  e a  t t l e  p c r f' c.> r,li<:tn c e . 
b o u .::;l 1 t  in t o  i n c ;: e a s e s t o d.;: ·' ' "u!tb c r s  £'a i l e cl t o  do >·; e l l  on t l'l i  s 
c l n s s o .f  c o un t ry . 1\ o o :L p ;·· i. c e s  i' e .l l  b y  o l. 1 i J o s t  a -::- ln r cl  j n  i�h e  
m i ddl e s t a G e s o �  d e � c l u p m e n t . Thes e' :fa c t o r s  c o ml•in e d  t o  
r e du c e  t h e  an:o·:..: n t  o :f cash availabl e f' o r  cl cv P l  O l )l' J e n  t .  In  
rcduc l' a sho :r [· t c r;u l ive s t o c k  l o a F , 
Thi s p r o gra.mmc shm,·s the e 'f :fu c t  a f  p r i c �� fa l l s c n  
deve lopment done o u t  of inc o m e . I t  a d u .s  c w pha.:; i s  -e o  t ll c  E C� C' d  
to  c oncentra t e  o n  qu.i ck :financial  r e t u r n s  \ ·; h e n  t ry in{_!,' t o  
devel op out of  inc o m e . The r e duc t i on in f e r t i l i s e r  
appli cat i on i n  t he mid dl e  s tage� o f  d evel opment  a:ffe c t e cl the 
s t o ck increas e s  achi ev e d .  The s t o cking  r n t e  of  J . 6  E . E .  per  
a cre  is  lo ,,· in re lat i on t o  the potential  o f  the :farm , The 
author cons iders  that increas ed  fertili s er appli cation could 
rai s e  the s t o cking rate  to 4 . 5  E . E .  per a c r e . 
( 2 )  This has been the a ctual cash  cost  t o  t h e  farmer ,  
figure does  not t ak e  into  a c c ount the r e -c ent i on of  
ing s to ck o r  any allowance  for  the farmer ' s  l abour . 
The 
breed-
1 1 7 
s . J C <1 S C'  F a rm n 
Tlli :s f a rm i s  s i t u :l t c d. a i; F a i kana e an d c a n  b e  cl ivi ,.:l c d  int o  
The :front s e c t i o n o f  l f O O  c.. cre.s  :;_':i s e s v e ry s ·L: c e p ly 
:from JOCJ :f 'e e t  t o  1 600 feet  above s e a  leve l . The t o p  s e c t i on 
o f' 8 1 8 <J. cres  is  ba dly broken by guLL i e s  <t n d  d e p r e s s io n s  . 
Acce s s  t o  the i. op  <: t r e a  i s  v o s s i b l e  on l-y by h o r s e b a c k .  .A. s a 
r e s ul t subdi·,· i s ion is  minillla 1 ,  
The n a  tu.ral f'ert i. l i  ty of  the s o ils  i s  l o 1·,· and tops  o i l s  
are  thin . Reve rs i on oc curs �eadi ly . The pas tures  c ons i s t  
mainly o f' 1Jr0\-.J.1.i; op ,  danthonia , rat s t & i l  and ,<:::�-; e e t v e rn a l .  
There  i s  l i t t le pas ture groKth in t h e  lat e aut tmm/win t er 
perio cl . Larabinc; and c o. lv i n g  d a t e s  a r c  delayed  unt i l  
S epteml.> E· r b e e  a us e o :f  s l o 1;  s pring [:;T O ,·:tll , 
The climate  i s  s i mi l a r  t o  that c· xp e r i enc e cl by c a s e  :f2.rm 
A ,  The farm i s  O h'1'ler  ope r<·l t ecl . 
5 . J . 1 The D e v e l o pm 0 n t P l a n ----------- - ---------
I n  1 9 6 6  a S tate  A dvan c e s  l oan o f'  $ 6 1+00 \·: a ::; o b t a in e d . 
Thi s wa s us ed  t o  bring i11. to  produc t i o n  60 a c r e s  o :f  t auhiuu 
in:fe s t e d  l and a nd to purc Jw s e  addit i onal  l ive s t ock .  Indian 
s crubcutters  ·\\· ere  used  t o cut the ta uhinu \d1 i ch ,,·as  burnt in 
the autumn and o v e r s 0 1\TI Hi th gras s and clover s e ed .  ( J ) The 
area wa s fence d  and 8 c1vt of aer-ial superphosphate  was appli e d  
in the autwnn , 6 cKt in the spring and the s ame amount again 
in the following autwnn . The c o s t  of  developing the 60 acre  
block on a per acre  bas i s  was  high , Individual c o s t s  are 
( J )  A mixture of ryegra s s , dogs tail  and whi t e clover was s own . 
Es tablishment of  ryegras s  s e ed has been poor . Dogs tail 
s eed  es tabli shed well . 
1 1 8 
given in tabl e  5 . 2 .  
T a b :1 r� ) • '2 
_ ___ ___..·�-
C a � c  F;:u · m  B - D eYc l c) ]"l ' ! i C·n t C o s t  of  T C l l< h i n u  L;� n d  
---�----- ---------- �-- -·----·-·-·--
I t e ; n  
S t o ck 7 20 1 2 .  00 
F enc j_n g 6J5  1 0 . _5 8 
H anuro 2600 h J . JJ  
s 0 0 (� J75  6 . 25 
S c rub cut t inc; 1 1  20 1 8 .  66 I 
----------�-------· ___ s
_
· . ,, s . 4 1 I 
I 
�------ -
I 
T o t a l  I $5 450  :;-. C)O 82 y '  ' 
A s  a result  o 1� de'.'t: l opment t h e  s t o cki ng ra t e  on thi s 
block w a s  r a i s e d  from 0 . 5  ewe equiv�lent  per  acre  to  2 . 5 ewe 
equivalen�s p e r  a c r e . 
The m,·n e r  c ons i d e r e d  l and devel opment h a d  b e en c ompl t� ted  
a t  the t ime of  t h e  s ur vey . 
The s e c ond pha s e  o f  the development programme inYolvecl  
inc r e a s i n G  the s t ocking ra t e  on the  potentially productive 
lan d . This  ,,·as a chi ove d by r e t a ining mos t o:f  the c1;e hog-ge t s  
and by buy i n g  in t110 t ooth P erendale e1,·es . An increase  o f  
795 ewe equivalents
( 4 )  
was achieved for a t o tal cash outlay of  
$ 950 . A comparison of the c o s ts for the two devel01)111ent 
s tages is given in table 5 · 3 · 
As s o c i ated  with the s e c ond  phase of  development was a 
( 4 ) FertiJ. i s er application 1vas no t increas e d  on this are a .  
The annual fertiliser  application i s  JO t ons of  aerial 
superphosphat e appli e d  to a different paddock each year . 
A time  lag of  eight years exi s ts between applications . 
One 
utili s e  a ll 
the g· L' "-'  s s  
being grm•.TI 
on t h e  
p r o �l u c  t i  v e  
I 
land 
�-otal--r 
950 
G , l.j. o o  
7 9 5 ·1 . 25 
9 1 5 
-i ---1 
I 6 . 9  
chance in the bre e d  of  s l w e v . C h evi o t  rc-L.ms \\· ere  ma t c d  t o  the 
Romney e 1\· e s  to produc e f ir .:; t cros s P erend<:tle  o·h· e lambs . 
P erendalc  rnms i\· e r e  t h e n.  mated t o  the resultant t 1-.·o t o o t h m\·e s .  
The change ,,· a s  an attempt t o  improve lambing; percentage s ,  
reduce stock lo s s e s and grow bigger  sheep. 
5 . 3 . 2 C onc lus i ons  
The deve lopment progranm1e provides  an exampl e  of'  poor  
allocation of  devel opment f'inance . Borrowed money was 
initially us ed  t o  develop  unproductive land . As  sho,,n in 
table  5 - J this was a c o s t ly process  in relation to the s to ck 
increas e s  achieved .  I n  any development prograiiiDle the s tarting 
point should be the complete  utilisation of all  grass  being  
groHn . This involves adding more s to ck and results  in an 
in�ediate  increas e in financial  returns . The next s t ep should 
1 20 
be t o  gr oK E_to r_� gras s on the ex i s ting prouuctive lan d , Thi s  
i s  a l e s s  c 0 s t l y m e -r.ho d o i� d eve l o pmen t t ha n  c l e <•. r :i n:;· land o f' 
The author  b e l i e v e s  t h a t  s t o r;e t,,-o o f  thi s p r o � T <'t mn t e  
s hould h a v e  b c c�n imp l emen t e d  f' i r s  t ,  Deve l o pment slwuld  tlwn 
have h e e n C O ll c cn t r a ·t c d  o n  the a l r e ady pro duc t i ve l an d . 
S ubdivi s i on a :nd annu <'l l fert i l i ::;er  appl i c a t ions -��-o t l l cl  h G. Y e  
r e s u l t e d  in a gr e a t e r  increas e in s to ck n l w i b e r s  t ll c:m t h a t 
achi eved  by c l e a r i n g  t <:nthin u .  
I mp l emcn t in g  s t a g e t\\ 0  o f'  t h e  a c  -r.ua l p r o g r a mm e  I�:i. r s  t 
K c u l d  a l s o  h o v e  i n c r e a s e d  t h e  p o s t  tax c a s h  s urp lus . Thi s 
in t u rn \\c. u l d  have provi ded  inc ome f' o :r c r o •·: i nc; m o r e  c; r a s s an d 
r e duc e d  the a J n o n.:l t o :C o ff' :farm c a p i t a l  r e qui r e d.  :for  d <? v e l o p'n t-:l ' ·t. 
s . 4  
Thi s f a nn is  s i tuated  at  P aekakariki . The t o t a l  a r e a  i s  
1 1 7 1 a c r e s  o f'  �hj c h  1 1 00 acr e s  i s  p o t e n t i a l l y pr o duc t j �e and 
23 acres  ploughable . 
The farm has  been man a g e d  i n  three  s e c t i on s . Tl1 e :f r o n t  
block c o n s i s t s  o :f  700 &cres  an d has been c l c 3 r e d  of bu s h  t h e  
longes t .  The middle block  had rever t ed t o  fern and t a uh i n u  
by 1 9 6 1 . The back block o :f 1 2 1 acres  has been treated  
largely as a res erve . 
The s o i l s  are  mainly shallow grey powdery s i lt l oams w i th 
the occasional s t one s cre e s lopes  beneath greywacke outc rops . 
There are smaller  areas o :f deeper more :fertile  brown s il ty 
loams . The main s o i l  group has poor  struc ture and moi s ture 
retention and this  limits  respons es  :from :ferti lis ers . The 
bro1m s ilt loam group however , gives a good  response t o  
• 
1 2 1  
app l i c o t i ons o f  phospha t e  and mo lyb lenwn . 
The m a i n  w i nds are  n o r t J-w r .l  i c s  an d norwes  t cr l io s . The 
c o l d s o u t he r ly l\' i n d s  a r c  a c aus e o :f s t o c k l o :c; s c s  e spec iall�,- in 
R a ini'c, l l  i s  in the vi c ini ty o f  45 i n c he s p e r  
yea r and s um m e r  d r o t:cht s c0..n o c cur . 
The f'Grm i s  run a s  a po. r t;n c r s hi p . 
5 .  � .  1 The� D e v e l o pm e n t Prop;ramme 
The de·vel opmen t pro e-ramme can be  divided in t o  t·\\·o  p h a s e .s .  
The :f i rs t phas e c ommen c ed  in 1 9 6 1  and entai l e d  subdividing ·LJ-w 
front  b l o c J.;: o f  700  acres . This K a s  a chi eved hy us ing 
e l e c tric  j_·enc ing and a \·i a i ka t o  mains c on.troller . 
s t a ck increa s e s  '"· e r e  achi eved Gnd the clevelopmen t Kas fin;,�u c <.-� d  
out  o f  inc ome . D e t <:L i l s  are given in t ab l e  5 . 4 .  
The s ubd i v i s i on enabl ed m o r e  e f'fi c i ent  gra z i n g  o :f t he 
poor  na t ive p ;-,.s ture an rl prepared. the ,,-a·y f o r  t he s e c o a d s t acc 
of deve lopltl en t .  
F o r  thi s s tage a deve lopment  plan was drm·m up . The 
plan. invo l v e d  ove rs o 11ing pas ture s , l ive s t o ck increa s e s  and 
annual  f e r t i l i s e r  applicat i on . ( 5 ) 
D e ve l opmen t finan c e  o f  $ 8 , _85 8 wa s obtained �rom the S tate  
Advances  C orporation .  Development c ommenced  in 1 965 and the 
farmer did n o t  deviate  from the budge ted  plan . Due t o  falling 
woo l  pri ces  ( from 35 . 9  c ents  per pow'ld to a l ow of 2 1 . 6  c ents  
per  pound ) and large bre eding c ow los s e s  a s e c ond loan had t o  
b e  obtained in order t o  c omple t e  the programme . Thi s loan o f  
( 5 )  Prior  t o  thi s 2 cwt of  molybdic  superphosphate  per  acre  
was applied every third y ear . 
1 22 
C·t s e  Farm C - �t o ck __ lncreas e A ch i e ve d �Y. 
S ub d i v i s i on 
S t o c k  1 {  in t e r-::;--·-1 Y c·,-::-, 1-.,------··-- - ----- -
D r e e ding 8 h f S  : :Z�o - - :��:�:0 -- ; �:� o _f:! �a-
S h e e p  e\ :e  cqui va l en. i: s  1 , 1� 9 ·i 1 , 5 85 1 , 7 85 · :.? , 0 1 8 
Dre eding c o¥3  J9  25 5 4  � 7  
C a t t l e c 1 ·: e  e CfLli va  1 c m:.s  2 !.J 8  280 J95 4. 20 
To til l  e1·,� e '2 C!a i \"a l e n  t: s  ·1 ,  7 J 9 1 ' 865 2 ,  1 80 2 , 438  
A1u1ual p e r c e n t a g e  
c !--; . .. ,.,  r.;e iE ev;e 
equ.ivalcE -t s  ?\ . A .  7 . 2 1 6 . 9  1 0 . 6 
E\·: e e qu iva l e n t s  p e r  
po tentiC!.lly 
productiYc  acre 1 . 7 1 . 8 2 .  1 2 . J 
�\ o t e  -
1 
' . � . A .  dcmo -c e s  non appli cabl e .  
___ _j 
$ 1  2 ,  692  \\-as o b ta i n e d  in J·uly 1 9 G 7 . 
I n  1 96) f'i ve l nu'!. dre d,,ce :L ght o f  aerial  supcrpho spha te  and 
l.j. lbs o f· 1·:hi t c  c lover s e e d  per  a cre 1\e re appli ed  in J.JO acres . 
Thi s ,,·as folloKed  by ano ther 5 c,,-t o f  aerial super1)ho sphate  
the fol l owing year . I n  the same year  the remaining area  o f  
the front blo ck \\as ovcrs oi1TI Kith 4 lbs of  1d1.i t e  c l over s e ed  
and 5 cwt of  superphosphate  per acre . 
Five ht.mdred,,-eight o f  aerial  superphosphate per  acre was 
applied  to  the middle blo ck in 1 9 6 7 . Forty chains of  fencing 
was als o erected . Fern and tauhinu ��-ere burnt on the back 
blo ck and overs own 1d th 1 2 lb of Ariki ryegra s s  and J lb of  
whi te  c lover seed  per  acre , 
The land development progranune ended at  this point , In 
1 2.:J 
t h o  1 9 6 8  s c a s ou a m a i n t e n a n c 0  dre s s ing of  2 Ch't  o f'  sup e r-
plwsplw.te  p c :c <'t c r e  ,,< u s  a }Jp l i c d  t o  7 00 a c r e s . A s unun n r y  o f  
t he 1 ct n. d  <.lC:Ye lopment  pro (;ramme  t o �;o t.her wi ·,,J J. tho s t o c k  
in c r c a .':;c; s  a ch i e v e d  i s  g i Y c n  i n  t ab l e  5 . 5 .  
Lan d P r o gramme 
-- L a n cl D r:> ·, - p l o p m c n t P r o {'T�n, ;· n e  <J n.d - - ---- - ·-··- ---------:..<.·- - --�: l O f: l<j_��-:J.:.. R < t t.; < > J n c r C! i'l :"- 0 S  
Y e <-) r  ------ I I 
I 
F e r t i l i .s e r  ( t ow� 
S e e d  ( lbs ) 
SubcliYi s i on ( cha 
) 
1 9 65 
r 8 7  
1 9 G 6  , 9 6 7  �6 8 +�6 9 I 
1 7 5  s3
-t-70  
I 
B r e e d ing e \ : e s 
She ep e1,·e e quiva 
Bre e ding c o •i:s 
Cat t l e  eKe equiY 
To t a l  ewe e quiva 
El·: e e quiva l en t s  
potentially 
produc tive acre  
ilJ. s )  
l on-r.s 
a.J..ent s 
l o n -r s  
per  
1 6 0 0  1 600  
1 L: oo 2! 1 0 8  
20 1 8  J 5J.5  
:+ 7 Go 
J 9 7  !.j 37 
2!+ l .5 3972 
2 . 3 J , 8 
1 050  
40 
J 1 00  J J )O I J 200 J8J8  4 1 /" 0 3 9 28 
7 8  80 60 I 
4 S i� s L� 9  4 63 
)+3 ?2 � 7 1 9 4 3 8 8  
I 
3 . 9  )..j. . 2 J . 9 
I n  the s e\·en y ea r s  o:f  development ther e Kas an increa s e  o f  
2 9 80 E . E .  Thi s repr e s en t s  a 1 7 0 per  c e n t  increa s e  in c arrying 
capacity . The 1 9 6 9  figures  for  s t o ck wint ered  s how a de c r e a s e  
o f  33 1 E . E .  This  ��-as no t due t o  the inabi li ty o f  the farm t o  
carry 4 . 2 E . E . per acre . I t  was an attempt by the partners t o  
reduce c o s ts in order t o  be able to  c ontinue farming . 
The c o s t  of  the deve lopment prograDIDle on a per  ewe  
equivalent increas e bas is  is  approximately $ 8 .  
There  has been a number o f  management changes as s ociated 
with development . Shorn t\o;o tooth wethers 1vere  bought for  
�; J t o  $ l1. and put on the b u c k  bl o c k o :f  tmprocluc tive l and . 
Dy d o inc, t hi s  a p :J :r 1.. i on o :f t lti s b l o c k  has b e en brought  i n t o  
Pl' oduc i.: i on ,  
a s  ·t hey c o uld a l s o  b e  u.t i l i :.:: e cl  on t l w  f'r ont t;,'o b l o c ks <J s  
r c q n i r e cl . 
1,· ere  pur cha s e d Gnd a l l ewe l a mb s  s o l d .  T h e  p a r t n e r s  s a i d  
that  b e c e.u s e  t h e  bo uc;ht i n  0 1 .· e s are b i (jc; c r  thElJ.'l <.: h e  replace­
me n t �:; they bTeed a h i gher Ltwb ing p c r c en ta[;e i s  }. ike J  :::_: , ( 6 ) 
The g:;.'a zing manag<:!men t o:f bre edinc e \·:e s a l s o  ch a n g e d  a s  a 
result  o f  d e v e l o pment . S e t s to cking a l l  the y e a r  r o un d  � a s  
carri ed  out. prio r  t o  d e v e l op1�1 ea t ,  S ince  devel opment  th0  e i,·· c s  
a r c  s e t s l; o ckcd  o n ly in  the p e ri o d  from l amb i n c  t o  wea.ning . 
5 . 4 . 2 C on c l u �: i o n s  
Three  main p o ints  c an  b e  l earnt :from this development 
progr2.nune . 
The :f i r s t po int i s  that s igTlificant in crea s e s in s t o cking 
r a t e  can b e  achi eved by s ubdivi s i on a lone . A s  a res lJ l t  o f  
subdivis i on t h e  s toc l�ing r a t e  ·\\· a s i n c r e a. s  e d  l.ry 0 ,  6 e1ve 
e quiv a l en t s  p e r  acre . Thi s ,,· a s due t o  better  ut i l i s a t i on o f  
pas ture s a n d  better  Keed  c ontro l . 
The applicn. tion o f'  te clm.iques  proven at  Te  A1va ( 7 )  has led  
( 6 ) An analysis  done by the author based  on infonnation 
provided by the partners and us ing 1 9 68/69 pr ic es showed 
a monetary advantage on this property from rearing mv-n 
replacements ,  
( 7 )  Thes e  techniques  include heavy t opdres s ing , overs owing 
with gras s e s  and c lovers , and efficient management '1\Ti th 
high s tocking rates to ensure c omplete pas ture 
utilisation . 
1 23 
t o  the rapid  improvement of  the poor  native hill  c ountry 
p :1 s ture , The au. t l 10 :r Yi s i  t c cl -che :farm i n  mi cl-- i..-i.n t e l� and 1-;u. s 
imp:;.'e s s e d \·,· i th tb e p �1 s t u r e  a.ncl g en e r a l  c ondi t i o n o f'  the 
an i m a l s . T l w  farm " s  too  cl o u t " :f r o m  the s nrrou.ncl i i L g  
"LU1d0veloped  hi l l  c o \u1. L ry p r o p e r t :i. e s , 
The mo r.-; t  imp o r t c.u1. t les s on that c an b e  l e arn t  f'rom t h i s  
c a s e  s tudy i s  the nee d  t o  have :f'lexibi lj ty in a clcvelopm8nt 
pro�r:::mune , Higj d aclhcrence t o  a devel opmcm t p l :n1 has in this 
ins t <=<llL: e  l e d  t o  :fin DD c i a. l  d i fi'icul  t i e s . I n  o r d e r  t o  r�nain on 
the :[arm , c a p i t a l  r e payment s and s ome in·Lcres t  r e p aymen t s  ha ,- e  
h a d  t o  b e  pos tponed ,  The partn e r s  m a i n t a in that i f' p ri c e s  
rema in s t a t i c  for  a n o Ther three  y ears they ,,- ill  have to  s ell  
up , Even :i :[ pr:L c e s  ri s e  :f e r t i l i s e r  app l i c et. t i o n  i s  1.-mlikc ly 
f o r  a nwnb e r  of years . As  a result  pas tures  wi ll  tru1d to  
I I 
ru�1. out a n ci. t he va lue o .f  the c omp l e t e d.  deve l o pment K o rk 1d. l l  b e  
los t .  
C a <:' e F .• n n D 
Thi s  :f a r m , s i tuated  in the Shanno n  area, wu.s purchas ed  in 
1 9 6 4. , ancl i s  rnn as a partnership . One partner manages the 
farm 1d1.i ls t the o ther partner works as a plas terer . This has 
enab l e d  a l o t  of deve l opment Kork to be financed  out of income . 
A }larginal Lands loan of $ 1 0 , 000 has als o  b e en us ed for 
development , 
The farm cons i s t s  of 2 1 00 acres , This i s  made up of  700 
acres  of  easy  front hills , 500 acres  of  p o tentially productive 
land and 900 acres of regrowth bush.  
The farm ris e s  from 400 fe e t  to  2000 f e e t above s ea l eve l .  
\{inters are cold  and snow falls  on the upper parts  o f  the :farm , 
The ra.inf';:t ll  o f  G o  t o  80 in c h e s  p e r  a nn wn is  even ly 
cli .s t r i bu-c e cl .  
fe r t i l i ty .  n ev c r s :� o n t o  f' c ;-n o c curs re adi ly . A t  tho t ime o .f  
pur c h a s  c t h e  p a s Lur e s  K c r e  in a p o o r  c on<li t i on , The clo•.-e rs 
lvt d  a lmo s t  <.li s <J pp c a r e d  a n d  ln o\·:n t o p  t:U 1d d a n t h oni a \\ere  
preva l e n t . The f'a n a  ha.d n e -, e r  b e en topdres s cd .  
5 , 5 , 1 
ueve l o pm cn t s t a r t e d  il!Ull i:: cl i a. t e lT on pu r c ha s e  o f  the farm in 
1 9 6 h . The f i r s t rl cvG l o pm c nt carri ed out w a s  on the 700  acres  
of'  front hi lls . T1·:o and a ha l .f  mile s  of  subdivi s i on Ka s 
e r e c t e d  and r o t a t i. oiJ a l  gra z ing of  bre e d ing e \,-e s  c onm1eEc e d ,  
F o ur huncl r e d'.,-e i ght o.f  s up e rph o s pl l::t t c;  -,,a s  app l i e d  t o  JOO a c r e s . 
A }I a.re;inal  L &.n d s  loan \,-a s obtained  in t l1e s e c ond year o .f 
deve lopment , Thi s Jnoney K a s  s p ent on nG ,,- p a s ture ( 40 acrG s ) ,  
l ivGs t o ck a n d  .feJ_' ti J i s e r .  During the s e c ond and thi r d  y e a r s  
o :f de\"e lopment 8 C\·:t of  superpho sphate , including J c1,:t o :f  
molybdi c  s up e rpho s pha t e , ,,· a s  app l i e d  t o  7 0 0  a c r e s . Burning 
out on an o t b e r  JOO a c r e s . 
c omple t ed . 
Tl,�o miles  of' subdivis i on \,'as als o 
The third year of  development smv the introduction of  
Perendale  e·wes . This  was achieved by purchas ing Perendale  
eKes and by mating a Chevio t  r am  with RonL"'ley ewes . 
In  the fourth year o f  development acces s was improved by 
bulldozing two miles  of  tracks . There was no  applica tion of  
fertili s er .  This  was be caus e the partners d id  not wish  t o  go 
further into debt . 
1 27 
Ere c t i on of  t�o ma in boundary fenc es  and the 
r u c o Hmi e n c e J a e n t  o :f' :f' e r t i l i s e  ,� ap_p l i c a t :L o n s  o c c u rr e d  in ·1 9 6 8 . 
C rus hi n�; < nul b u rn i n c  or  s O l l l <::: s c ru b  \·: a s a l s o  c ; , rri o d  0 1 H: .  
The i n c r e a s e  in s t o c l� inc;- ri.l t c  a s s o c i a t e d  id. th the 
d. Q ve l o pm cll t progralllm e is s l 1 o \\·n j n  t � t b l c  5 , G .  
t h a t  t h e  s t o ck.ing r <: l  t e  h< • .s a lm o s t  d ovblcd  <.J s il. r .:; ::; u l  t o .f t h e  
deve lop:oeut . D e s p i t e  thi s the s t o c k i n g  ra t e  i s  s t i l l  below 
the di s Lri c t  average o f  J , O  E . E .  �er  a c r e . C ons o li da t i on of  
thi s deve l opment  1/c rk 11 i l l  be  the ke)T1 o t e  }or  the n e x ·t- i;l,,·o 
When ewe nwnb e r s  r e a ch 2 0 0 0  development will  
rec ommenc e on the  500  a cre block ,  Thi s deve lopmen t will  be 
fiuan ced  o u -r  of' income . I .f  thi s  i s  n o t: po s s ible  c <l p i t a l  1d l l  
Tab l e  s , G  Ca s e  r ::  .. rm D -· I n c r c a s  c �  i n  S t o c k :i. n  : H n  t c  A s s  o c  i;:;_ t ed  ---- -- - -- - -·----- ·· 
:::::2-.!J0S...05:"E�2: 
S t o c k \·; in t e r�· Y� - -·------� 
_,_� 6'' 1 1 9".2 T 1 9 66-
Drecding ewes 7 JO 1 000 1 5 20 
S he ep C \IG e qu i v a l e n t s  9 6 2  1 2 1 5  1 9 J7 
Bre cdinc c ows 80  86  96  
Cat t l e  e we equival ents 
TQtal ew e equival ents  
EKe equivil lents 
potentially 
produc tive acre  
5 . 5 . 2  C onclus ions 
6 1+0 
1 60 2  
1 . 3 1 . 6 
7 7 7  
27 1 4  
2 . 2 
•J Cl ( '' - -_,:_ ..:}_L 1 9 6�: 
1 '/20  1 7 20 
2 1 7 1+ 2 1  7 L1 
1 0 2 1 0 2 
840 SLl-0 
J0 1 4 J0 1 LJ-
2 . 5  2 . 5 
The increas e in carrying capacity has been achieved by 
concentrating on the leas t di fficult land . The deve lopment 
program e has been flexible enough to s tm1.d the effec ts of  
the fall in wool  price . Heavy initial  inputs o f  fertiliser  
1 2 8  
al lowed fert i l i s er appli c a t ion t o  be  s t opped in year f our o �  
deYe lopmen  t i·,' i t llou t ;_t. n y  s i ,c:;·n L f i e<.t n t  el l!  t <:: }_' i o r a  t i o n i n  p a s ture 
l a r g e  f'i.nanc ial  c o Htmi tmen t s  ancl the de s ire  n o t  to g o  f u r t h e r  
int o  de 1Jt , 
T h o  c ons o l idation period  a imed  a t  int ens iCying s t o c king 
ra t e  on the developed  land should eno lJ .l e  the f' a r m  t o  b e  p l a c e d  
on a s ound rinancial  bas is . 
s . 6 C :-:.1 s c• F <:t r  E - Random S u r \  oy  Farm :\umber  20 
1\ha r e r o a  is  s i tuat ed  at  P i1 e kakariki a n d  is  ) t ianagecl by  t l l e  
L a n d s a n d  Survey Department . The s h e e p  un i t  i s  1 l f. 1 2  acres  i.n 
s i ze and c ons i s t s  o .f m o cl e r a t e l y s te ep  hi l l  c ou..Yltry . The r e  i '"  
a l s o  acc e s s  ro 700 a c r e s  o f  s an d  dune s id1ich  provi de a d d i t i o n 24 l  
gra zing during the  y e a r . 
The f a rm r i s e s  from 5 0  fc G t  t o  1 600 fe e t  above s e a  leYc l 
and ha s a nurKe s terly aspe c t , R a i n r a l l  a v e r a g e s 40 in c h e s  
per  annum and i s  unevenly dis tributed ,  S wmn e r  droug;ht .s arc  
c o mmon , T lw ,,·interf..; a r e  c old  c.:nd f a l l s O l  sno ,,· o c cur on t h e  
hic;her s l opes , 
The s o i ls are c :f medium lerti li  ty be ing d e r i v e d lrom 
greywacke , They a r e  molybd enwn defi ci ent and als o  respond t o  
phosphate applications . 
The farm is  run by a manager who implements po licy 
decisions of  two fi eld offi cers . 
5 .  6 '  1 Th e Deve l opment P r ogranm1 e 
Development c onunenced  in 1 9 67 and up to  1 9 6 9  i t  has 
c ons i s t e d  of  subdivisi o11 , live s tock increas es , � e r t i l i s e r  
ap p LL c a t  i on ,  s c 1 ·ub cu ·i� t in �· ,  g o r s e and v a  r:i g a t e  cl t h i s t l c  
c o n t r o l .  
The de t a i l s  o f'  the d o  \"e l O }J'!Wn'L pro e,T;-t nJme t o g e ther H i  t h  
liv0 � t ock inc r e a s e s  8 r c g i v e n  in tabl e 5 . 7 .  
T a b l e  5 ,  7 s h011.s tha t the s -c o cld. n c;  r a t e  1,·as d o ul.J l c d  in 1: 110 
fi. r s t  year of d eve lopment . A .s a r e s u l t  of  thi s s t o ck 
p c r i ' o r :m <.L!"W e ,.,-c., s .s eri ously a :f :f e  c t c  cL T a D l e  5 . 8 p r o v i d e s  a 
c o mp a J. ::_ s o n o f  the li..-e s t ock  performance  in 1 9 6 6  ancl in 1 9 6 7 . 
T o b l e  ::; . 7 
---.. � ......... -- C a .s e P a rm E 
I �-- Y_e <l r 
l :�:-�::=�� 
I F e r t i l i s e r  ( c on ) 
S ubdivi s i on ( chains ) 
S crubcutting ( n cres ) 
H o rmon e spraying ( acre s ) 
Cropping ( acre s ) 
��·,.--_.1
_
-2.__(_:J "'_r_,l,--
·
1
S
-' 0_
E
_:l-..l-,-9-6·-- �-;-"""f. -.,-<)-'/_0 ____ -
-- l(f· ;:; "c ima t e cl )  ' - - ---1------ -- -----
360 
7 0  230 2,)0 
24 0 90 65 
200 300 
200 200 1 65 
2 0  2 0 
�---- --- ----·----- ---------� --� -
S t o c k � inte�ed ( l )  
Bre eding e1·; e s  
Sheep  e�e equivalents 
Bre eding cm,·s 
Cat tle  ewe equivalents 
Total e�e equival ents 
��e equivalents per  
p o t entially 
productive acre  
Note  -
2 1 77 3880 
2724 1+ 7 2 3  
82 1 22 
1 2 22 306 1 
3946 7 7 84 
1 . 9 
4 6 9 1  6 327 5500 
5585 7 4 5 4 6600 
1 1  3 200 2 4 6  
1 LJ. 33 1 5 1 0  1 934 
7 0 1 8 8964  8534  
3 . 5 4 .  1-J. 4 . 2 
( 1 )  The s tock :figu.:res for 1 97 0  have been advers ely affected  
by the drought . 
T u. b J e ') . 8  ---- --- C a s e  F a rm E -�-�----� I t e n  
L a rnh i ng p e r c ent a g e  
L\·: e l o s s e s  C6 ) 
Wo o l  produc tion ( l�s ) 
C a l  Yill g p e r c en t a g e  
D r e e ding c o w  lo� s e s  ( % )  
··---:�: ' 1 '�-- ---
J J .. � c.;  - �--------· 
_!_]6( 'l 9!,']_ 
Sll '7 J 
6 7 32 , 6�iJ 
__ _,_ _____ _ 
The ::; ·i.· o c1d ng r <:::. t e  11Ta s r e du c e d  in the s e c on d  y e a r  of'  
dcvelo :tJment t o  al. lo\·: pas  t u.re o s  t ab l i s hmcn t and l iv e s t o ck 
pcr.formancc  t o  improYc . Tab l e  5 . 9 r e c o r d s  t l l o  s t o ck 
p c r f'o rm�u1 c e s  in 1 9 6 8  and 1 9 6 9 , The tabl e reveals  that Jc >·. ·o  
y e ::t r s  a:f·t e r  the s to  cL:ing :c <J. t c  11a s  cl oub l e d  s t a ck pcr:formance  
1·; a s  ba ck t o  t h e  pro-c.eve lopmc::.1. t l ev e l s , 
1 JO 
C a s e  r .:-t nn E - S ·[; o c k P c rf o n;1an c e  .A f t c r  S t o cl: i·'1/! R a_� 
I n c r e <: t ::: c s  
I t e m  I Y e a r  -·--
.:!_268 1 9 6 9  
Lambin e; p e rc e n t a g e  7 L1 80 
&,re l o s s e s ( % )  J h 
1vo o l  p r o duc t i on ( l b s ) 60 , 000 80 , 000 
C alving percentage 9 8  90 
Breedine; C 01\r los s e s  ( % )  2 J 
Devel opment i s  s till  continuing and the aim i s  to  run ten 
ewe equivalents  per  acre , The field officers concerned do n o t  
c onsider  development lvork being done on  Whareroa is  outs ide the 
s cope  of  the average hill cotmtry farmer .  Ho1vever ,  deve lopnent 
1 J 1 
d e v e l o pment C '- L l'ri c d  o u t  by o t h e r  b i l l  c o m1 t ry  :C' a n ; : o r s , Th e 
a Jv a n t a g· e s  a r c  L; �1 int c l'" C: s t  charge 0 1 1  b o r r u \\' e d  m o n e y  o r  four 
p e r  c en ·i:; p e r  annt.::m <::.nd t.hc.: ab i l i t y to t r a n s i' e r  s t o ck frolil 
o ther L an d s  ancl S nrve y :f8. rms . 
l1'har e r o a  i s  :farm e d  G s  an e n d o l\ ll l e n t  J' o :c the Que en 
Eli zabe th P ark D omain D o a r d , A l l  income go es  i n t o  a 
cons o lido.ted  fund . F i e l d o f f i c e r s prepare a budG e t f o r  e a ch 
y e a r ' � o p e ra t i on s  whi c h  i s  e i ther a p p r o v e d  e r  a l t e re d .  A s  a 
r e s u l t  dc-n-e l o piiw nt d o e s  n o ·t a l ,,-ay .s pro c e e d  in the JiLGUl e r  t he 
fi e l d  offi c e r s  w o u l d  l i k e , 
s . 6 . ? C on c 1 u c:. :i ons 
The author 1·: o u l d  l i k e  to s e c V l w r e r o a  u s e d  as a 
demons tration hi l l  c o w1. t ry s h e e p  fa.rm .. T.7ncl o ub t e cl ly many 
l e s s ons 1\i l l  be l e arn t  f'rom thi s a t t emp t to r e <'-�. c h  s t o cking 
l e ve l s  in the Yi c ini ty of 1 0  E . E ,  p e r  a c re , Alreacly one 
important pi e ce  o f  info nna t i on has Cl!lGrG"ed f'rom the  dcYe lop-
men t p r o gramm e , Thi s i s  tha t the de trimental e r f ec t on s tock 
p e r f o rman c e  c a u s e d  by a rupid  ini t i a l  incr e a s e  in s to cking ra t e  
is  only a t emp o rary phas e ,  
I f'  1\'hareroa Ka s us e d  a s  a demons tration farm phys i cal an d  
financial records  would need  to be  improved and reorganised .  
This improvement would b e  required in order t o  enable accurate  
c o s t ing of  development . 
5 · 7 Summary 
Thi s  chapt er has outlined the important phys i cal features  
of  five development programmes carried  out by  farmers in the 
Horowhenua dis trict . All  of  the s e  programmes have information 
1 J2 
to  o :ffer to  f'o.. rm e rs con s iderine· devel opmen t .  
The mos t  imp o r !; d.rl t  f'inrl.incr' from t he s e  d e v e J o pm c n t  
( i )  J ui t j  zd Ll lJP l i c a  t i ons o f'  c ap i t < 1 l  f e r t i l i. �:; e r  ·vari e d  
( i i )  
( i i i )  
( iv )  
r i rs t y e a r  t o t a l s  
H i c;h e a  t t l. e  l o s s  e �; ( np t o  1 o% ) c a n b e  expe c t e d  on 
thi s c l as s of c o tm � ry Khe r e  cat tle  are u s e d  t o  c rus h 
a n cl ·c ramp l e  s c n ..<.b , t a uhinu a n d uw_; h .  
The r e  i s  in c r e a s ing c ompeti  t i oli. beb,·een she ep and 
co.. t tle f o r  fe e d  a s  deve l o pment pl� o c e e d s . 
D o ucht in e1,· e s  gen e ra l ly d e  n o t  thriYe o n  thi s cla s s  
o :f hi l l  c ountry . 
( v ) S ome  cle..-elopnen t fa rm e r s  have chant;ed t o  the 
Perenda le bre ed  in order to improve lrunhing 
p e r c en t ac;c� s ,  r e du c e  s t o c k l o s s e s  a.ncl g r o ,,· b i. c;G e r  
s b C> ep , 
( vi )  
( vi i )  
( vii. i )  
( ix )  
A s ud d en large increas e in s t o ck i n g  r a t e  in order t o  
improYe pas ture production can t empo rari ly affe c t  
s t o ck p e rfo rman c e . 
N o r e  c o�p l e t e  uti lisa tion of  the ava i l a b l e  :f e e d  wi l l  
result in higher s tocking rates  on s om e  :farms . 
The cheapest  me thod o f  development i s  s t ock increases  
on exi s ting product ive land and the mos t  expens ive is  
clearing the land o :f  we eds and bush .  
The ,,-oo l  pric e  has a marked influence  o n  the rate  and 
amount o f  development that can be done out of  income . 
( x )  Careful thought mus t  b e  given t o  a development 
1 JJ 
p r o gramme and the pro gr;crnrne de c i de d  u p on mu s t  be 
1' l e x i b l c� e n o ug h  t o  a1 J. o;, mo cl i f'i c a t i on.s to b e  m a d e  
a s  o.Jd j t i o : n .:t l  i n f o .r.nw. t i o11. b e c o m e s av<-•.:i. l a b l e .  
( . \ , X l ;  D c: ve l o pmen i; c a n  b o  hind e r e d. by s h o r t  t E� :CJJJ f 'in<:, n c i a l  
a r r El J.f; O l ! t c n t s  b e c a u s e the p o s t  t < t x  c a ::-; h  s ur-p l u s i s  
u s e d  -G o  r e p ay t h r.:� l o an r a  t J w r  tllan b c int:; u s e d  :fo r  
l>" o r tlnihi l e  d c Y e l o p m e n  t .  
C J L\.PTF!l SIX 
G .  1 I n t r o clu c t i on 
I t  is p o s s i b l e  to (l ivi de I I o r cn: h c n u ;) h i l l  c o L:�·t -r r ' i'a.rms 
int o  :L o t H' m a :i . n  c l a s s e s  ;.J e c ordlnc: -� o t h e: s t c c;e  of d e: \ c<L o r.-m on t .  
The s e  c l a s s e s  a r c : -
( i )  t h e  po  tenLial ly e c onomi c but l �tr[; e .ly tmdE:Yc l oped.  
( i i )  
( i i i. )  
( iY)  
hil l  c ountry  < m :l. t 
t h e  S ]) ]il l l  s i :z; e d  farm e n  i;hi c h  the hi l l  c on! l i:ry a ::..' e iJ. 
h a s  b u cn negl e c t ed 
med.iwn s i z e d  p r o p e r ·t i. e s  on iihi c h  8. 1 1  t h e  po t entia ]  .t y 
pro dLt c t i ve .l. Cl n d  l l i1. s  be en c l oare:cl .s o  t l·�.,: t: :fu t u r e  
p r o du c t i on. i n c r e 21 .s e s  a r c  p o ::; s j b l c  o:r: ly b y  j n c 1 ·· e:-, s in �: 
s t o ck n um b e r s  O l� by i mp r oYi n r:;  s t o c k p e r :f o rn:<U1 c e .s  
incroas c s  a r e  s t i l l  p a s s  i b l o oi  t h c r tlu: u uc::; h J. a:n c 
d e v e l o pment ( 1) o r  by intcm .:;; ifi c a t i on , ( 2 )  
Although th e prof'i tubi l i ty o :f f u t u 1' e  de-.-e l o r,me:nt i s  
imp o r t an t iv i th  r e spe c t  t o  the lat ter  c las s o f  f'arn; i t  i s  more  
( 1) The pro c e s s  of  land development involve s  deve loping ·h-as t e  
land o r  land only partly farmed . I t  include s operati ons 
such as  c l earing we eds , s c rub , o r  bus h ,  cul t iva t i on ,  
regras s ing and overs oKing as 1�11 as  ere ct ing �ences , 
putting in tracks , improving 1·:ater  supplie s  and applying 
capi tal fert i l i s er .  
( 2 ) Intens ification can be defined  as  the addition  o f  extra 
inputs  to promot e  greater  output whil e  the remainder  o !� 
the inputs  are held cons tant . The additi onal inputs are 
l ike ly to  be  tho s e  with high marginal re turns such  as  
fertili s er and s to ck .  As  a result capital  is  go ing into 
factors o f  production which will  directly increas e the 
output of meat and wool . 
1 J5 
imp o r t an t  t n  t h e  p r o c c c c U n c  cL-1 5 S E� s . T h e s P  fa rms lJave a 
p r i c e s  and ris ing  c 0 � ts . A. J-' r o f i  t <..:b l c  i n c r <: u. s  c i:i.1. p r o d u c ·i: i 0 1.1. 
i s  o n e mei: hocl by h h i c h  t h i s vuln c ril b i J i ty c a 1 J  ]) () j_' e cJ u c e cL 
T 1 v.o ana .Ly s i s  o f  t h e  p .1� o j�i c a 1J i: L i l: y o .L  F u t u r e  h i l l  c ount1'Y 
d e v e l o  pm e n  t \·.- a s t h e n:; .f e r e  c o L f'i11 ed  ·t o fa:t'lll S r c p r e .s e l l  t a t  i v e  o f' 
t h e s e  t hJ.' c c· clas s e s . 
F o r  e a c h  r e p r e s  e n  e a  t i  v e  farm develo }Jnten t p :c o g r a J !L'l l e s  ,,- e r e  
devi ::: e d  a n d  s ubmi t t e: d t o  the f'u.rm 0 11-n c r s  for c omment s  and 
c r i t i e i s ;ns . A s  a r c s u l t s ome J. e v e l o r))n e n t  p:co g.cal !l.rne s were  
modi fi ed  br:?f'ore b e in g  f i nancially eva luated . ( J ) 
T:b.e in i t i a l  p a r t  o f  -chi s chapter  d e s c r i b e s the a s s "L11!1f' t i ons 
m.:-td e  i n  cYal·._:w t inc tbe  cl evelopme1.1t  p r o g ramme s . 
f a rm F i s  t l!.C!1. cl e s c r i  b e d  a n cl  t h o  d e v e l o pmen t proc,rannn e s  cl c \- i :"' e J  
f'or i t  f d i. �  c u s s e d a n d  eYaluated  i n  turn . • 
Th e :f i n 0.n c i a l  vn <llys i s  o f  t h e  development p T O {_; r a mm e s  
invo lYed m ak i n g  a number  o f'  as sump t ions . The s e  a s s ump t i on s  
ar8 l i s t e d  i n  t h e  fol lo�ing subs e c t i ons . 
6 .  2 .  1 P r i c e s  
In  d e t e rmining t h e prices  t o  use i n  an ex  ante  s t udy i t  
i s  ne c e s s ary t o  cho o s e  beb,-een one o f  three  procedures .  
The s e  are : -
( i ) 
( ii ) 
us e re c ent pri c e s  
us e forecas ts  o f'  f'uture values 
( J )  The development programmes  des cribed are thos e  \vhi ch the 
repres entative farm owners would be prepared to  
implement , given inc entives to  do  s o .  
1 36 
( i i i )  u s e a ran�e o f  pri ces  . 
. J . i k c� l i } H) O U  o r  e r r o r  cl u e  t o  t_mccrto::tin ty o f  t h e  :fu t u r e  i s  
p r i c e :=;  ( �- ) r c c C:· i ve cl by I I o r o 1d1euua h i l l  c ountry f a rm e r s . 
Thr (:· G  :la c  t o l'.3 ·.Lnf'l; :ten c e d  thi s dcc i r:;  i o n  • 
. _ )  t l '.e  .L o n e  t erm pros ]J C: c t  :f o r  1-.ro o l  i s  unf'a v o tL!.'a1J l e w l -r h  
r u ) \ . 
( i i i ) 
t h e  e -..;: i s t e L c e  o f  s t o ckpi l ed  w o o l  o::tnrl l o 1 .- pri c ed  
syntheti c s . 
r e c e n t  r e s e a r c h  ( 3 2 )  ind i c a t e s  i t  i s  l i ke ly t h a t  
?\ e>;·: Zealand 1i i 1 1  b e  n b l e  t o  e xp o r t  mos t  o:f the 
e x p e c t e d  i n c r e a s e in l a;nb p r o du c t i o n over t h e  n o :� t 
t e n � e a r s  a t  pre s ent  pri c e s , 
i t  s e ems l i k e ly t ha t  t h e r e  �i l l  Le f�voura b l c m a rke t 
orpo ]:-tuni  t i e s  :for  beef'  in  t h e  n e x t.  decade . 
The s e  f a. c t o r s  s 0 e m e d  to  indi cate  t h a t  pre s ent pri c e s  K e r e  
l i k e l )  t o  c ont i.nuo in to  the  :future . HoKever ,  in o rd e r  t o 
remove s e as ona l fluctua t i ons  i t  w a s  d e c ide d to  us e the average 
of  the pas t  thr e e  years 1 price s . The s e  pric e s  are li s t ed  in 
table 6 . 1 .  
6 . 2 . 2  C o t; t s  
Pri ce s  paid by primary producers have ri s en by 2 3  p er  c ent 
in the last ten years ( JJ ) . I :f  ri sing input price s  are us ed  
( 4 )  The three y ears us ed  ,\·ere 1 9 67/68 ,  1 9 68/69 and 1 9 69/70 • . 
1 37 
durin� deve l o pment i t  i s  nec e s s a ry t o  recalcul a t e  t h e  L D s e  
y e a r  ±' o r  each  year  o :f  dc-v G lopmcnt . 
d u vel opmen -c .  The c o mpu t u  t i o n a l  i J u r d c• J 1  i_ s  iu c r c : t s  e d  hy 
a J. l o 1vinc- .f o r  t hi s bu-L i t  d o e s  :i.nui c a  t c  t J J c  e f f'c c t: o.f  inc r c: c: :=; ln2,· 
c o s t t> on clc'! \ · e l o pJ l ten t .  
( ') ) A E.; t l w  c ompu t e r  p r o t;ram - · us e d  by i� h e  a u tl J O r  c o u l d  n o t  
:rw .. udle  rib inc- iupu "L c o s t s  a C OlJ s t an t  l e-v c: l  o f'  c o s t s  1·.- a .s  cl. S e d 
in this s t u dy , T h e  c o s t s us e d  K e r e  tho s e  1\hi ch i:l pp l i e d  t o  
I-I o r o ldl.ellu;J hi l l  c ountr-y 
6 . 2 . J  '1'<1 x <.t  i; i on 
f'arm e r s  . . L  4 cl 6 9/-o  ( 6 ) ln t n e:  � �  1 '  s e a s on . 
C a l cu l �  t i o n s  o :f  t a xa t i o n  1·: e r e  m a d e on t h e  premi �; e  ·cl1<1 t 
a J  1 in c ome a c c r u e d  t o  the f'ann o \\·n e r .  The l e ve l o :l t axabJ. e 
inc ome v; u. s cnlcula  t e d a s  J' o l l m·: s : ­
Taxa b l e inc ome ( ? ) = Gros s  i n c ome . .! c hange in l ive s -r o ck 
s t andard -v a l u e  - ( tax d e duc t i b l e  
expens e s  ( 8 )  + pers onal a n d  f'aEd ly 
exempt ions  �r life  insuranc e  
premiums ) • 
The a s swnptions made c on c erning fac t o rs affec t ing t h e  l eve l of  
taxable  income are de s cribed in the fo llowing subs e c t i ons . 
( 5 )  Used  to  financially evaluate  the feas ibility of  the 
development programmes . -
( 6 )  A development p!.�ogranmlB sho,,n t o  be marginally profi table 
under thes e c o s ts c ould be  unprofitable under higher 
c o s ts . 
( 7 ) This  t erm can be defined as  that sum o f  money which i s  
sub j e c t to  income tax.  
( 8 ) Thes e include s t o ck purchas e s , farm working expens es , 
intere s t  and certain items o f  development expendi ture •. 
�---·�-:-��-�-d_u_·�-t----- - ------ -�-__ ] ___ :_c i-� i-� _r_J 1��-c e-s-1 
( $ )  
\'! o o J. - p o r  p o 1.u1 cl 
S tore  1<.11llUS - C 1·i O S 
F a t  L.<.mb s 
C ul l  t l\·o t o G t h e1-; o �  
l'·l i x e d  a g e d  ewe s 
F i  vo y o a r  OI\'G S 
F a t  cull 01·.· c s  
S tore  Cattle  
iV e an c r  s t e e r s 
lv e a  n o r  h e i f e r s  
Cu:L l C O i i S 
C u l l bul l .s 
0 . 2 2 . :)  
1 1  ' 00 
J . t:so 
_5 . 00 
5 . 00 
Lj_ .  00 
J , 20 
2 . 5 0 
Js . oo 
JJ . OO 
6s . oo 
1 25 . 0 0 
1 3 9 
6 .  2 .  4 
The l i  v c s l; o ck s t c:m cL 1  rd v o  J. u P s  l i S  e d. in the developl!lent 
in t <'• bl e  G .  2 .  The u s e o f  ni l y; t lu c s  i·! a s  n o t. p o t; s i b .l c  b e c aus e 
the ovCtluat ion p r o c,- r ztm c o nl cl 11. o t  utilis e -lhC I J t , 
6 .  2 .  5 
I t  w a s  de c i de d  t o  a s s wn o  p e r s ona l e x cn� t i on s  o f  $ 7 85 .  
The s e  exem p ti ons correspond to  t l w s e of  a m F� .rr i  o u  m a n  11 i th t11 0 
children . 
6 . 2 . 6  J.., j_ f' e I- 1 J  :s n r a n c o  P r c m i  w n s  
A figure o f  $ 250 �a s u s e d  as the value for  life  insuranc e 
premiwns . Tld s figure r()pres ents the avcr<:lt_:: n annual p r omiwn 
p a i d  by the thr e e  reprc s c;ntative farme r s . 
Ne 11r 7: e ala�nd inc ome tax laws a l. l o 1·.' certuin i t ems of  
developmeu t expendi ture t o  b e  d e duc t o d  from t axa b l e  in c owe over 
a number of y ears . Such a provi s i on ena b l e s  taxation t o  be  
m inimi s e d  and c a s h  resources  to  b e  cons e�ved , ( 1 o ) However in 
thi s  s tudy the computeri s e d  evaluation  program us ed  d i d  not  
c ontain provis ion for  the deve l o �nent expendi ture to be spread 
forward . Hence  deve lopment exp:endi ture w a s  deduc t ed f'rom 
t axable  income in the year in whi ch i t  o c curred,  
( 9 ) S e e  glossary • .  
( 1 0) Two bas ic  principles  are involved vi z .  the more even the 
am1.ual  taxable  incomes the lower the total  tax paid over 
a period  and showing negative taxable incomes  is rarely 
a s ound practice ,  The s e  points  are explained in de tai l  by 
If . G .  Payne in D i s cus s ion Paper N o .  Jl� ,  Depart"JlH�nt o f  
Agricultural Economic s  and Farm :Hanagemen t ,  Has s ey 
Univers i ty .  
Tab l e  6 . 2  L i v c .�; t o c k S tnwLtrd I.T o. l u c s  -- --..-- ·· · ·-· ·-··--·----·----- �·- ··-�· .. --- --·-·-... --·-
�--- ----- - C J. <;_ s .s - o :i:-� t o�: k --- --- ----- -r- S t .�J d a r d-\' . c J u�- -, 1-- - ----- ---- --- ----- -------- - -- ,---- --- - - -- ---__J 
I $ I 
I s j·) u (' p - , � 1 1  . l t:: c "' J • o o 
I f' e ; ,� , -·- �L c' c n t t J  8 o n o y e il. r  I 2 0 . 0 0  
I tK o y e a r  < nH.l o l cJ o r  _5 0 . (JO 
I hu LL s 1 00 . 00 
'----------- --- --- ---------- ·- ___ _j ____ __ ___ _  
I n  thi .s s t� u dy p c rs ow:d dra\\'in{:;s o f ' $ 2000 ( 1 1 ) 
Th L::; � mu i s  gre::tter  t l w n  the pers onal clr<.n-.-i .lJ.gs o f  
s on:e hi l l  C O L"!.J.--: t r y  :Cu.rmc r s . H o w e v e r  tl1e ;:tu t h o :c b e .L i e ",·e �_; thc..-c; 
tl1 i 2  CJ >� ; :) Uil t o f  mo; �.e-y i s  r e qu i r e d  :f o r  & s a t :L s :L'a c; L u ry s t anci<'crd 
o:f 1 :;__ vi n e ,  
m o n e y r r o u  c o::1.s u.• ;:p t i on t o  d evelopment by rcducint, p o r s o �i z.J l 
clr a x i n c s  (!_ ,_,_rin g c le;,-e l o pmen t .  I i'  tll i s  pro c edure i s  ;:t do p t c d  
then t h e  d e v c < L o pm e n t  p r o g r a mm e  is  in e:ffe c t  re ceiving -�!.!: 
int e r e s t  LL' e e  1 ,_ 0 1 1  r e Da v a hl e l o an . f'or  thi s reason the l eve l --·-·---.. -·------·-· ____ .,. ____ J_.....c. ___ ----� 
0 1� p c r s  o na l  drm,· :i.ngs i s  as swned to  remain c ons tant tbroughou t 
thG devel opmen t period .  
6 . 3 �epre s entative F a nn F 
This  farm embodies  the problems of  farmers who have 
recently ( 1 2 ) purchas ed  1.-mdevel oped Horowhenua hill country 
( 1 1  ) This swn d o e s  n o t  include taxation or life insuranc e  
payments . Thes e  payments were allowed for a s  s eparate  
i tems in  the development plans . 
( 1 2 )  \{ ithin the las t f'ive to ten years . 
1 l.j 1 
' . ( 1 J ) propcrt1 e s . F a l l i11 g  inc ome ha s reduced not  only t he 
.s u 1. · p l. v s  i n c o m e  a ··,r : !. i Lt.1 , J. o  :f' o r  :fu tu:c c d c v  e l o LJ'tJ 'll t .  F or t l w s o  
f'<., :nu o r s  ::; u rp l u .s  :i n c o m c  i c;  t h e  ma j or �J ourc o o f  d o ve l O fl incn-:.; 
c ap i t c:t J. , "\.n}' n:l cluc t i  on i n  tl' d. s .s c r i  o u s l-y o. :f :C o c t s  the <.: b i l i  ty 
t o  i n C J' O ZJ. S O p r od11.C c i on C.".. ll d  main. t a in lH..: t  i:n.c oll:t) , 
On t lH: s e  p r o p e r t i e s  t u ·t a l  p r o du c t i o n c an b e  incroa.:;od  in 
one of thre e 1·.· a y s  Yi z .  by int ons i f'i c Qtion ,  by doYelopj nc 
unpro •.>LC t i ve l an d  or by c ombining in t on s i J'ica  tion 1·:i t h  l and 
development . F o r  t h i s r c u s o n thre e d eve l o pment prograirune s  
,,·e r e  d e v i s e d  an d cYa lua t c d .  
6 .  J . 1 
The t o t a l  a r 0 a  o f'  t h e .[';1.rm i s  1 , 2 6 0  il c r e s ,  Thi s  i s  made 
up o f : -
700  acre:s  o f  nat ive pas ture  e . e; . bro1o1 t op an d d anthon i a  
JO  a c r e s  o f  s cn;n pas ture 
1 50 G. C  1.' 8 S o r  m a r:.. ulc a 
1 JO a c r e s  of  f' e rn and s pars e s crub 
1 00 acres  o .r rangiora and pw1ga 
l t  0 acres  o f  s c a t t e r e d  t auhinu 
JO a c r e s  of  s c a t t e r e d  gors e 
JO acres  o f  native bush 
50 acres  of  was t e  land e . g . buildings , creeks . 
O f  the t o ta l  area , 1 , 080 acres ( 86%) i s  p otentially product ive . 
( 1 3 )  
Hos t  o f  the farm i s  bet \veen 900 fe e t  and 1 ,  000 fee t  above 
Random survey farm nwnbers 1 0 , 1 7  and 1 8  and cas e farms 
B and D are examples  o f  thi s  type of property. 
s e a  l evel . 
1 �- 2 
The highes t p e ak i s  1 , 20 0  �e e t  a n d  the lowest  
point 1 00 f e e t , The t o p o {_', l'et p hy o .f t h e  fu r;n vari e s  :Crom e a ::;- ·y 
hi ll  c o tu1 -Lry to  s t o e p  b r o k c.n Lm tl 1d. tll HlJm e r c nu; [;"Ll l l :i.  e s . 
D e s p i t e  t h i s  a LL p ;J. r t s  o i'  t h e  f;_:.rm ci J_' e  r c a lli ly a c c e s s :l i > l e . 
T h e  main a c c e s s  i s  e i ther hy in t ernal  t r a c k s  o r  1Jy :c o a d  c.; long 
the s ou t h e rn s i d e  o _f  the f;:u'm . O f  tlw p r o cl u c t ive l and o n ly 
80 .:� o r e s  can be t r a v e r s e d  by a 1-;he e l  t r a c -t o r . 
The annual  av e rage rainfall  i s  L� S i n c he s o n  the J . o·h·er  
s lo :� _ ...: and 60 inches on the  higher s lopes . Dry peri ods o f  
s i x t o  e :7_ gh t w e e k s  are common but prolonged droughi .s <J. S  
experienced in 1 9 70  are  r a r e . 
wi th fr o s t s  o c curring in }lay . 
The 1-;in t e r 3  a .r e  c old and we t 
On th�' highGr peaks  s n <.n\ 
f a l l s  a r e  c ommon in July , 
1-.ce s t 8rlies , 
The prevaili:ag  1; in ds a r e  
I na d e qua t e  s ubdivi s i o n  h a s  p r e '\  e n  ted  the c s  -c ab l i s llJr:.r_m t 
of  any organi sed  e;ra zing patt ern . Recently gra zing r i ght s 
have be en leas e d  in an attempt  to  improve pas t 1J.re  c on tr o l . 
I t  i s  hoped  tha t c omp l e t e  pas ture utili sation and fertility 
bui ldup Ki l l  r e s ul t  in_ i n c r e a s ed autmnn gro·l\-th  a n d  s o m e early 
winter  gro"i>' th .  
Buildings and yards e . g . wo o lshed ,  hayshed ,  sheep  yards 
are generally adequate  for their  purpos e .  The addi tion of  
ano ther s et o :f  sheep yards ,,Tould ,  hol\ever ,  facilitate quicker 
and eas ier s t ock 1vork . 
B o th the cattle and s heep policies involve breeding '\vi th 
the s al e  o:f  s tore  s tock .  Sheep sales  include s tore wether 
lambs , surplus ewe lambs and cull e1·res , lvhile  ea t t le sales  
include 1veaner s teers , s urplus wean er  heifers and cull c ows . 
The lambing and ca lY in G' percentages  o b t a i n e d  u n  tb i s  f::� rm 
c o r r �' �; JJ O nd t o  t h e cl i "'  t r l c 1:  a ·v e r n. r � e s ,  b c in e- 8_) 1-' e r  c <..' n  t <Ln d f30 
p e T  c e n t  r c:. s p ·-· c t i v e l ) . 
T h e  p a �:.i. u c c a n d  s t o c .k. m::n1<.• g e m e n t  r; r n c t i c c· s  e r ;p l c·y c cl a r e  
s imi LH' t o  t t � n :; e  u s e d  o n  o 1; lw r  hi l l  c o1.1a "L ry :farms i n  t h e  < l r e a , 
A de s c. 1' i p t :i. o n  o f  t h e s e  p r a c t i c e s  i s  c on t a i.n c:. d  i n  c h C� p t c r  fom� .  
The only permanent  l ab our i 3  the O \ \-:r 1 e r  h.L111s c l :f .  C a s u a l  
l. a bo cu· has b e e n emp l o y e d  f o r  s hc t:>.. r ing- and d o ckin �  \·thi l e  s ome 
c on ·c r  ,� c. t  f en c e rs have be en emp l o y (; cl . The O i\Tl c r  i s  a war r i e d  
H e  h a s  m-.·n e d  the f a rm f' o :.c f i  Y G  -y r.: a r s  
and i s  a capable  and experi enced  harch-;orkinc; farmcr . During-
the t i m e  he has b e en on -c h c  f'arm he has e r e c t e d  c a i:. t l c  <:-t.nc.l 
sheep  yards <:• nd bui l t  a ln ::t dinc; ra c e  and a .s J1 e e p d i p . :Ln  
n cl cl i  t i on h e  ha s r i ll5 f' e n c c d  the p r o p e r t y a n d  e re c  t c d  ll! o r e  t h ;u:. 
1 0 0 chains of  int ern<:l l f(�nc ine; . S c rub a n d  tm:t.hinu h <lY· e b e en 
cut , bra cken f'ern burnt , gors e s pr<�.yed  an d in L e rn<t l trc::t cks 
improved . 
The s e  improvements  have been finan c e d  by borro�ed money . 
The abi li ty t o  r e pay l o ans ha s b e en s evere ly a f f e c t e d  by the 
d e c l in e  in t h e  pri c e  o f  �oo l .  I n  the initial s t ages  of  
deve lopment t he gros s  re turn from a bale o f  w ool  was $ 1 1 2 . 
Thi s �as reduced  to  $ 5 8  per  b�le  �hen the wool  pri ce  reached 
i ts lowest  l evel . A t  the pre s ent  time the farmer is  
c ons olidating on  the development 1vork already c omple t ed .  
Any f�urther development will  require further borrowing . 
6 . 3 . 2 Deve l opment Progrrurune One 
The devel opment programme ini tially involves the addition 
o f  extra s to ck to  utilise  exi s t ing pasture growth . This  i s  
fo l l o ,,· o d  by the rl e Y e l o p m e n t  of'  2 80 a c r e s  of' land c o v c r f; d  i n  
: f e rn a n d m�u1.vL a .  The: i 1 1 1me di a t o  a cl d i  t i on o f  1 0 0 0 -,_, e 
e q u i v ;·, l e n t s  ( E , F . ) n o t  onl·y improve s IJas t u.rc  c ontr.J l  b u t �c l s o  
e n s u r G s  a n  i Hnn c di a t e  in c r c:- a � c  in t·<, J: ;n  1. l l G O J l l O , 
t h e  l e a s t  c a p i ( ;-: 1  i' o r  d c�Ye l o pmen l� i s  c l e<t r o d  :f i rs -:.; , ( l -'l ) Th:L s  
a r e a  c omp r i s e s  ·i J O  <v.::r8.s  o f' £' e rn a n d i s  c: J c <1 r e u  in t , ,- o  b l o c k . .  =: 
f' o r  the 
rep r e s  e n  t a t i  ve :f a nn i t  i ::o c o1 : ::: i cl c r e (l thr1. t h,lrn ing o :f  the .f t? lTL 
-h· o u l d  b o  the m o s t  s u i t a b l e  app rc , t c h ,  The :Corn i s  l r u rH t i n  
the autuinn n n d o v o r s o\,11 1d. -r; h  f' our p o un d s  ( l.t lbs ) o f' c l ov e r  
s e ed o.n_ d f i \ " O  hundred  ,,- (d ebt ( 5  c1:t , )  o f'  mo l yb.J i c  s u �J c r -
phosphc.d .; e . In t h e  s pr i n  ;_;· , .'3 c K t . o .f s u [H:) l' p h o .s p h a  t t· i .s  a p p J i ·? cl. 
and thurca :fter  an11ua .l .ly . 
I n  the t h i r d  an u r o n r t h  y c <'t l' S o f'  development c .l c a r in ;; o f' 
t l1 e  man1.1ka i s  uncl e r t c:d.;: o H . The a r e < t i s  c l e o. r e cl  i.n t \\ O  bJ. o cks , 
e a c h  o r  75 a c r e s . T11 e f i r s t b l o c k i n c l u d e s  5 0 3. C l' C S  1-:hi ch 
can be cut 1d th a :f l a i l  c h o pp e r . Thi s i s  t he c h e ap e s t  me t h o d  
o :f  cut ting the mo..nuka . H o l-.-e ve r ,  b e c a u s e o f  the topography t h e  
r ema i n ing 1 0 0 A c res  has t o  be cu t by hand ; 2.5 acres  in year  
thre e and 75  acres in year f o ur . After  the manuJca h a s  b e en 
cut it  i s  burnt and oversoh-n i n  the autwn  1d th s eed and 5 C l\- -t , 
of molybdic superphosphate ,  In  the spring , J cwt . of  super-
phosphate  is  appli ed and thereafter annually . 
( 1 4 ) 
( 1 5 ) 
To enable  s o1md pas ture management prac tices  t o  be  
The pre sent c o s t  per acre  of  clearing weeds on  the 
Horowhenua hill cou.ntx-y is outlined in appendix E .  
S e e  appendix E .  
f'o lloKed the f'c rn aTJ d manukct b l o cJ'-s a r e  f'enc c cL Th e l' cnc in& 
b<.t s _; c a n d J. :::: 
c h e a p e r  � n d c u s i A r  t o  e r e c t . 
ment c o !'-' t  in the initial  ye <-� r s  o f  development <m d e n s t ·• r .c· �� 
th<.� t d e b t  s c� rvi c ing cha rg e s  a r e  a min imum .  Th L s  i s  
imp c, _,_- l: an t 1·: h e r e  i:h.-'re is  uncertainty a b o u t  :ru tur e p!:- i ce  
movemen - �- s . l-\. r e d u c t i o n i n  inc ome uJ1. d e r  t h e :_; o  c i r c '  ..l.ms :i; ;_;_n c c s  
has a l e s s o r e ffe c t  -c han in  s i tuati ons 1d10 r 8  l c  . .:·e; c  interes t 
an.d prin.c i p a l  p<�-)' i ! le11 t s  h a Y e  b e e n :i.n c urro d ,  
The r a t e  a t  ,.,-hi c h  s t o c k nwnb c r s  ;:ere  l n c r c <.� s e cl c <J n  a :Cfc c t  
( •] ? \ the pro fi -c 2. b i l i  ty o J' t h e  d c Y c l o pmen t p l an ,  ·1 F o r  the 
developmcn � p r o gr<:umne apa r t  f'r um the J. ni t i a l  -y e a r  the r;:c t e  a t  
11-hi ch ::: t a c k nwn1.J e r s  CJ.r e  i 1 1 c re a s e d  i s  l imi t e d  b-y t1 .· o  f' ::-. c t o :r.' s , 
The s e  � � r e  the aJno tul ·c o f  n e ·".- l a n d  b r o u c; h t  i n t o p r o du c t i on 
e a c h  y e a r  <c.nd the ra t e  a t  Kll.i c h  the carryinG  capa c i ty i s  
. d ( 1 8 )  :;,. ncrea s e . ' The develo�n�nt pro grrurnne r e s u l t �  in 2 8 0  acres  
o f  n ew l and being brought i n to produc t i on over :four y0ars . 
On the s e  areas the s tocking rate increas es from 1 . 5 E , E .  p e r  
acre at  the e n d  of  y ear one to  J . S  E . E .  per acre a t  the end 
of year thre e . ( 1 9 ) 
( 1 6 )  
( 1 7 ) 
( 1 8 ) 
The bas ic  requirements for a fence are that i t  i s  s t o ck 
proof ,  long las ting and needs minimal maintena.J.1.ce . 
Holden in his s tudy concluded that high rates  o f' s to ck 
increas es  are a pre-requis ite  to  economically 
succes s ful hill c ountry development . 
This s tatement implies  that s tock increas es  are not  
limited  by capital . 
A l l  s t o ck i n c r c <:l. s e s  a r c  in t e rms o f  s h e e p  r a t h P r  t h m1. 
c a t -c l c_, .  This  i s  becaus e : -
( i )  l o s s  e a  p i  l� < d  i s  i nv o l \r e c L  
( .: · i ) .L - s h e e p  c;iYe o. b e t t c! r  :fin<:uJ. c i n. l  r C' t u rn than c a t t l e  on 
thi s a r e a  o :f 11 i 11  c o u11 t ry , ( 20 ) 
( i i :i )  p a s t ur e  can b e  c;£a z e d  hard a l l  t h e  y ear  row1d 
� h e r e a s  � i th c a t t l e  t h e r e  i s  <:1. ne e d  to  s ave e x t ra 
fe e d .  
e·\\·e s  :Ln larg e m o b s  develop  pas tures  better  through 
in c r e � s e d  tr�npling ,  fertility bui ldup and b e tter  
u t i .l is a ti on • .  
( v ) sheep  a r e  le s s vu ln e r a b l e  t o  drought than ca t t l e . 
( ·d ) ' . e a  t t  l e  l o s s e s  a r e  h i gh ( 3 - 1 o;� ) on this are3. o :f  hi l l  
C O tUl. t ry , 
A rapid  buildup in the nmnber of  breeclinc; ewe s often 
caus e s  p r o b l e 1 n s  b e c aus e o f'  insu:ffici ent ewe h o gge t replace-
m e n t s .  Th· c  c ou:cs e s  of  acti on are p o s s i b l e . Ei ther s ome :five 
year eKe s ec:m. b e  re tained for  another one and perhaps tv:o  y e ar.3, 
or ,  breedinc; e 11e s can "be  purchas ed  :from o ther :farms . There 
are di sadvantages  wi th b o t h  methods .  In the firs t ins tance 
woo l  product i on de teriorate s  and s to ck los s e s  increas e .  In  
the lat ter cas e bought in  ewes may not  thrive on thi s c las s 
( 1 9 ) 
( 20 ) 
These  s t ocking rate increas es  are tho s e  which Horowhenua 
hill c ountry :farmers  believe can be readily achieved .  
These  increas es  will , however ,  be  affected  by  climatic  
conditions . In  areas with extremes o :f  climate  
obtaining the s e  s t o cking levels  in the t ime period  
indicated may b e  d ifficult . Thi s will  b e  parti cularly 
s o  1vhere the natural s oi l  :fertility i s  lo1v . 
S e e  appendix D .  
o :f hi 11  c o 1.m �c ry . ( 2 1  ) L ik e  many othe.c H o r o 1d 1 enua hill  
c o 1..u1t ry :f�trmc· r ::·. . t l l c  r e ]_l r r· s  e n  t a  t :L  Ye l'armcr prefers t o  r e t a in 
s ome f i y o  y e ELr e,,·es  and buy in any a d cl i  t i o n a l  e K e s r r o m  :farms 
on a s i n i l a r c l a s s  o f'  c o w 1 � r y . 
The numb e r  of'  b r e  e cLi. n c; ei,· e s  and ln'e eding c o 1·;.s a p e rmanen -c 
labour ·Lm.:L t c an m z t n < � ;:�- c  i s  a_, .L imp o r t an 1� cl eve l o p'lJ I.. n ·t :f<J. c t or . 
S t o ck nwnbers in ex c e s s  o f  thes e :figln'cs  r equire addi t i ona l 
l a b our iuput s . The approac l1 us ed  in thi s s tudy i s  t o  a s .s um <� 
that ·J i·1 c  capacity o f  a s inc; l e  l R b our m1.it  i s  1 , 500  bre e ding 
and · 1  00 b r e e d : i . n e;  , .  ( 2 2 )  e o .-. s .  B e y ond t hi s  p o int 
( ' >  J )  and casual  lzLbour \ "- aro emp l oy e d  until  i t  becomes  
ec onomi caLly fea s ibl e to  a cl cl anothe r l abour uni t .  
c ontrClc t 
Por  thi s 
developmeni; proc.;raJIFne the i n c r e a s e in s t ock  nlUnbers  i s  
insu:ffi c i cnt t o  jus t i :fy this , 
To imp r o \'O the labour productivity a mo tor  b ik e  i s  
purcha s e d  in the s e c ond y e a r  o :f  deve l o pmen t and an additional 
s e t  o:f  sheep  y a r ds erected  in year three . The us e of  a mo tor  
bike improYes labou:c mobility , The time involved in s to ck 
( 2 1 )  0;.1e f.'.urvey farmer main t a ined that on hi s farm in i t s  
pres ent s ta ge o f  deve lopment h e  can 1dnter  J E , E .  per  
acre . I lo,,·ever ,  if  thes e  s tock Kerc s old and ewe s  bought 
in then only 2 . 0  E , E ,  per acre c ould be wintered ,  
( 2 2 )  This i s  a s omei,'hat  higher labour produc tivi ty than i s  
being achi eved  a t  pres ent ( 9 65  breeding ewes  and 6 5  
bre eding cm,·s p e r  labour uni t ) . HoKever ,  many survey 
farmers maintained that one permanent labour uni t  c ould 
manage these  s to ck nwnbers . 
( 23 )  The reliance  on casual labour c ould be reduced  by allow­
ing for s tock increas e s  in wethers rather than breeding 
ewe s . This would als o  improve the flexibili ty of the 
development programme e specially in periods of  drought . 
However wool  i s  the only s ourc e o f  income from wethers . 
With the pres ent  low prices  for wool i t  is  difficult t o  
jus ti:fy the inclusion of  1vethers in  a development 
progranune , 
1 lt 8  
o p e ra t i ons e . c; . drenching ,  i s  r e du c e d  by bu i l d in g  �t s e t  o i'  
s l J e o p  -y a r d s  a d j a c en t  t o  the n md_ y d e v e l o p e d  lai1.CL 
This means  
a dcU t j  on a l  E l..l] l _p l en;en L <:.t ry i'e e d  ll a s  t o  be  p:r- o v :i_ Lle cl :f o r  t h e  
c a t  L J e , o r  c <i t t 1 c n u mb c r s r e  u u c e d • 
deYelopment  p 1 an for  .? 0 a c r e s  o f'  s i l ::t c,·c t o  be  harv e s t c u  
annua l ly . S i l a g e  i s  mn do ra tlw r t h e n  h<'ty b e c aus e i t  c an b e  
ma d e  ·:: a r l i e r  in the  s e a s o n .  T h i s i s  an a dvan t a g e  :Ln a n  n. r c ::t. 
p r o n e  t o  d r o ug h t s .  I n  addi t i o n t he s i lage can b e  s elf  fed  
t h e r e by reducinG t h e  l a u our inp·ut reqni rod  f'o r  the bre eding  
S e rvi c ing  f'a c i l j_ ties  e . g . Ko o l s hc d  and Kat er supply K e r c  
cons i d c r e d  a cl e qna t e  t o  c ope  -1\-i tll  the incrc :::t .s  e in s t o clc nwnb o r s . 
The deve lopment procramme i s  swmnr-_;_ri s c d  in t al_) l o  G .  J 
the larges t E o E . increa s e  o ccurs i n  y ear f' our o f  development . 
A more de tai l e d  s t ock re conciliation given in table  6 . 4  
indic;a. t e s  tha L; breeding e K e s  increas e by 8 _'3 0  and e 1,·o ho gc e t s  
by 322 .  S imilarly t o tal E . E .  increas e by 1 078  whi ch 
repres ents an aru1ua l increas e of 5 , 9  per c ent . A l loKance  has 
been made f'or a reduction in s t o ck performance during 
development . As  the nmnber of  breeding Gives per  labour 1u1i t 
increas e s , s t o ck performa_TJ.ce ,  particularly lambing percentage , 
is  likely to  de creas e ,  Furthermore the retention of  C , F .A .  
ewe s  for capital  s to ck during development i s  likely t o  result 
in higher s to ck l o s se s  and l ower Koo l  production per  head . 
Table 6 . 3  Repres entative F a rm Jl' - Dcvc 1_<2]2� ,; u. t  P r o : ·:rn !l�l l l <: O n. c 
I tem I Uni t s  1 
Fencing Chains JO 
C apital Fertiliser 
8 Clvt . per acre A c r e s  65 
3 cwt . per acre 1 A c r e s  
I 
-
Increased  Maintenance  I 
F ertilis e r  I A c r e s  I -
Overs owint; A c r e s  6 5  
Durning Fern A c r e s  G 5  
Bulldo zing f l o ur �  -
Chopping· & Crushing Manukv. A c :r· c s  -
Cutting Manuka Dy Hand A c r e s  -
Plant and Duildings I t em� -
I 
I 
Ewe Equivalent Increas e 
per year I E .
E . 1 9 7 
-
D c' v u J.. o J ' l l H � n t Y ( ' ; J r I 
I 5 I rl I ' )  J I l-j ·- I 
I I JO J9 ] t) 
i I 
65 I '7 5 i 75  
65 1 JO 1 i 1 0 
- - ·  6 s 
6 5  7 5  7 5 
6_5 - -
- 1 0  -
- I _'j O -I 25 I 7 5 ·- I 
}l o t o r  Sheep I 
D i k e  i Y; Lll.b 
I � 6 ') : 2 ] . '_) 
I 
') r-:' ') 1 1 c_ 
I 
_ · I· , _  .:... .) c_ 
' I 
I 5
I --i 
-
-1 5 0 
1 JO 1 
-
· -
I 
-
. .. 
-
'1 50 
G 
I . I 
I 
I -
-
7 .5 
205 
-
-
-
-
-
7 5  
i 
I 
I I 
I 
I 
I 
I 
I 
I 
i 
I I 
I 
I I 
+-
\.0 
Table  6 . 4  Progranm1e One - S tock Rcconcilio. tion 
B o. s e 
Y o o.r 
I 
S tock Wintered 1 I 
! 
Breeding Ewes  1 6 0 0  1 6 00 
Ewe Hoggets  5SO 5 5 0 
Sheep Ewe Equivalents 2065 206_5 
Breeding Cows so so 
Cattle  Ewe Equivalents _5 6 1  _5 6 1  
Total Ewe Equivalents 26 26 2626  
Annual Percentage - N .A .  
Increas e In Ewe 
Equivalents 
Note  -
N .A . denotes  non applicable .  
Dcvelo pmcn t Yco.r 
2 I J �- 5 
I I 
1 7 h 9  I 1 8 9 9  I 20 90 2280 
G ;2 6  6 ' · - I ' "  :J 7 00 7 7 0 
2262  2lt 2� I 2 6 6 6  2 9 J 6 
so so so so 
5 6 1  5 6 1  5 6 1  56 1  
28 ;23  2 985 J227 J1+ 9 7  
'- " I 7 · 5 1  :.J • I 8 .  -1 7 . 8  
j 
6 
I 
2J90 
8 21� 
J·J 6 S  
so 
56 1  
J 629 
L� . 5 
I P o s t  [ 
D eve l o pment 
l i 
I 
I 2Lt JO 8 7 2  I 
J 1 h J  
80 
56 1  ' i 
J?Oh I I I I - I 2 . 0  I 
I 
I 
I 
I 
! 
_.. 
'vi 
0 
1 5 1  
I n  the c omput eri s e d  eva lua t i o n  rJ r o c; r am used  s t o c k  l o s s e s  
c o u l d  n o -c  b e  a l t e c e d  cl n r i n g  d t) \' u l o p m c n t . 
p r o d u c t i o n d a t a  u s e d  l i l  t h i s  ;;:; i; t 1. ciy r e f l e c t s  1; h e  e :x p o r i Anc c s  
Pro d uc t i on cl 0. t a  f' o r  -c h i s  cl c " c l o pm c n t  }n· o gr a ;m n e  i .s  l i s t e d  in 
tabl e  6 . 5 .  Fn l c s s  o t Jv.n�·v;i s c  Jncn t i o n e r1  t h i s  d a t a  '''a s a l s o  
u.s e cl  in the o t h e r  d c ,·e l opwen.t p r o g r a mm e s .  
The d a t a  in 
the t a b l e  r e v r� a .l s  t h c'< L the numl H>r o .f  C: \·,· e s  rc tainc cl in the 
s e c o n d , third and f' o u r t h y e ar s  of d ev e l opment fa l J.. s  s h o r t  o f  
the number  requirecl .  
t o  maJz e u p  
F e r t i l i s e r  i s  a n  importnnt d e , · e l o pn : c n t  i t em acc ountil �&;  
for a p p r oxima t e ly 5 1  p e r  c e n t  o f  t h e  t o t a l  d e v e l o pm e n t  
expenditure . 
D e ve l o pmen t c o s t s  reach n p e a k  in the third a n d  f o u r t h  
years of development � h e n  man�za s crub i s  cut and addi tional  
she ep yards ere c t ed , In  t h e  las t t,,-o y e a r s  of'  development 1 
capi tal  expendit ure i s  c onfined t o  fert i l i s er  appli cat i on . 
6 . 4  Financ i al Evalua t i on 
Data  from the deve lopment programme was punched on cards 
and financially evaluated  by Gardner ' s c omputerised  program . 
In  practice  i t  is  likely that bre eding ewe s  would be 
purchas ed only in year three .  I n  years two and four 
the small number  o f  ewe s required to mee t  the targe t 
number  would be obtained e i ther by retaining more ·f'i ve 
year  ewes  or by culling l e s s  s everely amongs t the mixed 
aged e'i,res .  
Tab l e  6 . s S t o ck P c· r :f o t ' J J > <i \l C e  D � t CJ.  
1 ' S t o c . .;-. L o .s s e :::. 
L amb s 
C attl e  
L e s s  1'1J.<:m S i x Y e a r s  
S i x Years A�1d 01  d e r  
( r cr C en t )  
s . o  
s . o  
J . O 
] . 0 
8 . 0  
1 5 2 
�------- ----------- -·--·- ----------f--- ----------------------l 
2 .  �. •J o l  P r o cluc -r i on ( P 01..111cls P er H ead ) 
Brcedinc; E'l':e s  8 . 5 
T110 To o t h E1·: e s  5 . .  '5 
£\·:e Hogc-e ts  
I R am s  
Pre  �:,.nd }' o s  t D e..-elopment 
Dc..-e lopmcnt Year T1. o On 
s . o 
9 . 0 
85 . 0  
80 . 0  
I 
f------· -----------+--1 - ---- -
. 4 , Ca lYin€_1 � ere 0n�e . 80 . 0  
5 . 
E1·: e Lambs 
:8\,-e  Hogge ts  
T\,-o Too th E1·: e s  
Four Too th Ei\·es  
S ix Too th Ewes  
Four Year Elves  
Five Year Elve s  
Note s  -
! ( 1 ) Pre And P o s t  Developmcnc: 1 Deve lopment 
( Per  C ent ) 1 ( Per  C ent ) 
1 5 . 0 s . o 
- J . O 
1 0 . 0  1 0 . 0  
s . o J . O  
2 . 0 o . o  
1 00 . 0  s o . o  
- 1 00 . 0  
( 1 ) These  are minimwn culling figures . This percentage in 
each age c las s mus t  be culled  during development . For  
example  three  per c ent of  the ewe hogge t s · on hand at the 
beginning of the y ear mus t  be culled a t  the end of  the 
year as two t ooth ewe s . The pro cedure enables  the 
retenti on o:f cull ewe s in o rder t o  build  up the t o tal 
number of capital s tock . 
Table  6 . 6 P r o r;ramme Ono - D e v e l o pm e n t C o� t s  
I tem D c vc l o 1_w:cm. t Y o a:c I 
I I '] I I ; 
1 1 :: 1  J ,  �� � 5 1  6 I 
$ * I  $ 1  $ I  $ �  
Breeding S tock ( Purchas ed )  1 - ·1 0 8  j '+ .'30  I 1 1 1.� I - I · 'j: 
Capital Fertiliser  I 8 8 1 �  i 1 .? O i t  I ' () GO I 1 G 9  2 � 7 0 6  J )  ;2 J Increa�e� Naintenance ' , i / I 
Fert1l1ser  - - I - 2 ·1 4  I L� 1 0 j 70h 1 Fenc ing 
I 
4-)0 4 so 1 �5 2 )  5 25 1 - ! - I S eed  I J ;2_'J 3 ;�5 I J 7 5  1 375 ! 1 - 1 
Bulldo zing - -- 60 I - I - - I I i Cutting & CrushinG S crub 
- - � 5
0 I - ! - - I 
Cutting S crub Dy Hand - 1 - • �) 0 0  1 ·1 _') 0 0  I - _.. I 
P lant ' - 5 5 0  I 5 0  I 5 0  - - I 
S lieepyards - - 1 7 5 0  - - - ! I I 
T o  t a l  Annua l Co s t
--
1 G 5 9  1 2 J C 7  I, (, ;w 
I 
hi ! ') O 
I 
.I I n  I 0 5 6  J 
-' 
\...,l 
\...) 
TJH� eva l ua. t i o n  '''<:< s carried  o u t  u n cl e r t \\· o �> e ts o .r c ondi t i on s . 
( . \ J . I n d eb t  f':t' (! e s i tua t i o.tL 
( i i )  
Th :j_ s  p r o c e dn r e  W <::I S  a n  a t t e mp t t o  s ] J 0\1 tb.C! :in :f.1.uen c (� o :C 
:!. a rm iHdcbt cdncs s on the pro:i.i ·I� <J.b .i. lity o :C clevc J. op;ncnt . By 
( ? - I  
rccbJ c ing  :farm equi ty � .J J t1•.e p o int at 1·vhi ch debt s crvi cinc; 
chnrge.s ( 26 ) ma ke the development  programme f'inan c ial.ly 
i n i' e as i b l e could be d e t e rmine d .  
For  s i.Jnp l i c i  ty s ymbols  l•r e r (� us e d  t o  rep r e s ent vari ou.'; 
equity· levels . The s e  symbol s  \v ere E 1 0 ,  E9 , E8 , !c'":7 , E6 a...."J d  
E5 ·1vhi ch repres ented 1 00 ,  90 , 80 , 70 ,  6 0  and 50 p e r  c ent 
equi ty res pe ctively . Al  thouc;h Ej \\" a s  t h e  l o 11'G S  t e qui ty 
s i tua t i on arw.l·ys ed  there  ,,· e r e  :f<lrm s in the survey area  1·.'i th 
l o ,,· c r  equiti es . Thes e  farms i n c lude d U1 o s c  whi c h  had re ce11 tly  
changed ow::.1.crship a n d  s ome o :r  the c a s e  farm e r s  1\ho h a cl rec ent ly 
carri ed  out development programmes .  
progranunes  analys ed ,,· ere  unpro:fi  t ab l e  a t  ES . For  thi s r e a s on 
lower equi ty  levels were not  analysed .  
Intere s t  and principal repayments ,,re re  as s e s s  e el f'or the 
various farm equities  as shown in table  6 . 7 .  The s e fi gures 
reflect  rates being paid by hi l l  country farmers with S tate 
Advance s  C orporation and Harginal Lands Board l oans . The 
result s  o f'  the financial evaluation c an be divided into  five 
( 25 )  Farm equity is the ratio  of t otal as s e ts minus t otal 
liabilities  to  total  as s ets . I t  is usually expres s ed 
as  a percentage . 
( 26 )  That is  debt s ervicing charges  exis ting prior to  the 
c onunencement of' development . 
1 55 
l n t c r e s  t and Pr:i  n c i  p ;�  l H e  r:uYnwnt s 
_ _,. ,  ______ ________  L ___ --_..._. ____ , __ 
l n t. (:r c��l 
I 
( per  c en t )  
2 . 0  
( } ; C r  c c n t ; l  
J < )  I 
S c c ond j'l o r tga g c  J , O 
main p�1 :c ts . The s e  are : -
( i )  the p:ce-develo:rmcnt o r  ba s e  year s i ::;uation . 
I • :) 
J } . 0 
( i i )  
( iii ) 
( iY )  
phys i c R l  producti on d:d: a  f' c r  the de ....- olopmcnt ye •.,rs . 
f'inan c i a l  da t a  for  each ye <J. r  o f'  d e \-c l o pmen t . 
t h e  p o ::: t develo pm en t s i  tuct Tion 
( ....- ) the r o s 'ltl t s  of'  t h e  pro f'i to.b:i lity ana lys i s . 
The m o �; t imp o r t an t  inf'ormat i on i s  c on tainod  in the fincm c i a l  
data  f'o r the physical  deYel opment years , Data  f'rom t h e  pre 
and p o .:;; t: developwent s i tua tion is r'.:quired. f'or  the analysis  o f  
( /- ) p r o f i t a b i l i ty l.w ing the pre s ent ya]_ue m e <J.sur e , - - / ,  
the pro :C'itabili  ty analys is  is  dependent upon t h e  ��! 
development progranune being implemen ted , . In  a dynami c 
agri cul ture Kith cons tantly changing pri ces , c o sts  and 
technology ,  thi s is unlike ly to oc cur . In addition ,  there 
are difficulties  involved in accurate ly de termining the bas e 
year and po s t  development s i tuations . Cons equent ly doubts 
can be expres s e d  about the ac curacy of any pres ent value 
figure s o  determined .  
( 27 )  The present value me thod o f  evaluating the profitability 
o f  a development programme is  briefly outlined in 
appendix F .  
The .follO\\'inc sul>s ec tions dis cus s in  .s o n : G  dC' t <ti l the 
plty s i c w l  pro dtl c t: i on da t a  a n d  the f'.i.n :m c i. <1 J. c.J c t a i 1 s  :Co r  the s i:·.;. 
s i  tu<� t i ons t o gc i:her 1\'i th U w  analys :t s of 1_1ro .L'i tilbi l i t:, a r c  
bri c fJ y di s c u s s e d ,  To s imp l i i'y tlw d i s cus s i o n i t  i s  <:1 s s wn e d 
that t1 1 c  development progr<.umne i s  imp l emen t e Ll exa c t ly <'ls 
pl.ann.ed an d. a l l  a s s ump t i o:1. s ho l d  t ru10• . 
6 .  l..j. ' 1 D a s e  Y e <1 r  D a t a  
Th e import :�n t ini'o rmo.. t i on r e l a t ing t o  ·t: ho pre-dc '.-e l opmen t 
o r  b · · · · 1 ·  t d · · 1 1  6 ° ( 2S ) a s c  year  S l tu a t; l on 1 s  1 �  e l n  t a J e . � . 'l'h:L s da t; a 
is  r e qu i r e d  f o r  p r o fi tab i J. i ty calcuJ. ati ons u s i n g  the p r e s ent 
value JJle <t sure . T�c t n b l e  l i s t s  for  vari ous leve ls o f' farm 
inde-btedne s s , gros s  income , total  c a s h  expendi ture , tztxation ,  
po s t  tax c u s h  s urplu s a n d to tal  mortc�ce s . ( �., c;\ T l l e  unrec: li s t i c  ·� - ' 
debt free  farm s ituo..t i on i s  inc lud e d  b e c a u s e  i t  provides  f o r  a 
better  illus tr<J. ti on o f'  the  in:flu e n c e  of  :farm inciebtednes s on 
the :fe as ibili ty o f  d evelopment . 
The table  indi c a t e s  tha t  gros s  income  t o t a l s  $ 1 2 , 1 96 
prior  t o  deve l o pment while  t otal cash  expendi ture vari es from 
$ 7 , 6 27 to $ 1 0 , 4 6 1  dep ending on the amom1t o f  farm debt .. The 
total  cash expenditure , includes tax deductible expenditure , 
( 28 )  I t  should be noted that the bas e year s i tuation will be  
the same f'or the three development pro granunes devised  
for  this farm as  it  is  the con�on s tarting point from 
,,rhich these  programmes would be implemented . 
( 29 ) Unrealistic  in the s ens e that there i s  tmlikely to be any 
completely debt free hill cou..YJ.try farms in the survey 
area . 
Tab l e  6 . 8 P r oaretnunc One - D et s  c Y e a r  D a  t ;c  
Farm G r o s s  T o t et l  TaxalJ l c  Taxa t i on 
I 
P o s t  T < l X T o t a l  
Equi ty Inc ome Expen u i ture I n c o n 1 e  C < t ::; h  D e b t  
I S urplus 
(P e r  C ent ) $ $ *j $ I <} th '·j ) ·+> 
1 00 ( E 1 0 ) 1 2 1 9 6 7 6 2 7  1� 6 .2 6  8.< 8 I :'J ) (j 9  -
80 ( E 8 )  1 2 1  9 6  8 7 2 9  J 5 cl 8  l t 7 h i J 1! G 7 1 7 h 2 0 I 
7 0  ( E7 ) 1 2 1 96  9 2 '7 9  J0 6 6  " ,., ., J ..J I :2 9 '! 7 :2 G ·i J O  
60 ( E6 ) 1 2 1 9 6 9 9 1 9 2.) 1 J  I 2 1 1  ;2 2 7 7  J lt 8 1 t O  
s o ( E5 ) 1 2 1  9 6  1 0 it 6 1  1 9 6 0  9 5  ., ·- ,...... r:: ' I _> _> I ·; ') 5 0 
Note  -
( 1 ) T o t a l  expend i ture d o e s  n o t  inc lude l l cr s on < � l c.lr<t >v il l (;'S . T h e  p o s t i; ; 1 x  c < t s h  
s urp lus i s  av<J.i l ab l e  f o r  p e r s o n a l  clr a w i n g :3 a n d  d e v e l o pm e n t .  
--------- ---- - ------ --
I 
I 
I 
-" 
I.J t  
--...( 
1 5 8 
non t a x  cl e duc t i b l o  expenditure t ( JO )  tax;.1tion and life 
in :::: u.rau c o  preud.1:n� , 
Th o p o s t  La x c a s h  s u :cp .l u s , o b t a i n e d  hy sn·I J tr<t c t .L;c_· t h o  t o t c< l  
A 1 tlwugh w o r e  tax :L s p ayabl c a t  h:i t>;her e qni ty 
l ev e l s , t h e  p o s t t a x cas b .  S1Jrplus is [;" r e a t c r  t l . �ul. t ll.o 
c o rr e s pon dinG fig·uro s  at  .l o . - .r.  equi ty leveL:; , 
offs et  the r e du c e d  t a x  p a ym ent s .  C ons equently for 
r e p r e s ent a t ive f'3 rJ!l I' the b a s e y e ar CC:t Sh  surplus d e c l in e s I�r O !'l 
$ 4 , 5 6 9  a t  E 1 0  t o  $ 1 , 7 J5 a t  ES . Thi s m e n n. s  that !�o r  E.5 farm 
developme-nt '''i ll  probably hav e t o  be f:i.n a��l'�_!':.2_ttirr<Lx..J:!::::, 
b o l_:r o-h' e d  L�J o n �:t,  ( J 1 )  be caus e the  pos  i; t a x  cash surplus , ,-i l l  be  
required for  l i  \-j l l !:'; expense s .  
The repre s entative farmer  ha s a level o:f  incl e b t e dr:.c ::::. s 
corres ponding t o  that of  E5 . In  order to  o b t ain suffic i ent 
money for l :L vin g e xpens e s a n d  farm deYelopmen t t he 0101. e r  i s  
ac tually working off the f'arm , ( 1 9 6 9 )  
6 . 4 . 2 Produc t ion Da t a  
( JO )  Thes e are cash expens es  which caru1.ot be deducted  from 
farm income 1d1.en as s e s s ing taxable  income . They include 
principal repayments  and the purchas e o:f  additional plant  
and machinery . 
( J 1 ) For the purpos e  of  this s tudy it  i s  as sun1ed that the off 
farm capital  required :for development is  provided by 
means  of a bailie overdraft . 
Thi s do. t a  is  s umm a r ·i s o d  in t a lJl c G . 9 ,  A s t udy o f  the  
� o o l  s a l e s  by � 2 , 37 8 .  
dcy·(� l o pnten t ·bv_i� sheep  s o l e s  in. c r c, a s e  by �� -1 ,  8 93 . 
:four y ears  o :f  cle \"e lopmcn t the ,-;:t l •.le o f  s l l n c p  sale s  i s  l e s s  
tho. n tho � e  p r i o r  t o  d e v e l o pmen t .  Th i s i s  due t o  revenue 
s t o c k  b e i n g  r e t a i n e tl in order to :in c r e a s e the total  numb e r  o f  
c a p i ·:- --. 1 s t o ck .  The r e du c e d  sheep  sale s  are respons ible  f'or 
e;r o s s  inc ome in the f i r .s T: two y e a r s  b e ing l e s s  t l w.n in the 
pro-development s i tuation . In  t h e  t hi rcl and fourth years t h e  
incre2. s e d  va l u e  o f  t l le 1,· o o l  s ale s  o :f:fs c -cs the redu c t i on in  t h e  
va l u e  o f  the � o o l  sa le s . 
As  a r e s u l t of d e \ r o l o p m e n t c;ro s s  i n c o m e  incre ::1 s e s  by J�) 
p e r  c ent . O f  t h i s i n c r e a s e  a p p r o x i m a t e l y o n e  hal f i s  clue t o  
the increas e d  va lue of  �oo l  s ales . This refl e c t s  t h e  fac t  
t ha t s t o c k increas e s a r e  in t e rm s o f  sheep  r a t h e r  t h a n  cattle . 
6 . L!- , J  
F inanc�_ al  de tai l s  :for  the s ix years  of'  phy s ica l 
devel opmen t ( J Z ) are fir s t  dis cus s e d  Kith  respect  t o  the debt  
free  s ituation . The effec t o f  farm indebt edl1.es s on the 
feas ibi lity o f  the development pro gramme i s  then analy s ed .  
6 . 4 . 3 , 1 The Debt Free  S i tuation 
( 3 2 )  
Financial  details  for this s ituation are sho1m in 
The t erm phys ical  deve lopment is us ed to  indicate  the 
period  o f  time required to implement the actual 
deve lopment plan . The development proce s s  i t s elf  i s , 
however ,  not c ompleted until  all  the money borrowed :for 
development has been repaid .  Usually repayment involves 
a l_onger period than the physical deve lopment period . 
Table 6 . 9  Programme One - Produc tion Data 
Base  1 2 Year 
Wool  Production ( lbs ) 22 , 279  2 1 , 9 1 0  24 , 4 30 
Wool  S ales  ( $ )  5 , 1 63 4 , 990  5 , 557  
Sheep S ales  ( $ )  4 , 533 3 , 677  3 , 839 
C attle  S ales  ( $ )  2 , 500 2 , 500 2 , 500 
Gro s s  Income ( $ )  1 2 ,  1 9 6 1 "1 , 1 67 1 1 , 896  
' 
Development Year 
3 4 5 
26 , 470  28 , 660 30 , 70 1  
6 , 026  6 , 5 1 9  6 , 9 78  
4 , 1 60 4 , l�65 5 , 1 73 
2 , 500 2 , 500 2 , 500 
1 2 , 686  1 3 , 4 84 1 4 , 65 1  
6 
32 , 037  
7 , 343 
5 , 9 1 1 
2 , 500 
1 5 , 754 
------ -----
Pos t 
D evelopment 
33 , 202 
7 , 54 1 
6 , 428  
2 , 500 
1 6 , 469 
L__ ·- --- -- --
_.. 
0\ 
0 
I 
I 
j 
tal Jle  6 . 1 0 . ( J J )  The cla e a  in the t c.1.b l e  ind i cc:: t e .s  t J u  t in 
y e a r  on e mo s t  cl eY e l o pm c 1-: t  C < ln b e  j_'inan c c� c:L o u ·t o f'  i n c • imo . 
pas ture c-ro,.\- t h  and deve l o p ing· t J w 1 e 3. s t  c o � c 'L·y l and . In  
the s c c ond 1 third a n d  f o u r t h  y e e t r s  t h e  r c qtli r0'il C n t  Lor  o f f  
f'arm capi tal  i n c r e a s e s  b c c <. t u s e cl:::Ye lopment inYo lYe s m o r e  
T n  the s e  y e a r s  the  ' ' 11..nual cash  
def'ic  i t s  a. r e  tl1 c l a r g o s  t :i. 1 w ur:r: c cl b y  t h e  deYelopmen -c p r o g-r atn.J:J.O . 
A s  <.>. result  the t o t <. 1 l o · · e r d r a :f t  r c q1.d r e d  t o  :fircanc e t l1 o 
o :f  y e z. r  four , 
r C' s u l t s  in an 
A t  a s i x  p e r  c en t  rLl G O  o :f in t s r e s t  t l 1 .L s  
i n t e r e s t  ch.:n·t;e of  $ 220 in  y e r; :c' :fi-.-e , ( J '� )  
Tll e las t t1:o  y e a r s  o i' phy s i c a l  development in,·o l\-e s nw 1 1  
s to ck inc r e a s e s  and f; mo l l  f'er t i l i s er inputs . A s  a. resul t 
c a s h  s u r p l us o s  are g e n o r � :  t e ll and t a xa t i on b e co m e s a mo re  
s i gn i :f i c an t  c hetr[;c . The t a x  pa i d  i n  the s e  y ears i s  Ereater  
t h an that p a i d prior  t o  de:vc lopmc.n t ,  T h e  ca · h  surplus es  a r e  
ava i l ab l e  t o  re pay t he overdr<l:ft i n curr e d  in t h e  e ar ly years  
o f  development . H epaymen t i s  c o m:) J e  t e d  by the end o f'  t h e  
physical  deve lopment period  and an addi tional c a s h  surplus o f  
$ 1  , 098  accw1mla t ed .  
( JJ )  Note  that  pers onal drmvings of' $ 2 , 000 are as sumed 
throughout development , 
( J4 ) I t  i s  assumed that annual oYerdrafts are draiin for the 
whole  year . Thus interes t  charges  fall  due on the las t 
day o f  the year  in which  they are incurred ,  For  the 
purpose  of  thi s  s tudy i t  i s  assumed that the intere s t  
charge is  made on the firs t day of  the following year ,  
thus b e c oming a tax  deductible expense  in that year . 
I 
.... 
Tabl e  6 . 1 0  P r oc-rn.nune One - F i n �J1 c :i . � · l ll : d;;� F o r  The Ik b t  F' r c C' S i. t1J a t i on 
Development Gro s s  
Year Income 
$ 
1 1 1 '  1 67 
2 1 "1 ' 896  
J 1 2 ,  686  
4 1 J ' l� 8 '-� 
5 1 4 ,  65 1 
6 1 5 , 754 I I i 
Note  -
I I To t ;L l  Cash( 1 ) I T : uc:.t t i on 
Exp oml i t ur o  _ I  ___ __ 
J I $ $ 
I GG  1 1 , .JJ2  I 1 ,?. � "- 9 2  G �! 
1 If. , / 1 2 1  0 
1 h � 5 �) 8 7 
1 2 . 6.55  1 , 1 :-! 1:3 I ' 
1 2 ,  8 2 2  1 ,  5 G 7  I I 
( 1 ) Includes taxation ,  l i :fc insuran c e  ( :t zso ) L:. n c t  p c r f'  on:J. l 
as farm workinG c xpcn.s c s  : u t t l  dcvc lopll l c r:. t C X l ) C J t s e s . 
l ' o s t  T 
C a ::;  
S t L L'j l .lU 
$ 
- ·1 ()5 
-) S) G  
- ·l ' 7 J5 
- 1  ' 1 7 11 
1 . ;J �) 6 
2 , 7 '7 2 
dr<1.w ing 
L X 1 C wnu Ld:; ivc 
s 
O v c r d r ; t  r t  
I 
, 
-�----, I 
"� I ., . I 1 6 s I I . -· I .  
I 
I , ., r · · 1 I I •) ' 
I ') '' ( > '>  I �"- ' t ... \.. 
l I ! I J '  6 7 0  I 
I ·• {, '7 , ,  l I I ' , ) I I ' 
l + l , o �:s __ j - ·--- --
I 
s o £  $ 2 , 000 o s  � o J l 
J 
-
_.. 
0\ 
1\) 
] 
1 6 3 
6 . LJ  . . 3 , 2 
Thi s re s u l t s  iH l e s s  in r. onw bc inc�- avn i l z• l 1 . !  c; i'o r j n-v · c s t m c n t in 
farm d c Y c l opmcn t . TL.c c i' f u c t  i s  t o  in c r C' :c s c  t h e  c i 1 ll o l· . n t o f' 
o f' :C f'ann c a p :i  tal  r e  qui r e e l t o  f i n o.n c e  t lw dcvc J. o  1 > H ! C n  1; p r o g r (H ' 1 : n e . 
The (;l' e a t er  t ll c  a m o m1 t  o 1� cl. obt  lJ o f' o r e  d c�v c l o pm cn t , t h e  g r e a ·L c r  
the  a m o l.m. t o :f o :ff' fanll c a p : i  t a l  r e qui r e d . ) .  s t h e  a 1 • 1 0 un i:; o f'  
o i' f f a rm c a p i t a l  b o rr o � c d  inc r e a s e s , s o  G o e s  t h e  i n t e r e s t 
charge and the t ime required t o  r e p a y ·L;l w b o r r o ''' e d.  money . 
H e n c e  a deve l opment p r o g r a m m e  1�1 i ch i s  p r o f i t a b l e  f o r  a d e b t  
f r e e farlll s i t ua t i on m a y  be inf<.'-as ib l e  bc J. c , ,.- a c e r t a i n  l e v e l  o f  
f a r m  equi ty . 
The efi' c c t o f  farm i n d e b t e dn e s s  on t h 2  :f i n an c i a l. 
requirements  f' or  thi s devel opmen t p r o g r amn 1 e  are  s un u: t o .ci s o d  
in  t a b l e  6 . 1 1 . As  s h o i1'TI in the t ab l e pers onal dra11ings o :f  
$ 2 , 000 a r e  as sumed  for  a l l  equi t·y l evel s  except  ES(?_:;) Data  in 
table  6 . 1 1  r e v e a l s  two important  p o i n t s . Thes e  a r c : -
( 35 ) 
( i )  as  :rarm equi ty de crea s e s  the quan t i ty o f  c :f f fE< rm 
c ap i tal required to  :fina nce the deve lopment  programme 
sub s tantially increas e s e . g . for E 1 0 $ 3 , 6 7 0  i s  
required ; :for E 5 $ 1 9 , i.J-83 . 
For  the repre s entative farm the bas e year p o s t  tax cash 
surplus i s  $ 1 , 7 35 at a fi fty per c ent  equi ty . I t  i s  
like ly that a farmer i n  thi s s i tuation would a t t empt to  
live on this amount  of  money . If  he  c ont inued to  have 
pers ona l  drawings of $ 2 , 000 then his to tal debt would 
be  inc reas ed  by $ 2 35 per annum during the devel opment 
prograrrL'11e . 
• 
1 (} .'.;. 
T <� b 1 r:. 6 .  1 1  F r o r� r n. n l i l l <:  O n (-: - T h 8 L f.fr! C"C o f  "' "' ' ' ' '1 I nrJ P ·h ·[· e ;� r: e s s  ___ ... __ ._______ --- -- ---·-·--- - ------�·-·--�-�-----
r :Cqu i t·y -�r . .:: or,,�- -�- -- -�l a=�-��-: :11 ! �-�:� d��;t l.��- Ye<� -�-----,- --�1;_, _;-�-.--:un; I D r cn. i n c· :,;  I n c u r r c  ...l D u  ri11 , _ ;· (  : ) 0Yc  r·;J r a !.' t  ( � . J 
E 1 0 
E8 
E7 
E 6  
E5 
?\ o t e s  -
D c v e l o u m n n t  j I n t c· rc .':- i:  --� ) I ---- -- ------'------ -r- ----- - -: 
"' ' I I <p I � I 
� I 2 , 000 J , 6 70  4 2 2 0  
.'2 ' 0 0 0  9 , 8 '( 7  L, 5 9 2 
2 , 000 1 2 � . .  5 77 3 
2 , 000  1 7 , 0 2 9  5 1 ' 0 2 1  
1 7 J s ( JL ----·---�- - 1 9 '  � 8J L 6 1 ,  ·1 6 9  I 
---- I 
( 1 ) D o G s  n o t i n c l u d e  t u x a t i o n o r  l i f e 
i t e ms a r c  a J  l o 1; e cl f' o r  s c' p a.rn t e l"y .  
A t  a s i x  p e r  c e n t  i n t e r e s t  ra t e , 
i l u> n r n n c e , ! 
! 
I ( 2 ) 
(J ) 
( 4 )  
P e r s  o n n l dr <-'.li i n c; s  1H: r e  a r e  
p o s t  t a x  cash surplus . 
De ta i l ed  f i n a n c i a l  d a t a  f o r 
c oll t o. i n c d  i n  a p p e n d i x  G ,  
p r o - d e v e l o p m e n t 
I e qu i ty l e v e l s  l s  1 
e q u a l t o  t h e  
t h e  Ya r :i. o u s  
_j 
( i i ) int er8 s t  becomes  an impo �_�tant devel opment c o s t  a t  
l ow equity leve l s  e .  g ,  i' o r· E 1  0 a m a x i mum c h a r G e  o:f  
$ 220 is incurred . Thi s increa s e s  t o  $ 1 1 1 6 9 i:f the 
pro granuue is imp l ement ed  under E5 . 
Repayment o f'  borrmte d money begins in the :fi:fth year o :f  
develo pment :for E8  when a c ash surplus o:f  $ 6 5 1 o c curs . 
Repayment does  not  com enc e  unti l  the s ixth year o :f  deve lop-
ment :for E6 and E? . For  E5 i t  i s  not  unt i l  after  the 
phys i cal  development program e has been comp l e ted  that 
repayment o:f  borrowed capi tal commences . Thi s aspec t ,  
toge the r with the greater  amount o :f  o :f:f :farm capital required 
and the larger int eres t payments  c ombine to  add t o  the 
unattractivenes s  o f  the proe;ramme a t  lo>v farm equities . 
6 . 4 . �  The Po s t  Development Situatio� 
The pos t development budge t as swne s that onc e deve lopment 
has been comple t ed s tock nwnbers ;-.ri ll  remain cons tant at 2 ,  l.j JO 
breeding ewes and 60 breeding cows . The budget  indicates  
that as a result of  development gro s s  income ri s es by $ 4 , 27 6 .  
This rise  in gros s  income is  accompanied by increas es  in bo th 
taxation and the po s t  tax cash surplus . The extent : . .  thes e 
increas es  is  shown in table 6 . 1 2  . 
• 
Table 6 . 1 2  Programme One - P o s t  Deve lopment Swnmary 
Equi ty Increas e In Increas e In Increas e In 
Gro s s  Income Taxation From P o s t  Tax Cash  
From Bas e Year Bas e Year Surplus From 
Bas e Year 
$ $ $ 
E 1 0 4 , 276 1 ' 055  844 
E8 4 , 27 6  9 9 2  877  
E7  4 , 27 6 9 44  9 25 
E6 4 , 276  882  989  
E5 4 ,  27 6 800 1 , 06 9  
The Profi tability of  the Development Programme 
Gardner ' s  program calculates  the profitabili ty of  
development by c omparing the pos t  tax  cash surplus es  during 
and after development with that of the bas e  year . Thi s  
measure of profi tability results  i n  a pres ent value figure 
being determined for the programme . The analysis  as sumes 
that the bas e year  surplus is  equal t o  the level of  pers onal 
drawings during development . While  this as sumption may be 
1 6 6  
c orroc t f'or  evalu.ation p u r p o s e s  i t  uocs  no t a l ,,•ay s h o l d  i n  
p r :.-:. c  t i c u . 
F a r;.n o r s hav e t :co..cU. t t o n et .L ly d. C:Yl; l o p o. d. -L h c- i r  LU.'llh o 1..:. t o .r  
in c ome force;oinc  l J r c .s e n t  c on t; 1.11JJ.P "L i on i n  o r cl c� r  to  o b t n j_ n a 
hic;her  f'u tu re income . 0 ['f' f'arm c �t } J l  t a J. hd :_:.; o n l y  lH:: cn 
b o rr o ,,· e cl 1d1.on the p o r t .L o n  o f  t he p o s t  tax C ' t s h  s u rp l u t:i  
diver t e d  from c ons t.unp t :L o n t o  devel opment cl o 0 .:; not m e e t  t he 
deve l opment c o s t ,  
F o r  thi s r c <t s o n t h e  v r e s ont ·va l ue o f  t1J 8 cleve l o pw c n t  
p r o gT aJmne \-.ras de t c� rmin o J  w1. d c r  "[;\,·o s e t s o f  c oncli t :L ons , 
Th es e ,,· ere : -
( J 6 ) 
( a ) 1·rhen the l c,rc-: 1  of  p e r s o n a l cl r<1 wings us e d  in 
evaluatine; the p r o f' i  t a b i 1. i ty o f'  t; h e  p r o cn::.tmtdc i s  
equal t o  the  be.t s e  y c il r  p o s t  t a x  c a s h  surplus ( JG ) 
e . g . :i f' the bils e y e u r p o s t  t a x  c a s h  s urp lus i s  
$J , 000 then this i s  the f':i g urc us e d  i'or pers onal 
drawinGS during deve lopment Khen cal culatin{:!; 
profi tability . 
( b ) when the b a s e y e ar po s t  tax cash :income above that 
required for pers onal drawings i s  made available for 
development e . g . if  the bas e year post  tax cash 
surplus i s  $ J , OOO and only $ 2 , 000 is  required lOr 
This calculation is  the one whi ch is carried out 
automatically by Garclner ' s  compute rised  evaluation 
program .  The pers ona l  drawings asswned during 
deve lopment ( in thi s s tudy $ 2 , 000 ) i s  ignored and 
the bas e y ear pos t  tax cash figure us ed .  
( , ·-- ) Cl "' ' ' . ,.., l 0 r:·· 1 '" l l '[, .) f ' \-.:,... \ ... ,l j j , l_;; • 
Tl1 e:: m c L: J w d  u .s e c1 l� o r e c l u c e t h e  l;<:i o; C  y c ;, r  p o s t: t :::t .x  c a s b  
p r e s e n t  V < J l � w c <<. l c u l c-t t i o n ,  i s  de s cri  h e el in ap p c� n cl i :� C ,  
T h e : r- e . .,_ u .L t s  o :f  1� 1 1e s e e Yn J u n t i on s  u r e  d i s c u s s e d in t h e  
s ub s c· e t :i o n s , 
6 .  l f . 5 '  1 1._ -,·;:.' l u Ec t i o r; l:n cl e r  C o r cli t i on ), .. 
A s -ct1 dT o :f  t h e  cl a t a  in t a b l e 6 . 1 J r e v e a l s  t h� t t: i f  
pers onal drn� ings dur ing dcve l o �n e n t  a r c  equa l  t o  the b a s e 
1 6 7  
y e a r  s u r p l -:..:. s t h e n  ·t he devel opment programme i s  u.np r o :f i  tabJ  e 
r e g a r d l t:: S t;  o f  C:: qu i t y  e . g . f or  E3 i :f t h e  b a s e ·y e nr  p o s t  t a x  
c a s h  s u r��· lus o:f  $ '3 ,  �� 6 7  i s  r c cru i r e d  in e a c h y o a r  o r  development 
i' o r  p e r s o n a l  cl r a ,,- in g s , t h en a m :t x i lllwn o v e r d r a f t  o f'  $ 1 7 , 70 2  i s  
inc urred , This  overdrnf't  cannot  be  p <::. i d  b a c k  ,,· i 1· h i n  n i n e t e e n 
years  by 1: l .1 e  addi t :L o n a l  p o s t  t ax inc o m e c;ene r a t c cl by 
d e v e l o pm e n t  i . e .  t h e  p o s t  tax  inc ome above $ J , 467 . Hence no 
pres ent value can b e  c a l c u l a t e d  and the  p r o g r amm e is  deemed  
to  be  u.npro f'i t abl e . 
6 . 4 . ) , 2 Eva l ua t i o n  Unde r C o n di t i on B 
Tabl e 6 . 1 4  indicates  that i:f  s ome o:f  the bas e year p o s t  
tax cash surplus is  inves ted in  development then development 
becomes  financially :feas ible . The programme i s  feas ible 
under the s e  c ondi tions  :for equi ties  equal to or  greater  than 
( J 7 ) I t  mus t be  emphasised  that this procedure i s  us ed only 
in calculating �he profi tability of the development 
progranune . 
1 G B 
Equi ty 
-------- --- - , ------- ----- ---- -,------------- --- --- ---� D <. , ::: •c' Y e Ll r  I P , � c ::; c:. n -L Y �J l u c  I �·Ll s i l l 11 ll . i  P cl_-y b;-: c]( I P o c;; t. T <. t x  I ( 6 p e 1' c.� (' n t l I O v u r cl 1' , 1 r t  Surp l t, :::; ( l ) ra t u o C  I 
----y,_,- - - - -- --
I _ � . 1 1 C O J.� (�_:_�l_ _ __ j____ ___ __ _ _____ __ __! 
E8  
E7  
E 6  
ES 
� I $ I 
J , lt (-, 7 1 ? �  7 0 2  7' 
2 , 9 1 7  2 , 2�77J ·- "1 8 , 9 "1 8 j��-
1 , 7 J 5 - 1 9 , L1 G J �-
__._____ 
-----------'----- - -- ---- --- j 
U s e d a s  t h e  l e v o J o f' p c r :.:; o n < ' l dra,.,· incs . durinG cl eYe l o r;muTt; l 
J:or the purp o s e  o:f  c a l cu l a  t i ne; pro fi. t ab i l i  ty in t e rms o f' 
a pre .s on t  value . 
( 2 )  ·X· Indi ca t e .:; pa:y b;.1 c k  i .s n o t a c h i e v e d  w i t h i n  1 9 y e ;:l r t.::. , 
G 21. r dr1 e r 1 s }n' o g r <.u n  d u es n o t  c on t; inuo t . h e  p r o :::: e u ·c v2 l u c  
c a l c u l ;:.< t i on p a s t t ll i s p o i 1 1 t ,  P r o gr cunm o s  u. clli oving 
p ayb a ck a f t e r  thi s -L i me p e r i o d  are cl e om c d  to b e  
u.npro f'i t a b l e . 
E7 and :f o r  i n t e r e s t  r n t o s  up t o  7 . 0  p e r  c ent . T h e  g r e a t e r  
the a m o un t  o C'  inc ome i nv e s t e d  the s ma ll er tb c ove r dr a :L t  
required  to  f'inan.ce  the  p r o e;ranu n e  and tho  qu i cker paybt.1ck i s  
achi eved .  The s e  points  a r e  illus trated  in figure 6 . 1 u s i n g  
data :f o r  E8 . 
I f'  the po s t  tax cash  surplus of  $ 3 , 467  i s  us ed  entirely 
for pers onal drawings , the development progranune i s  financed  
entirely by borrowed money . A s  a result  a maximum overdraft 
of'  $ 1 7 , 702  is incurred in  y ear s ix  and thi s i s  not repaid  by 
the end of year nine teen . Thi s i s  becaus e the  overdraft i s  
repaid  only by the  addi tional cash  surplus i . e .  the cash  
surplus over  and above the  pro-deve lopment cash  surplus o f  
$J , 467 . ( JB ) 
Figure 6 . 1 
P o s t  Tax 
Cash 
Surplus 
( $ )  
J , OOO 
Overdraft 
( $ )  
9 , 000 
1 2,  000 
1 5 , 000 
1 8 , 000 
The Effec t  of Inves t inG Income In  Farm Deve lopment 
---------- :m: 
II 
1 5  Years 
Payback 
Leeiend 
I = Draw·ings of 
$ 3 , 467  
n = Dra1vings of 
$ 2 ,  467 
m = Drmvings of 
$ 2 , 000 
Table  6 . 1 4  
Equi ty 
E8 
E7  
E6 
Pro{)ranmlC O n e  - P :rofi t ;:tbiJi t·y tl n < l c r  C o n u i t i o n n 
Bas e Y e ar 
P o s t  Tax ( ) 
Cash Surplus 1 
R e du c c <l :from 
$ 3 ,  I1 G 7  t o  
( i )  $ 2 , h67 
( i i ) $ 2 1 000 
Reduc ed fr om 
$ 2 , 9 1 7 t o  
$ 2 , 000 
$ 2 , 27 7 t o  
.P r e s e n t  V;:ll uc 1 
- ·r I N "ximcun Ov<• rdN.rt 
I 
Payh<> c '< 
I $ (Yc"r )  _j I 
I I i I c A I �  c A i l  I c ! 
I '! I I i I I . , I ! 
n 1 8 J ·1 1 I ) . ,  r,. I ". 00 l1 1 " 0 " J  , .1 " · 1 J 1 1  .1 
� / ' ) t I ' � 
,_ u . - '  ' , o ,_ J 
1 G , C 5 ,'2 1 9 , H 7 7 I 9 , �J I I O j l O , OU I: i O j hJ :I ! 0  i 
· · I I 
I 
! 
I I I 
' I I I I 
-; c· - ·) I ·1 .., s 9 ( ·1 " o ., ·) 1 3 ·1 · -1· " 1 ·1 J I � .., ' · 1  ' !  I ' ) J ,_ ' ,_ 1 ) _) .  J '- • V I I �· i . I 
l I I I l I Reduced  :from 
I ,. 1 1. I i 1 $ 2 , 000 1 1 7 , 0 2 9  ·Ye 
I E5 I $ 1 , 7 J5 I _L_l 'l ? ,  .. I BJ L __ j ___ I�_LL 
Notes ..:. 
( 1 ) 
( 2 )  
Us ed a s  the l evel of'  p c  r s o n a l dra\r i n ( �·s du r i11 ,•�; cl c v c l o pw en t J' o r  t l 1 \.:  p t lT J ' o s c  o l ' 
calc ulating pro .fi  tal>i li  ty in t u r n r s  o r  a p r c s c n  t v a l u e . 
J .Il C .r C < t S  C 
I n .i' o s t  
T: t ;.;:  C < t ::; h  
S u r p _L u s 
1• 'T' 
8 7 7 
Q " "" 1... ' I { 
(') r) r­;; ''- _) 
( 3 ) 
-- -----·----
, .. J 
-- - -- I -·--·- ---- --------- _______ _j 
A = 6 . 0  per c e n t  i n t e r n s t . 
1 3  = 6 .  5 p e r  c 1 ; n  t i n  t 1 ' r c s  t .  
C = 7 . 0  p e r  c e n. t .i n t c J · c ::; t .  
·*' D e n o t e s  pay l>a c k  u o t  ;; c Jt l e v c <.i wi t.J Li_n n l n c t e < ' rl .Y < � ; · r � ; . -' 
C\ 
'-.:; 
1 70 
An <:� ddi c j  onu J c <�. s h  s u.r p l u s  d o c;> s  n o T. o c c u r  u; d: i l  y e < l J '  s o v o n  
b u t  from thi s j l o .i n t o n  it s l o\;ly i !:. c :t.'c' a s c ."' c. :.., t h e  o •.-c• :;'clr o :f t  i�-
A t  chi :=: p o i : 1 t � 1 0 , 2 .? )  :L3 s -c i l 1  o 1. � t: s t andj Li; 
ha.s not  b e en r c- a l i s o c.L  
I .l t�1o b a s e ·y e a r  s urplus i s  clo c r e a s c J  -c: c> $ 2 �  .l� 6 (' t h en o n ly 
to  f ':Lnan c e  cl c v e l o pw e n. t , 
T he f i gure s h o i·: s that thi s s u m  i s  r e p a ·L d  l,y t he e n d  o f' 
The �ddi t i ona l p o � t  t ax ca s h  s ur p l u s  t h a �  
oc curs a s  a r o s ul t  , . � n � �  ( 1 9 )  o :f n e Y i'• .l o pm c n t  1 . s  · .' o ; ; . -
the ba s e  y e a r  p o s t  t <'tX c a s h  s urp :l_ns i s  r e d u c e d  t o  �· 2 l  0 0 0  then 
the a. m o un  t o f  o f�f' :f a rm c a rd. tal l' e c_; ni r e d  dccrc.:1s c s  t o  $ 9 ,  88G 
( at G� int eres t ) . Thi s l o a n  i .<::: r e p a i d  by t h e  e n d  o f  y e a :c 
t en . 
Ta b l e  6 , 1 h s hows t h a t  f'or E6  the r e du c t i o n o f'  per:::; onal 
d r aw i n g s  t o  8 2 , 000 and an aru1ua l  inve s tmen t o f' $ 27 7  i s  
insuf:ficien t t o  achi eve r e p a yment o :f  the borro�ied  m o n ey ,,·i thin 
ninete en years . S imilarly the debt  s ervic int;  charge s :for E5  
are  t o o  great to  allO\v development to  be  financed  entirely 
( 38 ) 
( 39 )  
This  s tat ement implies  that the farmer  continues t o  have 
p ers onal drawings o f  $ 3 , 467  after  phy s i cal  development 
has been completed . 
The figure shows an increas e of  $ 1 , 87 7 .  However from 
this figure must be subtrac t ed  $ 1 , 000 . This  i s  the 
differenc e between the ac tual pre-devel opment po s t  tax 
cash  surplus ( $ 3 , 4 6 7 )  and that us e d  ( $ 2 , 4 6 7 )  for  
pers onal drawings in  the  pres ent value calculati on .  
1 / 1  
j' C' (t J:-' S " 
lx• c omc s < m. i.mp o r t. a.n L c c i t o r i on in d e c i ding ·\\·h e t h e r  t J t e  
d eve l o pm e n t  pro t;-r,muHu 11i. LL b e  i mp l c rn c n t c cl .  
:Cin.anc e cl  p a r t ly o u t  o :f  i n c o : :- -· then :f o r  E ?  the JW' ximum. o-.-c rclr�l :f t  
re q u i r e d  i s  � 1 2 , 89 6  ( 6 . 0�; in i c r , s t  n:ne )  and f o r  I: /3 $ 9 , 87'/ ar. d 
$ ·1 ·1 .  9 2 6 ,  :L o r  p e r � o n a l  dra11· i n cs during d e v o l o pmc, n c. o f  $ 2 , 000 <'tn.d 
p e r s ona l i t y ,  p a s t  c xp c:- r i en c e  <.l. n d  f'n t u r n  c xp e c t a 1 .· i o n s  t he s 2 
n : a y  o r  may n o t  b e  <:1 c c  e p t ab l o  o Y o r d r a :f t. lev('" l s . 
The d e '\·e 1 o pmcn t p r o g r < um : 1 e  i s  r e  l a  t i  ve ly ill!:- e n s :!. t i  Y e  t o  
c han[:; u s  in in t e r e f.;; T ( di s c oun t )  r a t e  b c t,,· e en 6 , 0  <:.•.ncl '( , 0  p e r  
c en t , Thi s aspec t  i s  i l l u s t ra t e d  by d CJ. t a  in t a b l e  6 , 1 �- . 
The e f :fe c t  on the max imwn o-.-erclraf' t  a n d  t h e  payback. p e r i o d  l S  
ins i cni .f i c <'lnt f o r  :C8  a n d  E7 . A 1  tho ush the magyJi t ude o f'  the 
pre s en t  value i s  ad •ers e ly a:f:fe c t ed  by rai s ing  the intere s t  
rate ,  ( I 
' 
the progranune s t ill  remains pro.fitable · I O )  at  the 
higher rate o f  intere s t ,  
The analy s i s  has sho·wn that :for  the owner of the 
repres entative farm thi s development programme is financially 
infeas ible , The programme would be feas ible if hi s t o tal 
( 40 ) In the s ens e that the evaluation shows a pos it ive 
pres ent value as a result of inves ting bas e year po s t  
tax cash surpluse s  in the deve lop111ent progra.'11ll1e .  
1 7 2 
de b t  H � s less  t lEnl thirty p e r  c cmt o f' t J H� Y<' 1-,_w o _f his as s e  L s . 
i s  l; o o  lt.i c;h . T h e  p r o gT <::I mJ n c  w o u :t  d on} y l! C' u_11.cl e r t ::J  L:.e n  hy ·t; ] J i  s 
o f' e q_ui ty the w a x i 1 : mm o v e .�� clj_'a f' t  in c u  r .c e d  i s  l c s  s than �: 1 0 1  000 , 
6 . h . 6 
The fertil i s er  S lJ_bs i dy  announ c e d  in t h e  ·1 9 '7 0  budg�..- l, m e a n s  
a subs i dy of  five d o l l a r .::- . I I o1v e v e r  cl u e  to  t a xc:L t i on t h e  real  
va l u e  o f  t h e  s ubs i dy 1-.' i l l  h e" l e s s  t h �< n  fi\"e d o l l ar s  tl t o n . 
D e s  p i  t c  t hi s  t h e  suhs i d _y i s  l ikc: ly t o  ,-, :r re c t  1-l v J  f e a s i b :i J L t;y 
o f  dcve lop!Hcnt s in c e  .f e r t i l i s e r  i s  a ma j or input in Jnany 
dev e J. op n 1 c n t  programmes .  
A s  tJH:; pri ce  o f' :ferti l i s er at the f'a:;:m ga t o  is  l o 11' C r e d  by 
the subsidy the t o tal  development exr; endi ture in any one y e ar 
wi l l  a l s o  � e  r e duc e d .  Thi s will  ei ther de c r e a s e t h e  amo1m t 
of  o ff farm capi t a l  required to  financ e deve l o pm en t , or  
increas e the cash  surplus after tax .  In the former cas e the 
interes t  c hare;e on borrowed  money ��·i ll be reduced and in the 
lat ter  cas e the amount o f' tax paid will be increas ed . 
Table  6 . 1 5  outlines the s e  aspe c ts for s ix years  o f  
development • . The table  indicates  that for year one of  
deve lopment and for all  equi ty l evels  except  EB ,  the 
financial  gain from the fertilis er  subs idy is equal to the 
value of the fertiliser  subsidy . This is  be cause tax is  no t 
paid and overdraft interes t i s  no t incurred .  In  years two t o  
Table 6 . 1 5  Programme O n e  - The EJ..Cc c t  o J.  the :rcrtili scr  Subs i dy on A;m ua J  O v c r d ::- � 1  r:- e  
P_ l"'C).£i r�::.o� n t2 
Value of the 
Fertiliser  
subs idy $ 
Reduction in 
Annual 
overdraft $ 
Increase  in 
cash surplus $ 
Reduct ion in 
overdraft 
iritcres t  $ 
D-�vel opment Year I I 
Equity I Da s e  ! P o s t  
E8 
E7 
E6  
E5 
E8 
E7 
E6 
E5 
E8 
E7 
E6 
J65 lJ 9 5  5 L1 5 6 '1 5 650 5 L�5 5 25 I 505 
( I 
1 
N . A
. '-� 8 3 
'+ 95 
L� 9 5 
L� 9 5 
5 7 h 
575  
5 7 5  
5 75 
67 8 
6 7 9 
6 '7 9 
G .so 
I 7 5 LJ I 7 5 5  
755 
7 5 5  
I 
1 L:. I 
5 1+ 9  I 5 2J- 9  I 
( 
5 1 5 
( !\ . A  o 
( 
I I 
L 6 ' ;_. � I ) --t ,- .....  ') 2 I - - -- I - - � �) 1 j l I 2 ! ,:_. 2 6 5 - - i -
I 
- 4 5 8 I /.j I :J) 
I 
2 3 J_ 
2 s 6 - - ! - - - !.j '7 o ·2 t:; \l 
2 8 8 - -· I - L - - - ! J 'l 0 I i 
I i 
I I 
1 0 4 I 1 LI 8 '1 7 5  I � JO I r; ; ,  I 0 5 
I 
1 5 0 1 82  I \ l 
N . A .  1 ( N . A . �o I 61-1 1 0� _ : �o I i � i 1 ( i-, . A . 1 ( _) 0  ' G 5 1 (): y I I )0 i I 0 J I ( 1--------+------t---! - - I I ---�--1 
E5 I � 
Increas e in I I I i Taxation $ E8 ·1 1 9
. 
1 2  I -
1 - -- 2 1 1  "- 28J. i :: J-0 3 12 E 7 ., 0 0 - I -· 
- - �! ;; :? I :2 _') :; i :.' '! 1 .::; 
EG '7 ') - - I - - I ., (-; �: i �? (, i '!(! ') ''-'-' 
1 
E5 7 7  
_ _j_ -· ! __ -=--._ .1 __ - -=-J-�  SI .J _j ___ � 
f'our w h e n  ovcrdraf't  :i n t e r e s t l:w c o m c s  lKty a b J  e t h e v a lue o :f t h e  
s ul> .·d. dy is  e q u a l  t o  L h c' i' c rt i l j  :::· e r  s ubs j d y  1 1 lus ·c 11 c  r c d u c  c i o n 
is  [�·r e u t e r  th<:m t h e Yalue o f' t h e  sub.-.; i cly .  
finnncial  [;::l in :fr o lll the  E'. ubs :L <..ly i E:; l e s s  thau t ll e  Y ·�t l n c O l� t h e 
s u h s i d y .  Thi s  i s  b C' C <t U.'3 (;' i; ] lC;  i n c r e a s e i l l  t a xa t i on i s  e -r e a t e T  
t h a.r1 the r e d u c t i on in t h e:: interc �; t  charge� . 
\{ i tlt rcgarc] t o  -LJ •  c:: p o .s t d o v e  l o p l l l cn t s i  tur..t ti on .s � the 
ln. cl•.c r the taxabl e inCOl l le the lOh'CI' i s  the financ :i. a l  [�ain f · r o n  
tll e  f'ert i l i s cr  s ub s i dy . Pri or  t o  deve lol >ment taxa t i on c l<:1 ims  
thir ty-three  per c en L of'  the s u b s i dy a t  E tl , Af'ter  deve lop-
wen t t a xa t i on accomJ.t; s  :Cor  f'orty-s  i x  per  c en t  o :f t h e:� subs  irJy .  
F o r  E? the c orresponding  :f i gu r e s  a r <:J t\,·en t y - e i gh t: per  c ent 
an cl rorty-- thre e  p c:: 1 ·  c ent . This  Pw an s  thC�.t :f a nn e r s  hho l 1 a v e  
low :[arm e qui t i e s  w .i.. l l  gain p e r  t on the mo s t  frol ll  the subs i dy , 
However the s e  farmers Gen era l ly ca1u1.o t  afford to  apply lc::.re:e  
quantit i e s  of  �ert i l i s er even if  it  is  de s i rable  to d o  s o .  
Hence  :farmers in the h igher incol!le b r a c k e t s  \dl.o annua l ly app l;.' 
large quanti  t i e s  o f  :fert i li s er \vi l l  in t o ta _l receive the mo s t  
benefit  from the subs idy . 
The :fertiliser  subs idy reduces  the overdraft required t o  
finance  development and increas e s  the po st  tax cash surplus 
which is available to repay borrowed capital . This mea.ns 
that the time required t o  repay the borrowed c apital wi ll be 
reduced .  In  addition ,  the magnitude o :f  the pres ent value 
figure 1vill  be increas ed ,  the maximum overdraft will be 
reduced and the post  tax cash surplus \vil l  increas e .  
1 7 .5 
p r o t; r mm ; t c , TJ w cl ;;_ ,_ , ,_ :i. n n t. h l c· G .  1 () ( �_(1 \ ·'1 � j 1 I - - [- ')'' .-. � - ,. . � �- 1 ' '  ' - e 11 0  .: -y; _.___ c- . ' I _ .t. _ . .::;. _. . 0 t.• \,; ;::. l.. t ... �... . >:'I _, _Lj ._ l.  ;;::;> " 
il l' C  r c: q u i.  r e d  t o  r c· p �;- :.· t h e  1J o i" l' CJ 'i _· e d  m on oy un d t h �  H �l x i n t L1.:ll 
o v e r d r a f t i n c u r r e d  i 
kc ].d� on , ,,· o u. J_d c a u s e t h e  o h'n c r  of'  t h e  c a s e  f'i:.'lrm t o  re j e c t  i.. he 
d e \  e l o pmen t p r o gra.;m�t c . 
6 . i+ . 7 S 1.n1 • E: .::::. r ·\---.. ·---·--"""'-
The ma in p o in t s  f' r o n; t h e  an a ly s i s  o :f  t h e  developmen·c 
p :coc;-rc:umtw a r c : -
( . ) \ l  
( i i )  
C D  rr-ying calJaci  ty i 11 c r c a s  G 5  by 1 , 0 7  8 E ,  E ,  o r  L� 1 
p e r  c ent , 
do ve l opmen t e x p e n d i ture t o t a l  $ I 5 , 5 64  o r  $ 1  � .  !+ per  
E . E . i n c r e a s e . 
( ii i ) 
( iv)  
[_;ro s s  inco;ue in creas e s  b y  $ �+ ,  273  o r  3.5  p e r  c en t . 
t h e  cleve l o  pm en t prot'_;ra1mne is  in:feas  i b l c  i f  :finan c eel 
( 4 1 ) 
entirely by of'f  1�21 rm c api t a l . 
( v )  i f'  surpluE> :f a rm income i s  inve s t e d  in the deve l o pment 
programme the proEramme becomes  feas ible for  e qui t i e s  
greater than E7 . 
(vi ) the :fertiliser  subs idy enables the development 
program e t o  become :feas ible at E6 . 
The table as sumes that  the :fertiliser  subs idy will 
c ontinue indefinitely , 
Tabl9 6 . 1 6  P r o()rannne One - The E C J' c c t  0 [  T l w F <� r- ! : i l i s o r  S ul1s :i.dy O.t1. t� : r c P co f.i_ t : lb .i. l .L L :-:_ 
o .r D < ) V c· l o p l n <' n t 
Equity 
ES 
subsidy 
no  subsidy 
E7 
subs idy 
n o  subsidy 
E6 
subs idy 
no subs idy 
D a s e Year 
P o s t  Tax (  1 )  
Cash S urplus 
$ 
2 , 000 
2 , 000 
2 , 000 
2 , 000 
2 , 000 
2 , 000 
A 
r-
P r c s on t  V a l u e  · 
$ 
n c 
I ��-: ----t-j-f- --
1 I ' I n • n . I n I I I 
28 , ,. 9 8 1 25 , 0 7 9 1 22 , 1 69 1  '7 , 1 , o ;, j 7 , '• ' r s '  7 , 1r 97 1 8 1  8 1 o 
I 
9 , 07 7 1 9 , 91 t O
I
1 0 , 0U ir ! IO 1 0  1 1 0 
1 8 , 9 98 1 1 6 , 1 hG I 1 3 , 7 1 '• 1 0 , J88 j 1 0 , ,. � G I 1 0 , J ;! '! I 1 1  I ' '  I "  1 2 , J9h 9 , 811 :2 7 , G_5G  1 2 , 896  l J , OJ ;: , 1 J , H ) ;! I 'I J 'I J I i h  
I I I l 
7 , 503 5 ,  :zGo J J' J7 i 1 ' 1 ' '0 "'. 1 ' '' '1 7J I 1 i · 0 ') 1 1 ., , I , , 
1 
· :- 1 \ (' l ' ( • ' i S (' I _... . . . . . c .•. - I -� -- 1 ! ' () · · c- i . .. , . . . -, . I ·1 · c-· ' I • l_ ., •• � I :--.. _I_ t - L I � :. t : · : >  u ;:;  
I 
�; _j' �:· --- I
ry ) :?. 
c,) r_' :l u / ( 
�) !I ! 
9 '!5 
< )  �) 7 
I I I l 
I 
I I 
I 
' 
1 � : ;� �2 ;� 
I 1 ' 
' ' _) ._ I ·X- ) I \ )  I . { )  I L-.J . 
N o t e s  -
( 1 )  Us ed  as the level  o :f p e r s o n a l d r< uvl:n r·:s d u r i n ; •: d c, ve 1 0 p1 1 1 CHt .f o r  l l l • �  p u  L ' p o s e  o C 
calcula tine- pro .li tal.Ji l i  Vy in t c rJ!l::-; o r  a J l r e s  <.�.tl t v;J J u c . 
( 2 ) A = � . 0  p e r  cent  in t e r e s t .  
D = 6 . 5  per c ent  in t e r e s t .  
C o 7 . 0  p e r  c ent  in t e re s t . 
( J ) * D eno t e s  p a y l..> a c k  n o t  a c h i e v e d  w i thin nine t t� c n y c < t r s . 
' 
I ..... 
--....1 
0\ 
1 "" I I 
( vi i ) as a r e �� u 1 1� of' d e\"c l o pm o n t  t l-;. c p o s t t D x  c a s h  s c.n'plus 
$ 1::\7 ?  a t  E8 
$ 9 �2:.1 �' t E7 
tLi s pr o c;r;: 1 ;mn e  i s  -fin�m. c: i <. l l .l ·y in f e -, c� :l bJ. c  f o r  "l: h e  
Thi s d.evelop1J1cnt procr<u:�mc o. im.s a i: incre<:t s inc p r o du c t i o 1 1  
by r a l :3 l ng· t h e  s t o c 1.;:ing rate  f r o m  .3 . 5  E . E .  p C' r  ;t. c r e  t o  !1 . 5  
E . E . p e r  a c r e . I n  o r cl c.:! r  t o  d o  this t h e  e x i s t i n g  feed  s upply 
mu s t  b e  c ompletely u t i l i s e d  and t o tal  p a s ture pro du c tion 
i n c r e a s e d . 
D i s cu.s s i o ns ,,·i t l l  hi ll  c o Lmt :cy :fo. nncrs ind:L c �<- ·t e d  s o me 
d i s a g r e crnen t on ho ,,· quickly s t o ckinc; r a t e s  c o u l c l  t1 e r<.d. s e d  
from J . j E ,  E ,  t o  4 . 5  E . E , ( h ? )  p e r  a c r e , ' ·- I n f l u en c in g  f a c t o r s 
,,·ill  b e  t h e  nature of  the e x i s t ing p a s  tu:c e , t h e  vlll O lm. t o f'  
fertili s e r  applied  a n d  the respons e obtained and the manll.c;eri 8 l  
abi l i ty o f  t h e  fa nne r .  For  the  repres entative farm i t  �a s 
cons idered  that an i n c r e a s e  of  1 . 0 E o E .  per  a c r e  c o u l d  b e  
achieved wi thin two years . 
In  t h e  firs t year c omplete  ut il i sati on of  the pas ture 
growth i s  obtained  by subdividing and adding more s t ock .  The 
additional subdivi s i on no t only improves  pas ture control but 
als o s to ck management . S to ck control i s  improved and the 
time required for s tock operations reduced . 
Pas ture produc tion i s  increas ed by overs owing wi th c �Lover 
s eed and superphos phate .  P rior t o  oversowing i t  is  nec e s s ary 
( 4 2 ) Es t imates  ranged from two t o  five years . 
1 7 8 
t o  gra z e  t h e  lJ<.ts turc· hard in o r der t o  a l l o K  t h e  s e e d  to  r e a c h  
t h e  � r o un d . 
y c a .c s . ·r1-.· o L�. 1.n d r e c1 a c r e .-; ay e  o \" c· ... ' :3 o > ::n. l.H e r-� c h o f  1.:ho f' i r s T 
t ll r c:: c y c a :r ::, <: t n ll  o n e' hu.nLL r e d  a n d  th.i. r L y  a c r e s  :in "i.:: h o  i' o u :c t h  
)' C Lt :C' • 
c l oYer s e e d  and 1 lb o :f  s ub t c :r:-anewa c l o\·cr . 
suc c e s s ful on H o r m\ henua. hi ll  c ow.-ttry . ror  thi !'.' reo s on no 
5 c1·:·t of molybdi c superpho spha t e  p c: r  a c r e , 
by 5 c,,- t  o f  superpho s phate  in the  s e c ond y e a r  ancl ano ther J 
c·Ft i n  the thi r d  y e o. r .  ?--I c: m.y :f.::J.rm e r s and farm aclYi s ory 
o :f:f:L c ers c ons i d e r  t h a t  thi s i s  t he min.inu.m amo1.mt  o:f  
f e r t i l i s e r  re�uired  for an intens ification pro c e s s , 
As  in d e...-e l opmen t progrn.mme one improved ,,·inter  :feeding 
o f  the breeding cows  nec e s s itates  making tKenty acres  of  
s i lage . The catt l e  po li cy invo l ve s s elling all  weaner 
s te ers and surpl.us weaner  heifers . The sheep poli cy i s  
s imilar with the s a l e  o f  'ive ther l amb s and surplus e1·;e lambs . 
The we ther lambs are s ol d  during the period  :from J anuary to  
Nay . In the event o:f  a dry summer these  lambs 'i\'Ould be  
s o ld earlier . 
The transi ti on from a predominantly native pas ture to  an 
improved pas ture is often accompanied by a fall  in l ives t ock 
1 7 9 
p e r f O J .' i llClll C G , Thi s h � t f3 b e e n th �:: c :.;. p e r :i c n c e  o f'  hi l l  c o u.n t r  ' 
S i nli l <J r J y  ,,-o o l  produc tion :J.. s ci r• crcas ed  .f.' r o m  8 .  5 l b s  
p e r  e �·,- e t o  8 .  3 J L s  <J.} ] d  :f r o m  �) . 0 l b s  t u  l..j . 8 1 b s  p o r  l w g- g' o t ,  
The propo .s ed :t n c r e a. s o i n  s t o c k n w r;b e r s di cl n o t  p e rm i t  the 
hiring o:f a pe rman e n t  l abour un i t ,  .A f::! in d e-n: d o pment p r o -
c;ra::une o n e  t h e  acld i t i ona.l labour rOCJ.l�L-· ement K3 S s at i .s ;-:'i (:cl by 
i).1 C r e a s i n g  labour lJro duc t iYi ty and by us ing c on t r Lt c t and 
c a s u a l  l<:ibour , L a b o u r  mo h LL i ty ,,-a s i 1 '1 p r o v e d by pur c hzr s inc: 
a mo t o..c  bike v:hi lc  t t e  e r c c t� i o n 0 1� 3.n o t h c; r  s e t  o f  s lw c p ) o ;.' cl s  
reduce d  the time inv o l v e d  in s t o ck o p e r a t i on s . L a rge f a rm 
o p e r a t i ons e ,  g ,  s ll o a J." ing ;:;_n cl f' e n c inc; , ,.,- e r e  und e r t aken by 
c on t ra c t lc• u o ur . 
K a t e r  supplies  and o t h e r  s e rvi c i n g  fac i li ti e s K e r o  
cons idered to be adequate  t o  c o p e  1d. t h  t h e  incr eas e in s t o ok 
n1.unbers . In  s i tua t i ons ,,-he r o  tl1e s e  have t o  b e  imp r o v e d  o r  
e n l a r g e d  then the p r o fi tab i l i ty and the :feas ibility of  
development may be altere d .  This would apply parti cularly 
at  l ow levels  of  equi ty . 
The physical  development progranm1e t o ge t h e r  '""i th  the 
ann.ual increase  in carrying capaci ty i s  shown in t able 6 .  1 7 .  
( 4J )  For example a t  lvhareroa a development programme aimed at 
increas ing t o tal pas ture production and hence  s tocking 
rat e  resulted  in an init ial decrease in lambing percen­
tage of' 1 1 % and 1vo ol  production of 20% ,  whil e  s t ock 
los s e s  increas ed  by 2% . 
I I 
I 
I 
1 80 
n (� ;_)f_" (> S C' l : ·!- ;l t i V ( �  r:' d l'"l l l  f' - D e \- ( ' "' 0 l l ) !1(' n t P r o r  J ' C1 1 !117! 0 T \·: o 
-�---.. ,.,_ . ..  ----�-- -..._,.----�---- . _,..._ .. __ ,_,_......_. .. ... .,_._ ....... .. ----· 
0 v cc :c s 011�ing A c r e s  20() 200 .'2JO 1 JO 
P J iO n t an d I 
Bui ldin gs I t  ( ; Jn S  _\I o  t o r  S hc: e p  I 
bike �\ -rl-c cls I 
r o l " " 0 ] 0 ' t_l 
I 
�� ,·, \:: t CJ l.l .. L \ f .. � .. '-· .!. .._  
Increas e P c· r  
Y e a r  E . E  200 200 2 0 (1 1 G.:J C __  J - --
The da t a  in t h e  t ab l e  r e ve a l s  tJ1�t tho l � r a e s t  i n c r e a s e �n 
s t ock numb e r c,  o c curs in t b_e :f i r s t thre e y e a r s  of' d e v c l O _i)lJle li.'t , 
Th i s  has three  advantage s . I t  iucroas  e s  t h e  a m 0 1.u1 t o :C s u r p :L u s  
incOJae ini t ::.. a l l.y  aya i J.abl c :for f � t rm de\-e J. op;nen t and r e du c e s  
the a:;w lm t o f' o l:f  f a r m  c a p i t a l  r e qui r e d  v. n cl  hen c e  debt 
s e r vi c ing charge s .  
The dev e lopment progranuue i s  more  flexible t11CU1 lJrogrammc 
one as the pro0ranune c an b o  s topped  a t  any p a in t  in t ime ·h·i th 
l i ttle  l o s s  in benefi t s  from earli er inputs . This 
f lexibility d o e s  no t apply t o  progrrurunc one . IH t h  thi s 
programme land clearing can be  s t opped ,  but t o  obtain ful l  
benef'i ts  from previOus cl earing , c ontinuing inputs o f  s to ck 
and fertili ser are required .  
A detailed s t o ck reconciliation i s  shown in  table 6 . 1 8  • .  
The table shOii-"S that the t o tal  number o f  breeding ewes 
increas e s  by 65 6 .  This repres ents a forty-one per c ent 
increas e in five years . Over the s ame time period  t o tal  ew·e 
1 -- - - -- - -- - ----�����
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r) ,-- - .  I - - \. . . . l J l . . - - ,_ . - j I) � t;.· ·t· I � l o c . �  , , J_n , _, , _ (. �><' �· '-· r- - -· - r- . - - - --1· ---- ------r ·-:::-- - . c , -· 
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B r c d i ng 1>. c , j 1 , G O O  l i , G O O I I . 7 td 1 , n o o  2 , 1 1 1 I 2 . 2 1 7T 2 , ." .> 6 
E\:c  J ! o c·c; c  t '-'  1, s _s •J  1 S.J O  () 2 6 1 G :; y  7 2 2 1 ·; uo I 8 1 ?  
::. J:.e c:r' E 1 .- c 
J- qu iYLll C H t s  � 2 ,  0 6 j  1 .2 , 0 6 5  2 ,  J O O  2 ,  YYJ 2 ,  700 � �  8 <) 5  2 :  9 J O  
I B r e e ding C o � s  HO 
C ;:,_t tl c  -r._:,,-e 
E quiv0 L o n·t s  5 � 1  
T o  t a l  El-.- '? 
Lqu i va l e n -c s 
_\.nnu a l  
2 , G 26 
80 80 
5 6 1 5 6 "1 
2 , 6 2 6  2 1 86 1 
80 80 80 80 
_)()1  5 6 1  5 6 1  5 6 1 
J , 0 6 1 J ,  2 6 "1 .3 ' 4 2 6  J ,  L� 9 1  
P e r c o n  t zt g r� 
l n c r o a s c T n  I-.>.,-e 
l:: qui,·a l en "'c �  ! __[ __ :\_- _ • •  _A._._l ___ 8_. q.:._/ _,__6_1 _, .:._9__J__b_,:; • 5 '-- 5 ' 0 1 • 9 I 
I 
e qu i va l <�n t s  incrco. s e  by 865 o r  thirty-b·;o per  c ont . 
Deve lop;ncnt c o c:  t s  are out lined i n  t a b l e  6 .  1 9 .  Th e tab l e  
indicates  tll a t  deve lopment c o s t s  a r e  hi ghe s t  in year  thr e e  and 
fertili s e r  is the lur&e s t  s ingle cash  c o s t  in all  y e ars . The 
fertili s er  s ub s i dy 1dll  therefore profo1.mdly influence the 
fea s ib i l i ty of thi s programme . 
6 . 6 Financial  Evaluati on 
The i!llportant informati on from the evaluat i on i s  
summari s e d  in a s eries of  tables . Additional information i s  
listed  in tables  in appendix G .  
6 . 6 . 1 Prorl.uction Data 
Data  in table 6 . 20 shows that as a result of development 
,\·ool pro duction increas es  by 7 ,  557 lbs . This l eads to  an 
1 8 2  
P T o .r >; r <l l J " il U TI\'O - D ( 'Y•; l n J lll l <· n t C o :�; C .-, --·.!..:----·· ·---- --·- -· ----- .-·--·- ··- - -� 
�--����� ------------- -- �----- - -;
C
'
YO
�-:
P
li1 E.!l l�; Y l' ; �-- - - - -- l 
r ---- ------- ----- ·- - - _ ., ----T�- 2 -=__-[_J---I�� -1�2 - --�� J 
•l· � I < :  
I 
·"' "' I 
C api t a l  :f e r t l J i s c r 
llrccdlnt_;  s t o ck p n r c h :-, s e s  
r c n c ing 
S e e d  
no torbtke  
S he e p  ·y a:c d s  
Total A J J nua1 C o s t  
• P  'r 'r Y <;1 I 
1 ··: c·l ll ,.., " r  · n 1' ? �" 0 J r; '-' ? 0 0 1 r- I 1 1 _) ' _) J .__ t' : .-. U 1 U - t' .... 1 '1.. ) 
3 '1 2  2 "1 0 
1 ' 06 )  
hoo 1-J.O O  1 ! 0 0  2 6 0  
500  
7)0 
J , 1 G5  4 , 5 1 ? 5 , 620  J , 9 1 t- 2  2 .  o ·t 6  
inc r e a s e in the va l u e  o :f I\' O o J. s a l e s  o f  $ 1 , 6 25 . .  C a t t l e s a l e s  
r em a in cons tant but sheep  s a l e s  incre as e to  $ G , J::>7  :from t h e  
bas e year  l e ve l o :f  $ h , 5J J . D c s p i  t c  t h i s  incre a s e  s ll c Gp S ' � J e s  
d.o  not  e x c e e d  the bas e y ear l eve l w 1 t i l  y e a r  :f our o :f 
deve l o pment, , Thi s i s  due to  the retention o:f  revenue s t ock 
:for breeding . 
As  a result  o f  d Gvc l o pmen t ero s s income increas es  t o  a 
new po s t  deve:Lopment equilibrimn o:f  $ 1 5 , 645 . I n  the firs t 
tw·o years  of  development the ;;ros s  inc.ome i s  l e s s  than the 
bas e  year be caus e of lower s he ep sale s . 
6 . 6 . 2 The Physical  Devel ol2!!]-ent Years 
Data for the debt free s ituation is lis ted  in table 6 . 2 1 .  
As  shown in the t able total  expenditure exceeds gros s  income 
in the first three  years of development . This results  in a 
cumulative defi c i t  of'  $ 2 , 67 1 at the end of' year thre e .  From 
this point  on the pos t tax cash  surplus es that o c cur are 
insuffic ient to enable overdraft repayment by the end of the 
physical  development period .  
Table  6 . 20 Programme Two - Production Data 
I tem Base Year Year 
Year One Two 
Wool  P roduction ( lbs ) 2 2 , 279  2 2 , 0 85 24 ' 6 8 1  
Wool  S ales  ( $ )  5 , 1 63 5 , 029 5 , 6 1 9  
Sheep S ales  ( $ ) 4 , 5 33 3 , 495 3 , 936  
Cattle S ales  ( $ ) 2 , 500 2 , 500 2 , 500 
Gross  Income ( $ ) 1 2 ,  1 9 6  1 1 , 024 1 2 , 055 
Year Year 
Three Four 
2 6 , 356 ''.7 '  897  
5 , 9 95 6 , 373  
4 , 27 1  4 , 887 
2 , 500 2 , 500 
1 2 ,  7 66 1 3 , 760 
Year 
Five 
29 , 039  
6 , 6 1 4 
5 , 586  
2 , 500 
1 4 , 700 
P o s t  
Development 
29 , 836 
9 , 7 88  
6 , 357 
2 , 500 
1 5 , 645 
...... 
(X) 
\..J 
I 
Tn b l C'  f) , �2 1 
2 1 ;!_ ' 0 .5 3  1 ?. , 9 1 1 _) 
J ·1 .2 , 7 G G  1 J , 6 l �9  
LJ 1 J ,  7 6 0 ' I  2 ,  8 !  J 
5 1 L1. , 700 1 2 , 3 1 6 1 ' 
I\ o t e  
1 1 5 
'1 9 
1 1 69  
l lt 8 
1 8� 
.• 3 9 0  1 , '( 88 
- 88J 2 , 6 7 1  
9L1 7 1 ' 7 2 1·1 
2 ,  J 8L� + 660  
---- -·--- ----
( 1 )  I n c lu d e s  t a xa t i on , l i Ee insurance  ( $ 2]0 ) u nd p e r s ona l 
dY'<nvi:ng·s o :C'  $ 2 , 000  as lv· e l l  o. s  farm II' Orlcing e ::--. p c n !:3 '? S  a n d  
, _
_
__ c_le v e l o p n l cnt e x p ens e s , J 
Taxation chcn."r,-es inc r e a s e  :C'rom �� J in y e n r  one t o  $ '1 � 1 48 in 
year f'ivc . Thi s l a  ttor  figur e i s  g:c o a t e r  tllan t he c o r r e s p o n d -
ing f'igure ( $ 82 8 )  in the pre-deve l o prnent s i tuation . 
The affe c t: o:C'  :Larm equ.i  ty on the capj_ tal  requirc::nwnts  of  
the development  procramme are  suJJU!W.r i s e d  in  table  6 .  22 . The 
data indicates  that the amo1n1 t of o f':(' farm capital  requir8d  t o  
finance  deve l opment increas e s  :C'rom $ 2 , 67 1 at E l O t o  $ 1 6 , 1 8 2 at  
E5 . Once  again the table shows that overdraft intere s t  is  m1 
important deve lopment cost  at low equity levels . 
6 . 6 , J The P o s t  De,�e lopment S i tuation 
After development has been c ompleted gro s s  income amounts 
t o  $ 1 5 , 645 .  A s  shown in table 6 . 23 this i s  an increase of 
$ J , 4 49 over the bas e year figure . Ass ociated  with this is  an 
increas e in the pos t tax cash surplus of $ 894 at  E 1 0 and $ 1 ,  1 8 ·1 
at  E5 . Thes e  sums are available  for additional pers onal 
drawings . 
1 85 
Tab l e  6 . '2 2 ... TlH..: r. r  f'C' c i  0 £' F' < l "f "t !l T 'Hl c h t e cln e s .s 
$ $ 
E I O  2 , 000 2 , 6 ? 1  3 "1 60 
E8  2 , 0 0 0  7 , 55 9 L� 
E7 2 , 000 1 0 '  4 l� 6 L� 
E6 2 , 0 0 0  ·1 4 ,  ·1 21�  5 8� 8 
E5 "I , 7 35 1 6 '  1 82 5 9 7 1  
----·---------------�--- --------------- A------�---------- -
f\ o "L c: s  �-----
( 1 )  D o e s  n o t  in c .l.ucle taxa t i on o r  l :i. fe ins uran c e  p r emiums . 
Th� s e  i t ems are a l l o w e d  fo r s ep�rntely . 
( 2 ) At  a s i x  p e r  cent  in t e re s t  ra t e . 
( 3 ) D e t a i l e d  finan cial da t n  f o r  the vari ous equi ty levels  is  
c on t a i n e d  i n  a p p en d i x  G ,  
���.? ... 2 
-·· 
Equity 
E1 0 
E8 
E7 
E6 
E5 
N o t e  -
------·.---------- ------·--------------- ---, 
Increase  I n  Incree1 s e  In  Increas e In  Pos t  
Gro s s  Inc ome Taxat i on F r om 'J.'ax C ash  Surplus 
l'rom D<cs e Y e a r  Bas e Year From Bas e Year 
$ $ $ 
3 ,  4L� 9  1 ' 075  89/.j. 
3 , 4 49 995 974 
J ' 1�49 94 0 1 ' 0 29 
J ,  4-49 87 1 1 ' 09 8  
3 , 449 789  1 ' 1 8 1  
Detailed  post  development data for  the various equity 
s i tuations i s  contained in appendix G o  
6 .  G .  '-1 
Tl u:.� l' c s u.l t s  o f  U 1 0  an ;t J:y c,; j  s o r  p r p l' :i. t F1 bi l:i. ty t n1 d e �!.' 
t a b l e  :Ln.U..i. c Ll t o s  t l n  i_. the .rn· u e·r u w m e  i .s  u.n pro .ri t a b l e  1J..n c1.c� .r th i.. � 
a .s :::; UJll].J t j_ o n , 
$ ·1 G , 2 ·1 o  ( LS )  an d the s e  G r o  n o t  rep<.ti cl. 1-.'i t.h i.n ·I ') y e a r s . 
Hen ce  no pres ent  va l u e  i s  d e termined , I f  s omc o:f  the lJ O S  t 
tax cash  .s Llrplus i s  invos t c d  in dev e lopment t h o  _pr o Gr:1nuHo 
becomes :feas ible at equities  o i' E7 or  greater  ancl :for  i n t e r e s t  
rates  up t o  7 . 0  per cent . Thi s chance o c curs b e c aus e l o s s  
c a p i t a l  has t o  b e  borrowed , Hence  de b t  c ha r � e s  a r c  l o s s an d 
payback i s  achieved fas t er . The s e  a spects  a r e i llus tra t 0d 
by da t a  c ontained in table 6 . 25 . 
The table  a l s o  indicat e s  that f o r  E5 where  deve l o pmc'nt 
is :fina n c e d  entire l)' by borrowinE?; t:b.e deve lopment pro granmte i s  
unproi' i  t G b l e . Furthermore t l J e  progrGmme is  infeas ible  a t  
E6 . C ons equently for  the repres entative farm e r  the 
development programme is  financially in.feas iblc . 
6 . 6 . 5  The Effe c t  Of  the F e r t i l i s e r  S u bs i dy 
Fertili s er  i s  an impo rtant input in the development 
programme accounting for 75  per c ent o:f the t o tal  capital 
expenditure . The fertili ser subsidy will therefore increas e 
the profitability of' the programme by reducing total  
expenditure and hence the  overdraft required · t o  finance  the 
programme . Despite  this the analysis  indicates  that the 
( 4 4 ) That i s  when the l evel of  pers onal drawings throughout 
development equals the bas e year pos t  tax cash surplus . 
1 87 
Table  6 . 24 Programme T\v-o - Profi tability Under C ondition A 
Equity 
E 1 0 
E 8  
E7 
E 6  
E 5  
Notes  -
Bas e Year 
P o s t  Tax
( 1 ) 
Surplus 
$ 
4 , 5 69 
3 , 4 6 7  
2 , 9 1 7 
2 , 2 7 7  
1 ' 7 35 
Present Value Naximwn 
( 6 .  O% intere:;t) Overdraft 
$ 
- 1 3 ' 2 26 
- 1 4 , 5 8 2  
- 1 5 , 1 33 
- 1 5 , 6 7 3  
- 1 6 , 2 1 0  
Payback 
* 
* 
* 
* 
* 
( 1 )  U s ed as the level of  pers onal dra,,rings during development 
for the purpos e  of calculating profitability in terms of  
a present value . 
( 2 ) * Indicates  payback i s  not achieved within nineteen years . 
deve lopment programme i s  financially infeas ible for the 
repres entative farmer . ( 45 ) 
6 . 6 . 6 Smnmary 
The main points t o  emerge from the analy s i s  of this 
programme are : -
( i ) carrying capaci ty increases  by 830 E , E . or 3 1 
per c ent . 
( i i ) development expendi ture amounts to  $ 1 9 , 255 or an 
increase  of $ 23 per E . E .  
( i i i ) gros s  income rises  by $ 3 , 449 or 2 8 . 2 per c ent . 
( iv ) the programme i s  unprofitable if  all  development 
capital i s  borrowed .  
( 45 )  Data showing the e ffec t  of the fertiliser  subsidy on 
annual overdraft requirements and profitabil i ty is  
contained in  appendix G ,  
Tabl e  6 . 25 
Equi ty 
E7 
E6 
E5 
N o tes  -
Prop;ramme Thro - P r o :f' i t ab i l i ty U n u c r  C o nci i t i on B 
Bas e Year I 
P o s t  Tax ( 1 )  
Cash Surplus 
( 1 )  Us ed  as the level of pers on:t l  dr�nvinc;s dnri.nr;· cl c.:vc l o p! i : cnt  i'or  t h e  p u r p o !::; c  o .f 
cal culat ing pro :fi tabili  ty :i.n t e rm s  o f  a p r e s e n t  v:3 l u e . 
( 2 ) A = 6 . 0  p e r  c ent in t e r e s t .  
B = 6 . .5 p e r  c ent  in t e r e s t .  
I n c r e a s e l 
I n  P c ,:; t 
T ·-.. x C u s h  
S urp l us 
,.._ ._;, 
9 7 1+ 
9 7 lt. 
0 2 9 
J 
! C = 7 . 0  per cent in t e r e s t .  
( 3 )  * Denotes  pay l> a ck n o t  a c hi eved wi. th:i.u n in '..: t c� cn y e ar:"> _ 
_  j 
eo 
(J:j 
"i 8 9  
( v ) t h e  p r O GT 3 1 Jlni c i s  J' (: n.s i b l e  a t  e qui t i e s  a l ) o v c  E? :i. :C  
( vi )  
i n c r o et s  c c; - ·. ·1 · Y : -
�· 1 ' 0  �2 ') 
$ 1 , 0 9 8  
a t  
i. J t 
a l  
.C S  
E? 
F; 6 . 
( v i i. ) tlw d e vc 1 CJ pm()nt p r o ;; r a nu u c  i s  :fj_nanc i a l :L-y in :f e a s .i t, l o  
:f o r  the r e p r e s  e n  t a  t iYn f a n n  o \,'11 (� r . 
Th1s s  e a r e : -
( i )  the compl e te ut i l i �3 �1 t ion  o i' t ] J n  exi s t in c  p a s t u r e . 
( i i )  iH·;., ens i :fi c a t i o n  o f  p r o cl n c  t i on C• 1 1.  h o o  a c r e s  o .f  the 
( iii ) 
mo s t  :f o r t :i  . .l. e  land .. 
c l earing o f  ·1 00 a c r 0 s  o f  mt:muk.<:t . 
The :f i r s t t'\' O  s t a g c s  a r c  c o n c e rn c <l '\ i th r a p i dl y  increc:t ::; in ,:;·  
g-ros s income:� , Thi s i s  a chi c�ve: cl by a ddiuc t1v- o i n p u t s  vi z .  
s ubdivi s i on and i' e r t i l i s e r . The e x t ra s ubdivLs i on i s  
jus t i fied  b e c aus e it  enabl e s  t h e  c c:t rry ing c ap a c i ty t o  b e  
increas ed  by 1 00 E . E .  Thi s r u s u l  ts in an inunell it:i  t e  i n c r e a s e  
in gros s income . 
Producti on i s  intens i fied  on 400 acres only . This 
restric tion is  becaus e many farmers believe that rapid  
increas es  in s t ocking rat e  a r e  imposs ible on  s ome areas of  
their  farms . These  areas include land above 1 , 000 feet  and 
areas on which the vegetation has been frequently bun1. t .  On 
the Hormvhenua hill country , land above 1 ,  000 feet  has a 
shorter  gro'\\'ing s eas on and a s lOiver  grow·th rat e . S imilarly 
land on ivhich the vegetation has been frequently burnt tends 
to  be  of  a mu c h  l o '.,· e r f'e r t i J  i t y . 
on the ,, o r s t p r o duc t i v e l a n d . 
1 90 
Thi s r e du c e s  b o th the r<·t t e  
The d ev e l o pm e n t  approa ch  in-vcl l vc b  int ens :l fy i n rs JI T O dct c l i on 
on the b e s t l and an d then ch�v-e l o p :Lni�- ;:; o j ! W  o :f  t ll c  n o n p r o cl n c t :i. , - L� 
l u nd . 
pr o d u c t i on i 1:0  ana lys e d  in  t h 'i s d c vc l o J ; ; •, c n t  p r o c r :_1 Jltme . 
ImproYed pas ture and s t ock c on trol i s  a c hi e-ved in t h e  
firs t y e a r  o :f deve l o pmen_ t  b-y c r e c t iEg 7 ·1 ch<1 :i.n s  o i' :f e n c il'.l l.�· · 
Thi s e n a b l e s  the s t o ck:Lns· rat e t o  b e  l n c r e n s e d  l ) y  1 00 :S ,  E .  
I n  t h e s am e  y e a r  2 0 0  acres  i s  o v c :r s <Y\\'11 id t h  4 lb o i� c l over 
s e ed  and 5 c1-:t of sup e rpho s pha t e . P r i o r  t o  o v e rs owi n �  the 
pa s tures  a r e  gra z e d  hard Kith heavy concentrati o_n.s o :f  s t o c k .  
Thi s  enn b l c� s  the s e e d  t o  reach  t J w  c;- r o u n d  a.."l. d r e du c e s  
compet i t i on f r o m  the gras s es . The a r e a  i s  o v e r s  OWTl in the 
aut umn_ and the s t o cking rate  i s  in creas ed  by 0 . 5  � . E o  per  
acre . In  the foll oi,ring autwilll ano ther 5 Ci,rt of  
superphosphate is  appli ed and the s tocking rat e  increas e d  by 
0 . 5  E . E .  per  acre . 
The s t ock increas e s  are accompli shed by keeping s ome five 
year ewes for another y ear and by retaining surplus t-lvo t o o th 
elve s . This reduces  the incomes from sheep sales  but enables  
the number  of  capital s t ock to  be  increas ed . Capital 
expendi ture reaches a peak in the s e cond year of  deve lopment . 
1'\vo hundred  acres are overs own and 50 acre s of manuk:a fenced  
1 9 1  
of f and c u t i·:i t h  < t  :C l a i 1 c 1 10 I > P e r , A hu Li. cl P 7-Cr  is .  omp .l o y e <.l 
t o  c l e ar t h e  f e n c e:  Li. cl O �' and. 1 0  put in t ra c k. s . 
2 7 5  E . E .  
cru::-- hing t h e  s e c o n d  _5 0  acre 1 > l o c k  o :C  �'' <i n ulc o. . O n  t-l J.e f i r ., L 
bJ. o ck t he s t o cking r a t e  i s  increas ed  t o  � . 5 e�e o q ui¥a J . en t s  
p e r  D c r e . ( l� G )  "\n add.:i. t i ona l s e t o :C ::; llecp  y a r d s  i s  bu i l l: 
a d j a c en t  to  tha neKly d e v a l o p c <.l  blo cks . Thi s r e d. Lw s ::: the 
tili ! c  involY ed  in s t o ck o p e r <'< t i u .n s  e .  g ,  dagG·ing , clo cki n g  an cl 
d r e n c h i n g- . .As  in the s e c on d  y e ar gros ;,; inc ome i s  i n c .r e a s c d  
b}' the s a l e  o :f  e x t r <- t  l a m b s  and ,,- o o l .  
The :f o o.r th a n d  :Li.. :f -',: 11 y e u r ::;  o :f clov::? lopmen t a r E: c ons oli cla-
t i ox1 y e ars . The� :c; 'L o ckinc r a t e  on t l w  t1·;o manu.J..;::a blo ck s i s  
i�creab ed  t o  J . S  E . E .  per  a cre . Total  cxpendi tu:'e  in tlles  e 
y e a rs de c l i n e s  1d1.i l e  {;'ro s s  inc omes  incroa;:; c s  from tbe sale  o :  
extra breedinc s h e e p , l amb s ancl ,,· o ol . 
A smmnary o f  the d e v e l o pmen t p l an i �5  gi ven in table 6 .  26 . 
A detailed  s t o ck re conc i liat ion i s  i'ow1.d i n  t ab l e  6 .  27 . Data  
in  the table indi cates  that the carrying capaci ty incre as e s  by 
8 8 5  E . E .  This repres ents  an average annual increas e o :f  s i x  
per c ent . M o s t  of the increase in carrying capaci ty oc curs \ 
in the firs t three  years . In the las t two y ears the s ma l l  
s t ock increase s  are the resul t  of pas ture improvement on the 
manuka blocks . 
( 46 ) This s t ocking rat e  refers to  the nrunber  of  s t ock 
wintered . At  other t imes of  the year the s tocking rate  
may be much  higher in  order t o  control regrowth . 
T a h L c  0 . ? G I { e r) l ' n s c Tl ·1 · : 1 t j  ,-0 P < � r·1n f.' 
__ ..,.. _  ··-�..---- -----..--- --� ---··-
I t em 
FeJ1 c i1 1 G· 
5 c1."1� :p e r  a e r e  
_3 c1d� p e r  acre  I 
C i- i- -1· -, f" ., d . ,, ' ll -· 1 ,j · U , , ____  l ,;, cell C l. �1 b . .. l . •  l b  
I'};__[' C C· 
----- ·-----·-· 
,�=� - r--" LJ � -� J _ _2 __ 
l . - 1 I ') - ') - I c 1 <:L n :· 1 I •- :> ·- _) - ·-a c r e s  2 0 0  � 0 0  -
i:J.. C �i.' C .3 5 0  5 0  
ll C J, C S  200 1� 0 0  200 
a c r e s  250 JOO _)0 
manuk. a  acres  50  
Hand CLltt inc- ! l l a nuka a c r e s  
P l an t and Buildinc;- j t e m s  motor  
1.> :LL�c 
50 
she ep 
y a rds 
E1·.· e e quiYa l e n t  
I n c r e a s e p e r  
y e a r 
_L_r:_-. 
_
· ____,_2_J_· :J-t::-
_.__
2_?_. 5-�-2-2_._:;_!� -' :1 5 �-
1 9 �2 
The deve lopment c o s t s  are  outlined  in table  6 . 2 8 .  The 
highe s t  amuml c o s t  o c curs in the s e c ond and third year of  
development ,  In the s e y ears  clearing o f  the manuJca is  
undertal'en  and fertili s er  input r e a c h e s  a peak . Fe rtilis e r  
is  the only development c o s t  in the fourth and fiftl1 years 
o:f deve lopment . 
6 . 8 Financial  Evaluati on 
The impor tant data from the financial evaluation i s  
summaris ed  in a s eries  of  tables .  Additional data can be 
fow1d in appendix G .  
6 .  8 .  1 Production Data 
Production data for the five years of  physi cal 
development i s  li sted in table 6 . 29 .  The table  shows that 
1 93 
Table 6 . 27 Programme Three  - S tock Reconciliation 
Development Year 
S tock 1vintered Bas e Post  
Y ear 1 2 3 4 5 Development 
Breeding Elves 1 ' 600 1 ' 600 1 J 7 83 2, 0 20 2 ,  1 7 7 2 , 234 2 , 268 
Ewe Hoggets  550 5 5 0  626 657 7 lJ- 4  80 2 823 
Sheep Ewe 
Equivalents 2 , 0 65 2 , 065 2 , 300 2 , 575 2 , 800 2 , 900 2 , 950 
Breeding C ows 80 80 80 80 80 80 80 
Cattle Ewe 
Equivalents 5 6 1  5 ·'� - 5 6 1  5 6 1  5 6 1  5 6 1  5 6 1  
Total Elve 
Equivalents 2 , 6 26 2 , 6 2 6  2 , 8 6 1  3 , 1 3 6 3 ,  3 6 1  3 ,  4 6 1  3 '  5 1 1 
Annual Percen-
tage Increase 
In Ev,re 
Equivalents - N . A 8 . 9 9 . 6 7 . 1 2 . 9 1 . 4 
Note  -
N .A .  denotes  non applicable . 
Table 6 . 2 8 Progranune Three - Deve lopment C o s t s  
Development Year 
I tem 
1 2 3 4 5 
$ $ $ $ $ 
Capital F ertilis er  1 , 7 00 3 , 9 80 3 , 432 1 ' 4 40 22lJ-
Breeding S to ck 
Purchas es  - 6 9 6 27 6 - -
Fencing 1 ' 06 5  3 7 5  375 - -
Overs owing 200 450 - - -
Cutt ing & Crushing 
Manuka - 250 - ·- -
Hand cutt ing Manuka - - 1 ' 000 - -
Motorbike - 500 - - -
Sheep yards - - 750 - -
Total Annual C o s t  2 , 9 6 5  6 , 25 1 5 , 833 1 , 4 4 0  2 24 
Table 6 . 29 Programme Three - Production Data 
I tem Bas e Year Year 
Year One Two 
Wool Production ( lbs ) 2 2 , 279  2 2 , 058  25 , 335 
Wool Sales ( $ )  5 , 1 63 5 , 0 23 5 , 770  
Sheep Sales ( $ )  4 , 533 3 , 5 22 3 , 9 22  
Cattle Sales ( $ )  2 , 500 2 , 500 2 , 500 
Gros s  Sales ( $ )  1 2 , 1 9 6 1 1 , 045 1 2 , 1 92 
- --- - -
Year Year 
Three Four 
27 , 654  2� ' 237 
6 , 282 6 , 638  
L� , 388  5 , 263  
2 , 500 2 , 500 
1 3 , 1 70 1 L� , 40 1 
Year 
Five 
29 , 964  
6 , 802 
5 , 7 7 1  
2 , 500 
1 5 , 073  
P o s t  
Development 
30 , 030 
6 , 8 1 5 
5 , 8 1 8  
2 , 500 
1 5 , 1 33 
... 
\D 
+:-
1 95 
''o ol  p r o d u c t i on inc 1 c_• c:. s C-! : hy 7 7 .5 1  lbs e:tnd '''o o l  s a l � s  by 
�- , ,  Gs 2 .  
l 1 1 t ll u  f i r :-;  t 
t han Lhc p r c -deYc l o p n t c rn. s :L tu a. t . i on • 
. :� s a r c s u l t o i' c.l eYc l o p; n c:m i gro s s  in c o lll c i n c r e o s e s  by 
G . 8 . 2  The P hy s j c a l  D o \c c=, } o p w e n t Y e :1 :r"' s  ____ ....._ __ _ �-----· .. ··�·4�---- - -
The �inancia l d a t a  f o r  the d e b t  f r e e  � l tua t i on is  
c on t a i n e d  i n  t a b l e 6 . J O ,  Da t ; t  in the t: c-:.l ) l e  s h o K s  t ha t  t o i.; ;::J J 
expendi t t tre  0xc e c d s  i n c omu in t h e f i r s t thr e e  y e i.1 J ' i3  o f  
deYe l opmen t . I n  y e .'l r on0 thi s is  in part clue t o  the 
r e du c t i on in r e v e n u e  s t o c k  a n d i n  part d u e  t o  e xp en d i tur e on 
improved. s ub d :L vi s i o n . 
The re t ent i on o f  50 per  c ent of  the :five y e a r  0wes 
an d the p u r c h a s e  o f  1 1 6 two t o o th ewes is  largely respons ible  
for the cash d e :f i c i  t i n  y ear ti,'O . At  the end o f  y e ar two 
the t otal  overdraft incurred as a result of development i s  
$ J , 085 . This i s  increased  t o  $ 4 , 0 0 1  in year three as  a 
result of  expenditure exceeding income by $ 9 1 6 .  
The las t  tvvo years o f  development involve a period of  
consoli dation .  Development i s  confined t o  small s t ock 
increas e s  and capi tal ferti liser  applications . As a result 
pos t  tax cash surpluses  o ccur in the s e  years . Thes e surplus es  
enable  the cumulative overdraft to  be  repaid by the end of the 
D n v c l o pm o i t t  
\- C C:l l"' 
--------- - - -- -
1 
2 
J 
L� 
5 
:N o t e  -
1 2 '  1 9 2  
"1 1 ' ?07  
1 1 1 '  4 1 5 
1 1 · r: {i :· · ·_; -c ·l 1 r ;  �- i ( .. 11 
..... $ c.!) .;: '-? 
5 -8G2  8 6 2  
. <! , ? � )  'i . ...,.. __ _ J , 0 85 
1 8 - 9 ·1 G 4 ,  oo ·1 
6 G 7  1 � 5:3 9 2 '  l� 6 2 I 
1 ' Lj 9 7  �! '  9 2 J  +hGo 
---------
( 1 )  Tncludc s taxa t i on $  life insu �anc c ( $ 250 ) and p c�r�3 0nal 
cJ.ra i\·:Lncs of' $ 2 , 000 as  well  a s  :farm ·1\·o rking e x_p c n s c s  and 
d c v· e l O lJlll 2 1 l  i:; exp ens e s . 
- ------- -' 
physi cal  deve l opment p e r i o d .  A cash surp lus o:f  $ 1� 60 i s  a l s o  
generate d ,  
TaxG t i on becomes an importan:c c o s t  i n  the l a. s t  t11'0 years 
of deve l opment . The amount o:f  taxation paid  j n  the final 
year ( $ 1 , 49 7 )  exceeds that paid prior  to d e v e l o pment ( $ 826 ) . 
Data in table  6 , J 1  i llus trates  the affec t of  :fann 
indebtedness  on o.ff :farm capital requirement s  :for  this 
programme . The table r eveaJ.s that the capital requirements  
o:f  ES  are :four times as great  as  those  :for E 1 0 .  This resul ts  
in intere s t  being an important development cost  at E5 . 
6 . 8 . J The Pos t Development S i tuation 
Details of the pos t development s i tuati on are given in 
table  6 . J 2 .  The table  indicates  that p o s t  tax cash increas e s  
resulting :from development , range :from $ 62J a t  E 1 0 t o  $ 8J6 a t  
ES .  Increas e s  in taxation are the greates t :for E 1 0 and the 
1 97 
T C1 h l c; G . '3 1  
--· ..4-� ·----
(J 11 C .· ' ·  : · ·. 1 ·-. 1 ! t H ·· · • · · _; �- · · , , ,. , � · •. _____ .,. __ -�-�- ---·-� ... ..- .-...:..--�- ·--- -- .  
� --1��-� - �- :-:-�- 1-1 (-· � �- 0 11--, �,--· - -··-!\ ·�� -�J��-�� �·-- --1- - --�-:��.-r- r-�=����-1 . ll- 1 ---- ---,, -· - 1 L . .  � ) · . •'J _ c. _L , ,  _ _...._ . 1 1 • -.t.l - · �- - � J t..t _ ,  _ _  ,.� 
Dr·.' 1·: i n t_�· �; Ovc ,- , [ •· ; ._  C t  o -, LT d 1.· �d' t., 
r--- - -
E 'I O  
E 8  
L 7  
E G  
N o t e s  -
D u r i n g- I n c u r n cl I n t e r G .s t 
D c• v c .L o p i n cH1 ·:; D� u - i u g  
$ 
2 , 000  
2 , 000  
2 , 000  
2 , 00')  
1 ' 7 3 5 
D ' . \C () J () FlnlUJ l  t 
lj. , 0 0  l 
8 , 6 1 2 
! 1  ' 3 !  0 
1 h , 5 3 2 
J 
3 
4 
4 
5 
-----------·------- - � 
$ 
2 � 0  
'5 1 ( 
6 7 8 
8 '( 2  
1 ,  O G J  
( 1 ) Do e s  n o l inc lud e  taxa t i on o r  l i :f c i n s u r an c e  p r c:> m i u m s . 
( 2 ) A t  a s i x  p e r  c e11 t  in t u� e s t  ro. t c . 
( J ) De ta i l ed  :f i n an c i a l  d a t a  f o :r t h e  vz:� ri ous  e qu i t y  l eve l s  i s  
c ontain ed  in a p p en d i x  G .  
Tab l_o_G_>..:..' 2� 
Equi ty 
E 1 0 
E8 
E7 
E6 
E5 
Note  -
Thr e e  - P o s t  Deve l o pmen t 
I n  c r e n. s e In  
Gro s s  Incone  
F'rom Bo. s e  Y e a r  
$ 
2 , 9 3 7 
2 , 9 3 7 
2 , 9 3 7 
2 , 9 3 7  
2 , 9 3 7  
---- --
I n c r e a s e I n. 
Taxa t i o n F'rom 
B<:�.s e Y ear  
$ 
8 1 4 
7 5 4  
7 2 3  
6 6 9  
60 3 
In creas e I n  P o s tl 
T a x  C a s h  Surplus 
F r o m  B a s e Y e a r  
$ 
6 2 3  
67 J  
7 1 5 
7 60 
83 6 
Detai led pos t development data for the various equi ty 
s i tuations is c ontained in appendix G .  
l e a s t f o r  ES . F o r  equi t i e s  gr e a t e r  th<:tn E? rhe in crea s e  in 
s u r p l u.s , 
6 '  8 .  l-j 
i s  "LUJ.p.c o f'i t a b l e  i .f  i t  i s  i' i n a n c e cl.  en t irely by bo r r o \·:u d  money 
( c ond i t i on  A ) . Thi s r:J s pe c t i s  i l l u s t ra t c; cl by d � t o.  i n  tab l e  
6 . J3 . H o 1,·ev e r  i f' surplu.s :farm i n c ome i s  in ve s t e d  in t h e  
d e v c .: , . 1J m e n  t proe:ramme ( concli t ion B) t h en the programme i s  
f'e as i b l e  f o r  e qu i  t i c s  equal to  or  f,Tio! a teT  th2.n E7 . Table  
6 .  34  r e \' G a l s  tlw.t :f o r  E7  i:f  $ 9 1 7 i s  inve s t e d annua l ly in the 
developmen t p r o g r u nm t e  than payback i s  achi eved at  the end o:f  
1 3 y e a r s . The pres ent  va lue o f  the p r o c;rammo varies  f' r o m  
$ 1 0 , 006 ( 6% intere s t ) to $ 6 , 0 63  ( 7% interes t ) . Th e 
maximum ove rclr;L :f t  incur r e d  i s  approxima"c ely $ 1 1 ,  500 . 
T a b l e 6 . 3 3 P r oc;r a mw e  Thr e e  - P r o :f i t a b i l i ry C n cl o r  C ond i t i o n A 
.---- ---,- ------------------.--------------------�---------------- �--------- ---
Equity 
E 1 0 
E8 
E? 
E6 
ES 
Notes  -
B a s e Y e a r  
P o s t  T a x  ( 1 )  
C a s h  SurpJ.us 
$ 
4 , 5 69  
3 '  4- 67 
2 , 9 1 7  
2 , 2 77  
1 ' 7 35 
Pres en t  Va lue s 
( 6% interes t )  
-
-
-
-
-
Maximum 
O v e rdraf't 
$ 
1 3 ,.;41 
1 L� , 846 
1 5 , 344 
1 5 , 7 84 
1 7 , 7 1 9  
Payback 
� 
* 
* 
* 
* 
( 1 )  Used  as the l evel of personal drawings during development 
for the purpos e  of calculating profi tability in terms of 
a pres ent value . 
( 2 ) * Indicat es  payback no t achi eved  within nineteen years . 
Table  6 . 34 Programme Three  - Profi!���l��y U�d �' r �£���!��n � 
Equity Ba s e  Y e a r  
P o s t  Tax( 1 ) 
Cash  Surplus 
P r e s e n t  V a l : 1 c I MaxiuwJn Overdra :ft '. P a y b a c k  I 
:\ 
' I n c r e a s e 
I 
I ( , . �-
I n p o ,� t 
$ I 
c A In---� , 
�------�--------------�----- I . , I E8 
E7 
E6  
ES 
Notes -
Reduced  fr o m  
$ 3 , 4 67 to 
( i ) $ 2 , 467  
( i i ) $ 2 , 000 
R e duc e d  from 
$ 2 , 9 1 7 to  
$ 2 , 000 
R e du c e d  from 
$ 2 , 277  to  
$ 2 , 000 
$ 1 , 7 35 
I I 
I I 
1 1 , 5 7 9  1 9 . '-1 2 8 ! 
1 9 ,  970 ! ·1 7 ,  2 7  J 1 
I 
7 , 5 8J 
] ll , 9 6 7 
1 o , oo6 I 7 , 885  I 6 , o6 �) 1 
I 
I 
I 
I ! I 
A I 
I ' . .  , , . , T < •  . 
0 
T
B 1---y- --, 1 _ J 
.. .x C a s 11 
1 C 
: 1 1• 1. 
S u r p . .l u � 
--- --+-- -t-� 
u r. 
s 
I 
__ I I _, . 
,., 
I 
�� I 
� 
I 
I ! 
I , - -t 
,. 
: 
! I I I 
I 
I 
: ; : : 
I 
1 0 , lJ 6J 
8 , 6 1 2 
1 1  ' 3 1 0 
, ,. � , 5 3 2  
1 7 , 7 1 9  
1 o "' ,. - � 
j j i I 
1 ' Y J ) 1 ( )  
r 1 .  , i I • 
I 
- , U '-1  i:3 '  1 I 
s 6 (, 3 I 
. . ,. 2 ! 1 ;� 1 1  ., ! 
' ,) 8 
- I 
r- I 
· pJ 6 1 " r '  1' _ I 
I 
I 
.J 
I 
,' ' �) i 
. 
I 
. , 
I 
I i J I I 
I I ' 
1 1 1 ,  1+ 2 0  j · I 
i I 
' 
I I 1 :- •) ., I . .  ' I ! I 
il 
' _) , _ V  li ! J I i ') ,' ., ,, I : .- J ) 
' ; ' - � 
67J  
67 3 
7 1' 5  
! I 
I 
I 
I 1 
I ! 
. I 
I I 
' 
I I : 
.• I I 
I 
I I I ' I 1 I 
I 
....,_______!__  I I • 
I 
( 1 )  U s e d as  the l evel of'  pers onal d r'awinGs ll ll r i n c; d c l.· c J. o pm c n t f o r  tlle purp o :::; ( '  o f  
calculating profitabil i ty in terms o f  a p r e s e n t  va l u e .  
( 2 ) A ;;; 6 . 0  per c e nt in teres t .  
B = 6 . ) per  c ent in t e r e s t .  c "" 7 . 0 p e r  c ent in t e rc � :::; t .  
( .3 )  ·* D eno t es payback  n o t  a c l 1 i cvc d \v:L tl d. l' n i n ( ) L c ·��jl Y (' < 1 r s . -'-v 
\...0 
200 
The ;::m.a ly s  i s  o .f pro.fi t ;:J l) i l i  ty : i  ncl j_ c- a t c s  tha t  thi s 
r • • )) r c s e n t <J t. i v e  :f a r w e r . I n  o r d e r  t o  �; uc c e c:. :3 i'u ..L ly 1.U1 Cl c· r t. a k c  
o f'  80 }J C J ' c C· E t . 
G . s . s  The [:l_':f0 C. T· O :f  T lw F' t. J · t i .1 i s f:' J '  S • t1 J .s i llY --�--..... _..... _  . ·---·-------------- --� .... �-·--.-::-
t o  
The :f e r t i l i s e r s ubs i dy '·"lF, b l e �  the d eY<? l O lJllicnt p r o .s r u mm e  
I h . ..., ) 
b e c ome! p r o f :L t u. h l e  <.t t E 6 . \. ' 1  D e s p i t e  thi s i. he p r o gramme 
s t i l l  r e; m u i n .s  1 1 una t tra c t ive 1 '  to  the repre.s enc:a"t iYe :fa rm 0 1• n c r . 
6 . 8 . 6  S u r ; m <:U.' V _____ _.._ 
The m:1. in points  tha t emerged from the e Y a ll .H l  tion  0 1� thi s 
dcvelopll iC!.1t progre:umnG ,,·ere : -
( i )  c arryinG c �: pa c i ty i n c r e a s e s  by 8 85 E . E .  or  by J 1{ 
per cent . 
( i i ) deYc l o pmcE t expcll di turc t o ta l s  $ 1 6 , 9J7  or  an incrPas e 
o :f  $ 1 9 . 1 p G r E . E . 
( i i j_ ) 
( iY )  
gro s s  income ri s e s  by $ 2 , 937  o r  2 4  p er  c ent , 
the p r o g r amm e  i s  unpro :f i table  if  financed entirely 
( 47 )  
by o ff farm capita l .  
( v )  i f' developll!en t i s  financed  partly by surplus farm 
( vi )  
income then the programme i s  feas ible for equi t i e s  
above E/ . 
as  a resul t of  deve lopment the pos t tax cash surplus 
increas e s  by 
$ 67 3  at  E8 
$ 7 1 5 at E7 
$ 760 at E6 
Data shoKing t he affe c ts of the fertili s er subs i dy on 
a1�ual overdraft requirements and profitabil i ty i s  
c ontained in appendix G o  
( vi i )  t h e  proc;r; J ;dme i s  ' � u n a t t ra c t i vc ' 1  t o  t l 1e O \ .J. l O  l' o _r t h e  
G ,  ') C o n .� _1 ,_1 �- i o n 
pr<� c ti cabl c; .  
m e a n t  d 1 <t  t < • n y  d evelop!'Jent cupi  trtJ_ has  t o  b e  bor::.·o �·:cd . T h e  
anaJ:ys e s  incl i c ;::._ t e  t h a t  un u e r  t h e  p :r· e s c n -c leve l of res ource  
produc t ivi -cy an d c c o n o w i c c limc:t t e  ' 1 ' . .  f ' 1 1 ( LJ S ) 1: 11 s  1 s  1n e o s � l - C . 
A ma j o r in c r e a s e in b o t h  r c s O l l r c e  procluc t ivi ty and produc t 
pri c es i s  r c qu_ i r e d  b e f' o r e  f u t u r e  clevc lop:ncnt  c ould  be  
c ont empl o. t e ll .  
I n  order  t o  :raain ·t ain h i s  s t CJ..n cla r d  o :f  living· the 
represEntat ive farmer ha s been forc ed  to suppl ement f'arm 
in c o me ,,- i t h  11a ge empl oymcn t .  Thi s has l e d to  a de c l ine  in 
farm produc tivi ty be caus e of  l e s s  e f f i c i e n t  s t o ck and pas ture 
management . �{e c en t n. t t empts  t o b o rro ,._. money for  development 
have been w1.s ucc e s s f'ul . A s  a re sult the f'arm 01a1.er  has 
decided t o  l eave far-ming for  ,,·age empl oyment . Hoi·:ever  at  the 
pres ent time di fficul ti es in s ell ing his property have forc ed  
him to  c ontinue farming . 
( 4 8 ) Assuming that devel opment finance can be borroiV-ed  a t  
the s e  l o,,r equity l evels . 
2 0 2  
l a r g e: a r e a  o i· p l o ugJuJ J .l e l < il l d , 
on rl cve lop in ;:; t- h t :  p l ou{ ) l c.tb l e  l . m cL 
c o u n t ry h a s  1 1 e en n e c; i 1_� c  t r:' d  an d r o \"e rs i on t o  
( 1 ) 
1\ e e d ;,:.  J-J (·i !':i O C CUl' l ' F; cl �  
_;_ · -'-' O p e .r t i o s  o f  t J 1 i s  t y p e  i: o n c l t o  ll_ ;_ , ·v c  Cl h i t:) •  e q ui ty a ,s ti 1 e  
f' ;;: r m  h G s  gen P. r ::l l ly b c; c n hand ed  d<n:n from :r a t J .1. e r  t o  3 o n . 
C ons equent ly d e b t  c o11,mi tments  a r c-:> s wu LL . 
e n a b l e d  t h e m  t o  1 1 s ur'.·j_ve " 1.u1. d e:· r  e c o n o m i c c u n cl i t i o n .s o _;-' :fi1 1 l i n e· 
p r i c e :3  an d r i .=.: i n g  C (J S t s , 
There i s , h o w e Y e r ,  a l i m i t t o  the  c o s t  in c r .o! a .o- c :..; t h e y  c an 
c ontinue to  abs o rlJ . H e n c e  i.. h e r e  i s  a n c o cl t o  i n c r e n s e  
production in o rd e r  t o  ma intain tl1 e i r  s t cct n d a r cl  o f  l ivin;<; . 
On 1nany o f  t h o s e  f a r m s  a s i gnif'icant  in c r e a s e  in p r o d u c t i o n i s  
only poss ible  by h i LL c o un t ry d eve lopment . This d e v e l o p m e n t  
can be  part ly f inan c e d  l 1y s u r p J. n �- f' a r m  inc ome b u t  t h e  huJ k o f'  
the required  capital  has t o  be borrowed . 
7 . 2 Des cr i p t i on O f  Tlle Farm 
The to tal area of the farm i s  650 a c r e s . 
200 acres of  s own pas ture , 
250 acres of native pas ture , 
1 50 acres of tauhinu and gors e ,  
5 0  acres o f  was te land . 
Thi s c ompri s e s : -
( 1 )  Random survey farm numbers 6 ,  1 2  and 1 6  are examples o f  
this type of'  property . 
2 0 J  
·r ·.\.- u l t LllJ •.1 J"' e c;_ 
A d r y ]-J 0 r _i _  o d  us nn ll )' o c c n r :- ;  .Lr o 1 1 1  
J u n u ; t ; · :, t o  �- ! a r c ) !  bu t <J r· o u gh t s  <� r e  u n c o 1 1 : >u o n . 
fa 1 1  s <'.t r c: r c:n _· (" . f r u s t s a n  cl c o l d :::: o u t h e  r 1 y �<: i n  cl s c : c  e>. a 1. e 
"LUJ l >l c) a s a.n t c o n d i t i o n s  ill t he 1d n t o r . 
T h e· r o l  ! j n r.; c o ru J t r y i s  K e .l l  s u b cl i Y i cl c� d .  O n.  L J w h i l l  
b l o ck subdivis i on i s  i n a d e q u a t e  an d p r e Y e n t s  2 E Y  o r�·ani � e d 
.1\. t the p r o s o n t  t i m e  t h e  n e, t u C' a l  1-:a t e r s u p p l y  
j u_s t c opes  1d t h  t h e  r c� q u i r e m e n t ::; o f  tl1e  s t o c k , 
The .s he ep  p o l i c y ha s c ons i s t e d  or� bre edin G  0 1 ·: c s  1-.'i t h  the 
s a l e  of f a t  l a :-nb .s . T h i s p o l i c y i s  no 1\ l> e ing- a l -L e r ed  t o  o n o  
of s e  l l ine; ::: t o r o  l a m b s  b e c au s e  of d i f fi c u l t i e s  c x p o r i e n c c�d  i n  
fat tening l n mh s . T h c s e d i 1 f i c u l  t i e s  have l a r g- e l y o c curred  a s  
a r e sul t of  ina clequa t o  fe ed  SU ]_Jp l i e s . 
The cat t l e  p o l i cy has va r i e d . For  the deve lopment o f  
the hill  c ountry area  the  o1,'1 er  c ons iders  that bre eding c o·.,-s 
are  required . However ,  onc e  development has been compl e t ed  
the cat tle  po l i cy wi ll  be  revi s e d .  
I n  re c ent  years the grazing policy has changed from s e t  
s t ocking , t o  mobs t ocking from weaning through t o  lambing .  
Because  o f  inadequate  subdivis ion mobstocking has not  
s i gnificantly increas ed  pas ture production .  As  a resul t  
supplementary winter  feed  i s  required for  the bre eding ewes . 
This i s  provided  for by way of  a winter  crop and hay . 
P r i o r  t o  the dce liJ� e  in ,,-o o '- p r l c c s  the b r e e d .L n g- �':i e s  
The f a r m  i. s a t  p r e s ent C d r r y  i · -l g' t h e  f o l l O\.·in� s t o c k  
n w n t.J e r .s : --
1 , J OO br e e ctin� e w e s , 
5 0 0  e -;,- rj l w e; c; c t s , 
2 6  r a m s , 
1 4  bre c d i nc c o �s , 
bu l l . 
20� 
Thi s i s  a ·!.; o t a l o f' i , ·i- 80 8\,- c ·  c qniv0. l ont s ( E . E . ) s  or  2 . 9 
E . E .  per  p o t en t i a l ly p r o d uc t i ve 8 c rc . 
l n i  tihlly the p .l an invol  vet;  improving  pas ture s and 
increas ing s t o ck numbers  on the lJ louc;ha.hle lcu1d , This i s  
f' o l l o;,-e J. by development of  the h:i l l  C O Ui1. t r y  b l o c k .  The 
ini tial  deve lopment incr e a s e s  b o th the total s to ck nwubers and 
the gross  inc ome . Thes e t1vo factors combine t o  pro vide  the 
bas is  for developing the tauhinu and gorse on the hill  country . 
Pas ture improvement on the ploughable  land i s  achi eved in 
two ways viz . by increas ed ferti liser  application in 
as s ociation 1vi th increased s to ck numbers and by c ropping and 
pas ture renewal . In  the firs t year of  development s ix hundred 
weight ( mvt ) of superphosphate  i s  applied to 225 acres  of  
ploughable  land . The remaining 35 acres is  cropped  over a 
205 
period  o f  t hr c 0  y e a r s . I 1 1  e a c h  ) c a r a \\' i n t e r  r. r o p  o f'  
p a s t u r e , ( ? )  
breeding e1\ e s  a n d  s i x  ·b r c· c d :L n c  C O \'. S . In  t lJ. o  s e c o n d  a n d  thi rd 
y e a r t>  of deve l o } -' 'ncnt t h e n u m1 J c r  o f  br o e cU.nt_� c o w ::; i. s i n c r e a s e d 
t o  4 0 . The s l o 1·: in c r e a s e s p r e a d�; t JJ.e c o s  L o f'  c a t t l e' p l l r r. ha s e s  
o v· e r  a n umb e r  o r  y e a r s . I t  i s  n e c e s s a r y  t o  p u. r c l 1 a s e c a t c l e 
i n  o r d e r  t o  in c r e a s e  the l.n'o t:; ding h e r d  t o  Lt O 1\· i t hin t h r e e  
y e a r s . ( J )  
O n  t J1o p l e ·uc;ha b l e  .l< t J J.d t h e r e  i s  an i n c r e a s e of'  1 0 0 
b:r e o d inc o 1-:e s in tlw s e c on d  y e a r  o :r  d e v e l o pmen t , In  the S cdJW 
year deve l o pm e n t  \\· o rk b e g  i n s  on t ll e  hi l l  c oun t ry b l o c 1.;: ,  Th i s  
·1\·o rk. ini t i a l ly inYo l v c s t h e  erec tion o:f'  a bonil dary f'enc o a r o und 
the native  bus h .  A l. thouch not  direc tly pro duc tive thi s f' e n c e 
prevents  t h e  l o s s  o f  s tock in the bush and en<J.ules  more 
effective pas ture control . 
C learing of' the tauhinu and GOrs e begins in year three .  
The area i s  divided into two 75 a c r e  p addo cks . One of the s e  
blocks i s  then mobs tocked wi th cattle  which eat the rough 
growth and crush s ome of'  the tauhinu . The uncrushed tauhinu 
( 2 ) This  is a more c o s tly method of pas ture renovation than 
overs owing with c lovers . However ,  it  enables  a qui cker  
es tablis hment of  a quali ty pas ture . For  this reas on i t  
"\vas used  in this development plan . 
( 3 ) This number of breeding c ows is  c ons idered  by the o'n1e r  
to  be  the nwnber required for effective development o f  
the tauhinu block . 
( !.j ) t ll.un 1 c .f t  t o  rot  �uHl -L h.0 (S o r s  e is  
206 
sprayed  by ll8J1. cl , 
Tld s 
hc av"}' 3 p p l .i. c a t i c:m o r  .f e r t i l i s c .i� c n s n r c: s  e:• · o cl  (;' :3 tilblis l unc:n t o .f  
over t h e  , ,-:Lrl t e r . 
p e r  a c r e  r e s p e c t i ve ly . T h e s e s t ockinc; 1�a t e s  e n ::, u r c ·t: h a. t  t J w  
graE. ..... e,rm·;n is  c omp l e t e ly ut i l i s e d . I n  the  suc c e e d ing t ·."·o 
Clearing o :f  the :.3 e c o:n.d 75  acre bl o ck of  t:; o r b e a.n cl t o 1..1..h inu 
be g-:Lns i n  y e <:t r  :f our o f' deve lopment . D e v e l o p m e n t o:f  the 1 5 0 
a c r e s  in t1 · u  bJ. o cks e::nab l. e s  th0 a r e a  t o  be  c� i' f'e c l; i v e .l.y 
prepared  for  overs o�ing and va s t ur c s  c on t r o l l e d  a £ t e r 
Ass o ci ated  ·h·i th tJ) e d eve l o pment of  the  ta.u}1inu 
blo ck is p:c o Yi s i on :f o r  a:n. improved ''a t e r  s upply , Subdivi s ion 
of  the  block m e a n s  that 1vater  ha s t o  b e  provi de d :for e a c h  
padd o ck . This i s  acc omplished  by pwn1J i:nc :from a creek t o  a 
s torage t ank , From here  the Kater  is  g-ravi ty :fe el to  troughs . 
The maj or c o s t  as s o c iated  with this s y s t em i s  the c o s t  o:f  the 
alkathene  piping . 
The back block of 1 50 acres i s  subdivided in year five of 
development . This enables improved pas ture control  and 
results in an increas e of  90 E . E .  In the final year o f  
development fertiliser  application and s tock numbers are 
( 4 )  The tauhinu i s  not burnt because 
i s  a probl em on this property . 
decays wi thin two years . 
re infes tation o f  tauhinu 
Hos t  of  the tauhinu 
207 
increas ed  on the tauhinu blocks . By the end of year s ix 
breeding ewes total  2 , 064 . Breeding c ows remain c ons tant at 
40 from the end of  year three . 
The development programme i s  outl ined in table 7 . 1 while 
a detai led  s t ock re conciliation i s  given in table 7 . 2 .  
Tabl e  7 . 2  reveals  t h a t  the rate o f  increa s e  in s t ock 
numbers de clines from year one to  year four but increas e s  from 
year four to year s ix .  The ini tial  increas e i s  the re sult o f  
heavy fertiliser application in the firs t year . The later  
ris e in  s t ock nwnbers i s  due to  new land being brought int o  
product ion , Total  ewe equivalents increase  by 1 , 070 whi ch 
repres ents an average annual increas e of 8 . 2 per  cent , 
Development c o s ts are l i s t ed in table 7 , 3 , This data  
shows that the greate s t  annual cost  o c curs in year three '"hen 
land clearing conunences and the water  supply is  extended ,  
7 . 4  F inancial Evaluation 
The development programme was eva luated in a s imilar 
manner to  tl1.e deve lopment progranune s for repres entative farm 
F o  The resul ts o f  the evaluation are summari sed. in the 
following subs e c t i ons , A dditional evaluation data i s  
contained in appendix H .  
7 .  4 .  1 Bas e Year Data 
Data for the bas e  year is l i s ted  in table  7 . 4 .  The data 
in the table reflects  the small s i ze of the farm and the small 
amount of debt ( in money t erms ) at low levels  of  equity . 
Prior to development gro s s  income amounts to  $ 8 , 0 95 while 
total cash expendi ture varie s  from $5 , 244 ( E 1 0 ) to $ 6 , 27 1 ( E6 ) . 
The small  pos t  tax cash surplus es  mean that for E7 and E6 
Table 7.  1 Repres entative Farm G - The D e v e l o pmen t Pror:;ramme 
D o ve l o�nent Y e a r  
I tem Un i t s  
1 2 J Lj. 
F encinG c l F .t in s  - Go 7 0  J_) 
Capital Fertiliser  t ons J G - 2 2  2 2  
Increased  Maintenance 
Fertiliser  tons - - - 1 1 
Gors e Spraying - - X X 
Cutting and Crushing 
Tauhinu acres - - 7 5 7 -'; 
Overs owing acres  - - 7 5 75 
Cropping a c r e s  1 2 1 0  1 J -
New Grass  acres - 1 2 1 0  1 J 
Water Supply - - X -
Ewe Equivalent 
Increase  Per  
Year E . E .  20.) 
I 
1 81+ 1 0 2 1 9 L� 
.5 
J_) 
-
22 
-
-
-
-
-
-
2h0 
6 
-
-
2 2  
-
-
-
-
-
-
1 45 
'-
1\) 0 
CO 
Table 7 . 2 Repres entative Farm G - S tock Reconciliation 
Bas e 
S tock Wintered Year 1 
Breeding Ewes 1 ,  JOO 1 ,  JOO 
Ewe Hoggets  500 500 
Sheep Ewe Equivalents 1 ' 705 1 ' 7 05 
Bree<;ling Cows 1 L� 1 l.j. 
Cattle  Ewe Equivalenu 75 75 
To tal Ewe Equivalents 1 ' 7 80 1 ' 7  80 
Annual Percentage 
Increas e In Ewe 
Equivalents - N . A .  
Note  -
( 1 ) N .A .  denotes  non applicable .  
2 
1 , .500 
l.t- 79  
1 ' 880 
20 
1 05 
1 � 9 85 
1 1 . 6 
Development Year 
J 
·1 ,  600 
5 5 2  
2 , 0 1 4 
JO  
1 55 
2 , 1 6 9 
9 . 2 
4 
1 ' 625 
5 89 
2 , 066  
Lt-O 
205 
2 , 27 1 
4 . !3 
5 6 
1 ' 7 75 1 , 97 2  
5 98  65 Lt-
2 , 260 2 , 500 
L!-0 li-0 
205 205 
2 , 465 2 , 705 
8 . 7  9 . 8 
Post  
Development 
2 , 0 64 
726  
2 , 645 
40 
205 
2 , 850 
5 · 3 
----
l\) 
0 
\0 
Table 7 · 3  R epr e s entat ive F arm G - Deve l9.J?E!en t C o s t s  
I tem Development C o s t s 
1 2 3 4 5 
$ $ $ $ $ 
Bre e ding S t o ck 
Purchases  6 84 900 9 0 0  - 4 6 2  
F encing - 900 1 ' 05 0  5 25 5 25 
Capital  Fertil i s er 1 '  i 5 2  - 7 h 8  7 4 8  -
Increa.s ed  :Pla intenano=: 
F0.rtili ser - - - 353 706 
Gors e Spraying - - 20 20 1 5  
Cutting Tauhinu - - 300 300 ·-
S e eds 5 8  67  4 3 4  450 -
\{a ter  Supply - - j 1 '  1 95 - -
Increa s e d  
Suppl ementary 
Feed  - 1 50 300 300 JOO 
Total  Annual C o s t 1 ' 8 9 4  2 ,  0 "1 7  4 , 947 2 , 6 9 6  2 , 0 0 8  
Tab l e  7 . 4 R eE_Fe s er.. t at ive Farm G - Bas e  Y e a r  D a t a  
2 1 0 
-� 
6 
$ 
-
-
-
7 0 6  
7 
-
-
·-
300 
1 ' 0 1 J 
�------�--------�------------�- ------.----------.--------------.------
Equi ty Gro s s  To tal  C ash ( 1 ) Ta.xable  Taxation P o s t  Tax To tal  
E 1 0 
E9 
E8 
E7 
E6 
Note  -
Income Expendi ture Income  C ash  Surplus Debt  
$ 
8 , 0 95 
8 , 0 95 
8 , 0 95 
8 , 0 95 
8 , 0 95 
$ 
5 , 244 
5 , 4 7 2  
5 , 7 3 1  
6 , 00 1 
6 , 27 1 
$ 
3 , 04 7 
2 , 8 4 9  
2 , 6 2 7  
2 , 3 9 7  
2 , 1 6 7 
$ 
267 
2 25 
1 7 9 
1 30 
8 2  
$ 
2 , 8 5 1 
2 , 6 2 3  
2 , 3 64 
2 , 0 9 4  
1 '  8 2 4  
$ 
3 , 600 
7 '  200 
1 0 , 800 
1 4 , 400 
( 1 )  Includes t axation ,  farm working expens es  and life  
insurance . It  does  not  include pers onal drawings . The 
po s t  tax cash surplus i s  available for pers onal drawings 
and for development . 
2 1 1 
development has to be  financed by borrowed money .
( 5 ) At  
the higher equi ty l evels s ome income i s  available  for  
development . In  all  cas e s  the  amount i s  l e s s  than $ ·1 , 000 . 
Production Data 
Product ion data for the s ix years of phy s i cal  deve lopment 
i s  listed in tabl e 7 . 5 .  The t able  indica t e s that as a result  
o f  development gros s  income inc reas e s  fro� a pre-development 
level of $ 8 , 0 95 to a p o s t  devel opment l evel of $ 1 3 , 354 . This 
r epres ents  a rise  o f  $5 , 25 9 or  65 per  c ent . The ri se  is  
made up of  increas es  in  woo l  s ales ( 44% ) , sheep  s ales  ( J8% )  
and cattle  s ales  ( 1 8% ) o 
7 . 4 . 3  The Phys i cal  Deve lopment Years 
Annual financial  details  for the d e b t  fr e e  s i tuation are  
l i s ted  in  t able  7 . 6 . The tabl e shows that total  expendi ture 
exc eeds gros s  income in the firs t five years of  deve lopment .  
Thi s resul t s  in a cwnulative deficit  of $ 1 0 , 75 1  at  the end 
of  year five 1v-hi ch i s  reduced  t o  $ 9 , 789  by a cash surplus in 
y ear s ix .  Taxation i s  only a s ignificant c o s t  in  the final 
year when $ 5 28 :is paid ,  
The influence  of  farm indebtednes s  on the capital 
requirements  of  the development programn1e are i l lus trated in 
table 7 . 7 .  For all equity l evels  except E6 , pers onal 
drawings o f  $ 2 , 000 are assumed throughout development .
( 6 ) 
( 5 ) 
( 6 ) 
This s tatement assumes that $ 2 , 000 is  required  for 
pers onal drawings . 
For E6  pers onal dra-o;vings o f  $ 1 , 824 have been as sumed . 
This as swnption i s  logical  in that pers o'nal dra1vings 
above this level would create  an annual cash  defi c it 
1vhich c ould not be repaid in the absence o f  development . 
Table 7.5  Repres entative Farm G - Production Data 
I tem Base Year Year Year Year Year Year Year P o s t  
One Two Three Four Five S ix Development 
\fool Production ( lbs ) 1 7 , 72 3 1 7 , 825 1 9 ' 4 2 1  20 , 65 6 2 1 , 5 95 23 ,  7 2 1  25 , 624 27 , 8 9 7  
Wool  Sales  ( $ )  4 , 047 4 , 0 6 7  4 , 4 25 4 , 7 0 7 4 , 9 24 5 , 40 8  5 , 84 1 6 , 35 2 
Sheep Sales  ( $ )  3 , 3 89 2 , 6 9 9  3 , 1 7 0  3 , 89 9  3 , 5 6 6  3 , 848 4 , hoo 5 , 4 1 1  
Cattle Sales  ( $ )  65 9  L� 6 3 6 7 4  1 '  20 4 1 , L� 1 6 1 ' 5 4 1  1 ' 4 1 6 1 ' 5 9 1 
Gross  Income ( $ )  8 , 0 95 7 '  2 29_1 8 , 26 9 9 , 8 1 0 9 , 90 6  1 0 , 7 9 7  1 1 , 65 7  1 3 , 354 
----
1\) ...... 
1\) 
Table 7 . 6 Repres entative Farm G - F inahcial Data For  The 
Debt Free S J tuation 
2 1 3 
Development Gro s s  To tal Cash  
Expenditure 
Taxation P o s t  Tax 
C ash  
Surplus 
Cumulative 
Overdraft Year Income 
1 
2 
3 
4 
5 
6 
$ 
7 , 229  
8 , 269  
9 , 8 1 0 
9 , 906 
1 0 , 7 97 
1 1  ' 657  
$ 
8 ,  585 
1 0 , 300 
·1 4 ,  28 1  
1 2 ,  250 
1 1  , 346 
1 0 , 688  
$ 
3 
0 
0 
0 
1 1  7 
5 28 
$ 
- 1 , 356  
- 2 , 03 1  
-4 , 47 1  
- 2 , 344 
$ 
1 ' 356  
3 , 387 
7 , 858 
1 0 , 202 
1 0 , 75 1  
9 , 7 82 
549 ,� 
+ 969  
r-------------�--------�--------------�--------�----------�---------- ---� 
Notes -
( 1 ) Includes taxation ,  life  insurance  ( $ 250 ) , pers onal 
drawings ( $ 2 , 000 ) , farm working expenses  and development 
expens e s . 
Tabl e 7 . 7 Repres enta tive Farm G - The Effe c t  Of'  Farm J. ndebted_nes s  
On Overdraft R equirements  
During Development 
Equity Pers onal Drawings ( 1 ) 
During Development 
$ 
E 1 0 2 , 000 
E9 2 , 000 
E8 2 , 000 
E7 2 , 000 
E6 1 ' 824 
Notes  -
1-faximwn Overdraft 
Incurred During 
Development 
$ 
1 0 , 75 1  
1 2 , 2 1 9  
1 3 , 9 1 2  
1 5 , 683 
1 7 , 803 
Year 1-Iaximum 
Overdraft 
Interes t ( 2 ) 
$ 
5 6'-1-5 
5 733  
5 834 
5 94 1 
6 1 ' 06 8  
( 1 ) D oes n o t  include taxation or  life insurance premiums . 
These  i tems are allowed for s eparately . 
( 2 ) At  a s ix per  cent interes t rat e . 
( 3 ) Detailed financial data for the various equi ty l evels  is  
contained in appendix H .  
2 1 4 
The table indicates that another $ 7 , 000 of capital i s  
requi red t o  finance the programme at E 6  than is required at 
E1 0 .  This i n  turn results in  the maximwn i nterest charge 
being $ 423 higher at E6 . 
The Post Deve l opment S i tua t i on 
Data for the post development s i tuation is swnmarised in  
table 7 . 8 . The data reveals a significa�1.t increase at  all 
equity levels in both taxati on and post tax cash surplus . 
I ncr- - . .. s es in  the post tax cash surplus range from $ 1 , 0 8h ( E 1  0 ) 
to $ 1 , 1 45 ( E6 ) . S imilar fig�res for taxation  increases are 
$50 1  ( E 1 0 ) and $4 L�o ( E6 ) . 
? . 4 . 5 Th� Profitabili ty Of  The Development Programme 
Details of the profitability analysis ( ? ) are listed i n  
table 7 . 9  and 7 . 1 0 . The data in  table 7 . 9  indicates that the 
development progra1mne is w1.profi table if  financed entirely by 
off farm capital, as payback is no t achi eved ·Ki thin 1 9  y ears. 
For  the prograJmne to be feasible i ncome has to be diverted 
:from conswnpt i on  to farm i nvestment . This aspect i s  
illustrated by data in  table 7 . 1 0 .  For  E1 0 a maximwn 
overdra:ft of $ 1 5 , 5 9 1  is i ncurred if  all development money is 
borrmv� d .  If  $ 85 1 is diverted to  development the maximum 
overdraft incurred is  reduced to  $ 1 0 , 75 1 . This swn i s  repaid 
by the end of year 1 2  and the pos t tax cash surplus of $ 1 , 084 
achieved .  
By diverting surplus farm income
( 8 ) t o  development the 
( 7 ) The programme was evaluated under the t1vo conditions 
outlined in chapter  s ix .  
( 8 ) That i s  the pos t tax cash surplus over and above the $ 2 , 000 
required for pers anal drmvings . 
, 
Table  7. 8 
Equity 
E1 0 
E9 
E8 
E7 
E6 
Note  -
2 1 5 
Representative Farm G - P o s t  Development Sunm tary 
Increas e In 
Gros s  Income 
From Bas e Year 
$ 
5 , 25 9 
5 ,  25 9 
5 , 25 9 
5 , 25 9  
5 , 25 9  
Increase  In 
Taxation From 
Bas e Year 
$ 
5 0 1  
4 85 
468  
455  
440 
Increas e In 
Po s t  Tax Cash 
Surplus From 
Bas e Year 
$ 
1 ' 08�-
1 '  1 00 
1 ' 1 1  6 
1 ,  1 JO 
1 ,  1 4  j 
( 1 ) De tailed  post  development data for the vari ous equity 
s i tuati ons is  c ontained in appendix H .  
Table 7 . 9  Repres entative Farm G - The Profitabili ty Of  
Dev.c l opmcnt unde r 
C ondition A 
Equity Bas e Year 
P o s t  Tax ( 1 )  
Cash Surplus 
Present Value Haximum Payback 
E 1 0 
E9 
E8 
E7 
Notes  -
$ 
2 , 85 1 
2 , 6 23 
2 , 364 
2 , 094  
( 6% interes t rate ) Overdraft 
$ $ 
- 1 5 , 5 9 1  * 
- 1 5 , 7 95 * 
- 1 6 ,  047 * 
- 1 6 , 3 1 4  * 
( 1 ) Us ed  as the level of  pers onal drawings during 
development for the purpose  o f  calculating profitability 
in terms of  a present value . 
( 2 ) * Indicates  payback is  not a chieved within 1 9 years . 
Table 7 . 1 0  Repres en ta ti ve Farm G - Th�___R:ro_:f:i__tCl.h:i.lj_i:;y Of  Development Under  Condition B 
Equity Bas e Year Pre s ent Value Maximum Overdraft P ayback Increas e 
P o s t  Tax( 1 ) In P os t  
Cash  Surplus $ $ (Year ) Tax Cash 
Surplus 
A D c A B c A B c $ 
E 1 0 Reduced  from 
$ 2 , 85 1 t o  
$ 2 , 000 1 3 , 503 1 1 , 090 9 , 0 28 .1 0 , 7 5 1  1 0 , 860 1 0 , 969  1 2  1 2  1 3  1 ' 084 
E9 Reduced  from 
$ 2 , 623  t o  
$ 2 , 000 9 , 1 45 6 , 949 5 , 05 6  1 2 ,  2 20 1 2 , 342 1 2 , 47 3  1 4 1 5  1 5  1 '  1 00 
E8 Reduced  from 
$ 2 , 364 to  
$ 2 , 000 3 ,  81+6  - - 1 3 , 9 1 2  1 4 , 0 60 1 4 ' 206 1 8 * * 1 , 1 1  6 
Notes  -
. ( 1 ) U s e d  a s  t h e  l e v e l o f  p e r s ona l d r a w i n g s  during d e v e l o pm e n t  in c a l c u l a t i n g  
profitability .  
( 2 ) A = 6 . 0  per c ent intere s t . 
B = 6 . 5  per cent intere s t . 
C = 7 . 0  per cent interes t .  
( 3 ) * Indicates  payback i s  not achi eved within 1 9  �ears . 
---------- � ---�---
1\) ..... 
0\ 
2 1 7 
programne becomes feasible at  E1 0 and E9 . However the owner  
o f  the representative farm would not  undertake this develop-
ment program e becaus e the maximum overdraft i s  too  high and 
becaus e payback doe s  not occur until  year 1 4 . 
7 . 4 . 6  The Effect  Of  The Fertilis er  Subsidy 
As a result of  the subs i dy the progrrurune becomes feas ible 
for  all interes t  rat e s  at  E7 as well as  at  E8 , The payback 
period · i s reduced by three years at  E9 and four years at E 8 .  
However ,  payback i s  s till  n o t  achieved wi thin 1 0  years at  E9 . 
F or  this reason i t  i s  unlikely that the development programme 
would be implemented on this property .
( 9 ) 
Sum.-rnary 
The analys is  of  the development progra.Jmne sho,,rs that : -
( i ) carrying capacity increas es  by 1 , 070 E . E .  or 60 per  
c ent . 
( ii ) development expenditure t o tals $ 1 3 , 225 or an increas e 
of  $ 1 3 . 2  p er  E . E .  
( i i i ) gross  income rises  by $5 , 25 9  or  65 per c ent . 
( iv) the programme is  unprofitable i f  financed  entirely 
by off farm capital . 
( v) i f  development i s  financed partly by surplus farm 
income the programme i s  feas ible for equities  above 
E8 .  
( vi ) as a result of  development the pos t tax cash surplus 
increas es by $ 1 , 1 00 at E9 
( 9 ) For details  of the effec t  of the subs idy on annual 
overdraft requirements  and profitability the reader i s  
referred t o  appendix H o  
21 8 
$ 1 , 1 1 6  at E8 
$ 1 , 1 30 at  E7 
(vii ) the development progranur1e would no t be  
implemented  by the  owner of the repres entat ive 
farm . 
7 . 5  Repres entative Farm A ( 1 o ) 
On s ome Horowhenua hill c o1.mtry farms all  the product ive 
land has been c leared ,  As  a result future s ign.ifican t 
production increas e s  are only po s s ible through intensification . 
Repres entative Farm A i s  typical  o f  these  farms . ( 1 1 ) 
The total  area of  the repres entative fann i s  870 acres . 
Of  this area , 600 acres has been developed to  a carrying 
capacity o f  J . J E . E .  per acre . The remaining 270  acres i s  
covered ,,·ith nat ive bush 1vhich i s  c ons idered uneconomi c to 
develop . 
The phys ical features of  the :farm t ogether Kith detai ls  
of  pas t  deve lopment practices  are  outlined in chap ter five . 
The farm is  well  subdivided and this enables an organised  
grazing patt ern to  be adopted .  The sheep po lic·y i s  one of  
breeding with the sale  o f  both  breeding a:n.d s tore s to ck .  The 
role  o f  cattle  on the property has changed with the complet.i on 
of  land development . Cat tle  are now required  for grazing 
ahead  of the lambs rather than for 1 1 breaking in 11 land . 
C ons equently the breeding cmvs are gradually being reduced and 
w·ill eventually be replaced  by dairy bulls . 
( 1 0 ) 
( 1 1  ) 
This farm was als o included in purposive survey , 
Random survey farms numbers 8 ,  1 J and ·1 5 are o ther 
examples  o f  this class  of farm ,  
2 1 9 
Labour productivity is  high . All farm work i s  
undertaken by  the Oh'llGr hims elf .  To  achieve this use is  made 
of labour saving devic e s . Thes e include minimum shepherding 
at lambing , good acc e s s  tracks , extra yards and the s ale  of  
s tore  s t ock.  Both the farmer and his wife are hard iv orking 
people . In the pas t they have been prepared  to  sacrifice  
pers onal expenditure in order t o  develop the property . 
At the pres ent time ( 1 969/70 ) the following s to ck nwnbers 
are t0ing carried : -
1 , 500  breeding ewes 
460  ewe hoggets 
1 5  breeding cows 
1 bull . 
This repres ents a c arrying capacity of J , J  E . E .  per acre . 
7 .  6 The Development Proc�-ramme 
The bas i c  aim of the programme is to  intensify production . 
To achi eve this expenditure i s  c oncentrated mainly on dire ct ly 
productive i t ems e . g . fertiliser  and s to ck .  Expenditure on 
"non-produc tive " items i s  restri cted  to  additional sheep yards 
and to  the reneival of  fence s .  
The nwnber of  breeding ewes i s  increas e d  by 200 in the 
firs t year of development .  I n  the s e c ond , third and fourth 
years , eive nwnbers increas e  by 1 00 per year . This gives a 
to tal increase  of 500 eives in four years or an average annual  
incr ease of eight per  c ent . 
increas e by 277 . 
In  the same period e1ve hogge ts 
As sociated with the increas e in she ep numbers is a change 
in the cattle  policy . Breeding cows are phased  out at the end 
of  year two and replaced by Frie sian weaner bulls . T'ivo 
fac t ors are res ponsible for this vi z .  the changed role of  
220 
cattle  and the c ompe tition be tween breeding c ows and breeding 
ewes for late  winter and e arly spring fe ed . 
The addi tional fe ed  supplies  required for the increas ed 
s t o ck numbers is  provided for by the appli cation of  more 
ferti liser . There is  an increas e of  ten t ons of  fertili ser 
in the firs t year and five tons in the s e cond and subsequent 
year � . Thes e  increas e s  are c ons idered to  be suffi cient  to  
grow the addi tional gras s required for the extra s t ock . 
T'ivo s e t s o f  sheep yards are erected in the first two years 
of development . Thes e  extra yards enable the labour force  t o  
cope  ,,Ti t h  the higher s to ck numbers by reducing the time 
involved in s tock operations e . g . dagging , docking and drenching , 
The replacement of  internal fencing is  nece s sary for 
improved s tock control .  In the initial s tages of  development 
cheap fencing was erec ted . This enabled more fen cing to  be 
erect ed  for the same cos t and cons equent ly led to qui cker 
pas ture improvement . However this fencing i s  no l onger 
s t ockproof and has t o  be  replace d .  
The p o s t  development s ituation reveals a t o tal carrying 
capacity of 2 , 5 79  E . E .  This represents a s t ocking rat e  of  
approximate ly l+ . J  E . E .  per  acre  ,.,rhich i s  an increas e of  1 . 0 
E . E .  per acre . The owner c onsiders that this s t o cking rat e  
i s  close  to  the potential  carrying capacity of the farm .
( 1 2 ) 
The development programme i s  virtually a s eries  of  annual 
( 1 2 )  Given the pres ent  level of  t e chnology . 
221  
plans . Such a pro gramme incorporate s  a large degree  o f  
flexibility a s  the annual plans can be  readily modified  
ac cording to  the prevailing economic c onditions . A swnmary 
of the development programme is given in table 7 . 1 1  and a 
detailed  s tock reconciliation in table  7 . 1 2 . Aru1ual 
deve lopment cos ts  are outlined in tabl e 7 . 1 3 . 
A s tudy of table 7 . 1 3  reveals that the annual development 
expendi ture decreas es from year one t o  year four . Bree ding 
s to ck are purchas e d  in the firs t two years only . In  thes e 
years the nwnber o f  ewe hoggets re tained is suffic i ent  t o  meet  
the target nwnber  of breeding e1v-es . 
c o s t  i s  only $ 3 , 9 36 . 
The to tal development 
Tab l e  7_�J..l Repres en tative Farm A - The Development Prog�� 
I tem Units  
Fencing Chains 
Capi tal Fertili s e r  Tons 
S t ock yards I tem 
Ewe Equivalent  E . E .  
Increas e Per 
Year 
7 . 7  F inancial Evaluation 
7 . 7 . 1 Bas e Year Data 
D evelopment Year 
1 2 3 4-
1 0  5 5 5 
sheep sheep - -
yards yards 
232  1 22 1 37 1 4 1 
The important  data for the bas e  year s i tuation i s  given 
in table  7 . 1 4 . 
Prior to deve lopment gros s  income totals $ 9 , 7 1 3 whil e  cash 
expendi ture ( 1 3 ) varies  from $ 6 , 393  ( E 1 0 ) to  $ 8 , 4 81 ( E6 ) . As 
. 
a result the amount o f  pos t  tax income available for personal 
222  
Table  7 . 1 2  Repres entative Farm A - S tock Reconciliation 
Development Year I 
S tock 14in tered  Bas e Year P o s t  
" 1 2 3 4 Development "-..... 
Bre eding E\ve s 1 ' 500 1 , 500 1 , 700 ·1 , 800 1 ' 900 2 , 000 
Ewe Hogget s  �-60 L1. 60 5 34 605 64 ·1 677 
Sheep Ewe Equivalents  1 '  872  1 ,  87 2 2 , 1 29 2 , 2 83 2 , 402  2 , 5h3 
Bre eding C ows 1 5 .1 5 1 0  - - -
S ix Honth Friesian Bulls - - - 6 6 6 
One Year Fries ian Bulls  - - - - 6 6 
C attle  E1ve Equivalents  75  75 50 1 8  36  36  
To tal Ewe Equivalents  1 ' 9�·7 1 '  9�·7  2 , 1 7 9 2 , 3 0 1  2 , 4 38 2 , 57 9  
Annual Percentage 
Increas e In Elve 
Equivalents  - N .A 1 1 . 9 s . s 5 . 9  5 · 7 
Note  -
--
( 1 ) N ,A .  denotes  non applicable .  
Table  7 . 1 3  Representative Farm A - Deve lopment C o s ts 
Development Year 
I tem 
1 2 3 4 
$ $ $ $ 
Breeding S to ck ( Purchases ) 948 288 - -
Fencing * 500 500 600 -
Capital Fertilis er 320 1 60 1 60 1 60 
Sheep yards * 1 50 1 50 - -
To tal Annual C o s t  1 ' 9 1 8 1 , 098  7 60 1 60 
Note -
--
( 1 ) * Refers to the cost  of  mat erials only . 
Fencing and sheep yards are to be erected  by the 
o-.;vner himself .  
223  
Table  7 . 1 4 Representative Farm A - Bas e Y e a r  Data 
-
Equity Gros s  Total  C ash  ( 1 ) Taxati on P o s t  Tax 
To tal 
Inc ome Expenditure Cash Hortgage 
Surplus 
$ $ $ $ $ 
E 1 0 9 , 7 1 3  6 , 393  470  3 , 320 -
E 8 9 , 7 1 3 7 , 292  259  2 ,  4 2 1  1 lJ , 800 
E7 9 , 7 1 3 7 , 75 1 1 7 7 1 ' 962  20 , 000 
E6 9 , 7 1 3  8 ,  4 8 "1 49 1 '  232  29 , 600 
N o t e  ----
( 1 ) Does  no t include pers onal drawings . The po s t  t a x  cash  
surplus is  the swn which i s  available for pers onal 
drawings and/or development . 
drawings de clines from $ 3 , 320 at  E1 0 to  $ 1 , 232 at E6 . I f  
$ 2 , 000 i s  required for pers onal drawings then the repres entative 
farm i s  uneconomi c at  equi ties  below E7 . 
The owner has an equi ty equal to  E7 . I f  rising cos t s  
c ontinue then he mus t increas e his production in order t o  
maintain his s tandard o f  living . 
Production Data 
Produc t i on data for the four years of  physical development 
i s  l i s t ed in table 7 . 1 5 .  A s tudy of t'he data indicates  that 
gros s  income increas e s  from a pre-development level of $ 9 , 7 1 3 
t o  a pos t  development level of $ 1 2 , 887 . This  repres ents an 
increase  of $ 3 , 1 74 or 3 2  per c ent . 
The increas e in income is  largely due to  increas ed  woo l  
and sheep sales . Woo l  production increas e s  by 6 , 083 lb and 
( 1 3 ) Does  not include pers onal dra>vings . The pos t tax cash 
surplus is  available for personal drawings and 
development . 
224  
Table 7 . 1 5  Repres enta tive Farm A - Produc tion  Data 
Bas e Year Year  Year  Year  P o s t  
I tem Year O n e  Two Three  F our Deve 1opn en t 
ll o o l  Produc t i on ( lbs ) 1 9 , 350  '1 9 ,  9 60 2 2 , 067  2 3 , 3 6 7 2 4,538 25 , 433  
lv o ol Sale s  ( $ ) 4 ,  4 5 14- 4 , 5 5 1  4 , 887 5 , 327 5,596 5 , 7 98 
Sheep Sales  ( $ ) 4 , 7 30 4 , 267  5 , 035 5 , 1 9 8 5,567 6 , 34 1  
Cattle  Sale s  ( $ )  529  1 ' 0  �20 8 23 4 0 8  ho8 ? lJ-8 
Gros s Inc ome ( $ ) 9 , 7 1 3 9 , 838  10 ' 745 10 , 9 33  1 1 ,57 1  1 2 ,  887  -
wool sales  by $ 1 , 3h 4 . The · · 1 c reas e in breeding e1ves  results  
in additi onal C . F .A .  ewes and s t ore  lambs being s o ld , This in 
turn caus e s  s he ep  sales  t o  ri s e  by $ 1 , 6 1 1 .  
Cat tl e  sales  ac c ount for only $ 2 1 9 of the $ 3 , 1 74 increas e 
in gro s s  income . In  the s e c ond and third years o f  development 
cattle  s a l e s  reach their peak with the disposal o f  the breeding 
herd .  The dec line in the relative importance  of cattle  sales  
increase s  the vulnerability of  the  enterpris e  t o  falling she ep  
prices . The limi t on cat tle  nwnbers means that reduced she ep 
sales cannot  be offs et  by increased  cattle  sales . 
The Phys ica� Development Years 
Financial  data for the �our years of phys i cal development 
for E1 0 is out lined in table 7 . 1 6 . For the debt free 
s i tuation t o tal expendi ture exc e eds gro s s  income in the first  
y ear of  development only . This ini tial overdraft i s  repai d  
by the end o f  year two . By the end of year four the 
additional cash surplus incurred as a result of deve lopment 
has increas ed  to $ 2 , 642 . A s s o c iated with the annual increas e 
in the cash surplus is  increas e d  taxation.  As  a result  of  
development taxation increas e s  from $444 in year one to  $ 860 
in year four . 
2 2 5  
Table 7 . 1 6  Re.12resentative Farm A - Financial Data For The 
D e b t  Free S i tuation 
Development Gross  Total Taxation Pos t Tax Cumula t i ve 
Y ear Income C a s h( 1 )  Cash  Credi t 
Expendi ture Surplus 
$ $ $ $ $ 
1 9 , 8 3 8  9 , 870 4LJ-4 - 3 2  - 3 2  
2 1 0 , 7 45 1 0 , 220 5 2 5  5 64 5 3 2  
3 1 0 , 9 3 3  1 0 , 087 6 1 0 846 1 ' 3 7 9  
4 1 1 , 5 7 1  1 0 , 30 9  860 n ,  262  2 , 6 4 2  
Note  -
( 1 ) Includes taxation ,  life insurance ( $ 250 ) , personal 
drawings ( $ 2 , 000 ) , farm working expens es  and deve l o pment 
expens es . 
For the non debt free s i tuations development cann o t  be  
financed entirely by surplus income . Data c ontained in table 
7 . 1 7  emphas ises  thi s point . Capital has to  be borrowed and as 
the equity decreas e s  the amount  required  increas e s . For E8 
the maximum overdraft reaches a peak in  year three  of 
development 1vhile  for E7 and E 6  the capi tal requirements reach 
a peak in the final y ear of development . 
The capital requirements of the development programme are 
small in re lation t o  thooo incurred by development programmes 
analysed for other repres entative farms . C ons equently over-
draft interest  i s  not  such an important development cos t .  
7 .  7 .  1+ The P o s t  Development S i tuation 
The important data for the po s t  development s i tuation i s  
s hown in  the las t two columns of table  7 . 1 8 . These  c olunms 
indicate the extent o f  the increases  in pos t  tax cash surplus 
and taxation .  The c olumns show that the po s t  tax cash surplus 
Table 7 . 1 7  
Equi ty 
E1 0 
E8 
E7 
E6 
Notes  -
226  
Repres entative Farm A - The Effe c t  Of Farm Indebtednes s  
On Overdr;'! ft  H egu i r emen t s  
DurinG Deve lopment 
Personal 
Drawings 
During ( 1 )  
Development 
$ 
2 , 000 
2 , 000 
1 ' 962  
1 ' 232  
Haximum Overdraft  
Incurred  During 
Development 
$ 
32  
1 , 384  
2 , 953 
2 ,  7 80 
Year Maximum 
Overdraft 
Interes t ( 2 ) 
$ 
1 2 
3 83 
4 1 77 
4 1 67 
( 1 ) Does  nci t include taxation or  life insuranc e premiwns . 
Thes e  i t ems are allowed for s eparat ely . 
( 2 ) At  a s ix per c ent intere s t  rat e . 
( 3 ) De tailed  financ ial data  for the various equi ty levels  i s  
contained in  appendix I o  
Table 7 . 1 8  Repres entative Farm A - Po s t  Deve lopment S ummary 
Equity Increas e In Increas e In  Increas e In  P o s t  
Gro s s  Income Taxation From Tax Cash Surplus 
From The Bas e The Bas e  Y ear From The Bas e 
Year Year 
$ $ $ 
E 1 0 3 , 1 74 652 905 
E8 3 , 1 74 5 7 9  9 7 8  
E7 3 , 1 74 545 1 ' 0 1 2 
E6 3 , 1 74 490 1 ' 068  
Note  ---
( 1 ) De tailed po s t  deve lopment data for  the various equity 
s i tuations is c ontained in appendix I • 
227 
increas e s  vary from $ 905 at E 1 0 to $ 1 , 06 8  at E6 . S imilarly 
taxation ris es  by $6 5 2  at E1 0 and $ 490 a t  E6 . 
For E6 the increas e in the post  tax cash surplus i s  of  
particular importance .  I f  the repres entative farmer had a 
60  per cent equi ty and undertook this development progra1mne 
he would almost  double  his pers onal drawings i . e .  pers onal 
drawings would ris e  from $ 1 , 232 to $ 2 , 300 .
( 1 4 ) As  i s  s e en in 
the following s e ction the devel opment progra1mne is both 
profitable and "attractive " at  a 60 per c ent equi ty . . Lenc e 
development at this l evel of  equity is  feas ibl e .  
7 - 7 · 5  The Profi tability Of  The Deve lopment PrograJmne 
Data in table  7 . 1 9  indicates  that the development prograJmne 
is profitable  at all equity l evels  analysed .  ::<'or  the 
m1.reali stic  debt fre e s i tuation the bas e -y ear surplus doe s  no t 
have to be reduced  t o  make the programme financially :feas ibl e . 
In  o ther words a :farmer could continue to  have pers onal 
drawings o:f  $ 3 ,  320 and profi tabilit-y borro\v all the capital 
required for development . The maximum overdraft incurred  i s  
l e s s  than $3 , 000 and this mone-y is repaid b-y the end of  year 
e ight . 
The e ffect  of  reducing the bas e year surplus on the 
profitability of the programme i s  illus trated  by data for E S .  
I f  all development capital has t o  b e  borrmved a maximum 
overdraft of  approximately $ 2 , 800 i s  incurred .  This i s  repaid 
by the end of  year eight . Depending on the intere s t  rate us e d  
the pres ent  value figures range from approximately $ 8 , 000 t o  
( 1 4 )  This s tatement implie s  that i t  i s  pos s ible  t o  live on 
$ 1 , 23 2  per year . 
Tahle 1.:....:!..2. Re12res entative F:arm A - P r o fi tabi l i tz Of  The Dc�elopment Proc-ranune 
Equity I 
E1 0 I 
E8 I 
E7 I 
E6 I 
Notes -
Bas e Year 
P o s t  Tax ( 1 )  
Cash Surplus 
$ 
3 , 320 
2 , 42 1 ( 2
) 
2 ooo ( 3 ) ' 
1 , 96 2  
1 , 232 . I 
Present Value 
$ 
A D I c 
9 , 1 88 8 , 055 7 , 087 
1 0 ,  20l� 8 , 977  7 , 9 27 
1 7 , � 6 2  1 5 , 7 1 2 1 1+ ,  2L1 o  
1 0 , 687 9 , 4 1 6  8 , 3 30 
1 1  ' 420 1 0 , 080 8 , 935 
Payl>ack I Maximum Overdraft (year ) 
I $ 
A D c A D I c 
8 8 8 2 , 883 2 , 904 2 , 926  
8 8 8 2 , 82 2 2 , 845 2 , 869 
5 5 5 1 ' 38l� 1 , 39 2 1 ' 3 95 
7 8 8 2 , 7 9 2  2 , 8 1 7 2 , 842 
7 7 7 2 ,  7 � I 2 , 8 1 6 2 , 842 
( 1 ) Used  as  the level of  pers onal drawine;s durinG' development for the purpos e  o f  
calculating a pres ent value . 
( 2 ) Condition A i . e .  the pers onal drawines durine development is  equal to  the 
pre-development pos t t ax cash surplus . Hence the development prorrramme is  
financed by borrowed money . 
Increas e 
In  P o s t  
Tax Cash 
Surplus 
$ 
905 
978  
1 ' 0 1 2 
1 ' 068  
( 3 ) Condi tion B i . e .  pers onal drawinc;s durinc <lcvclopmcnt are l e s s  than the base year 
pos t tax cash surplus . This enabl es development to  be  financed  partly by surplus 
farm income . 
( 4 ) A = 6 . 0  per c ent 
B = 6 . 5  per c ent 
C = 7 . 0  per c ent 
interes t .  
interes t .  
intere s t . 
1\:) 
1\:) 
(X) 
229 
$ 1 0 , 000 . 
By reducing pers onal drawings to  $ 2 , 000 and diverting 
$42 1  per year to development the overdraft incurre d  is halved .  
This overdraft i s  repaid by the end O l  year five and the 
pres ent value figures range from $ 1 4 , 000 to $ 1 7 , 000 . 
The s ignificant point about this development programme i s  
i llus trated by the data for E6 . The data shows that at thi s  
level of  equi ty the programme can b e  financed entirely by 
borrowed capital . The end result is to  increas e the 1-. .  · s t  tax 
/ 
cash surplus from a subs istence l evel of  $ 1 , 232  to  a more 
realis tic  level of $ 2 , 300 . C apital borrowed to  finance the 
progrmmne is repaid by the end o f  year s even . 
7 . 7 . 6 The Effect  O f  The Fertiliser  Subs idy( 1 5 ) 
The fertiliser  subs idy increas es the " at trac tivenes s "  of  
the development progranm1e to  the repres en ta t i  ve farm owner . 
The payback period is  reduced  by one year ,  the pres ent value 
increas ed  by approximately $5 , 000 and the maximum overdraft 
reduced .  
The owner intends to  proc e ed  with this development 
programme . I t  i s  l ikely that even if  costs continue to  ris e 
thi s  programme will  s till  remain. profi table .  
Summary 
The main points ari s ing from the evaluation o f  the 
development programme are : 
( 1 5 ) 
( i ) carrying capaci ty increas es  by 632  E . E .  or  3 1  per c ent . 
Data  showing the effe ct  o f  the fertiliser  subsidy on 
annual overdraft requirements and profitabili ty is  
contained in appendix . I . 
( i i ) 
( iii ) 
( iv ) 
230 
development expenditure t o tals  $ 3 , 936  or an increas e 
of $6 . 2 per  E . E .  
gross  inc ome ris e s  by $3 , 1 7 4 o r  32 per cent . 
the programme can be financed  entirely by off farm 
capital for equi tie s  as low a s  E6 . 
( v ) the fert i liser  subs idy increases  the 11 attrac tivenes s  1 1  
of the development programme . 
(vi ) as a result of development the pos t tax cash surplus 
increas e s  by $ 905 at E 1 0 
$ 978  at  E8 
$ 1 , 0 1 2  at E7 
$ 1 , 068 at E6 . 
(vii ) the development progranune i s  profitable to the nation 
and. t o  the farmer .  
(viii ) the development programme wil l  be implemente� by the 
farmer . 
7 . 8  C onclus ion 
Thi s  chapter has analysed  development programme s for two 
representative farms . The study has shown that on small 
Horowhenua hill country farms , where there are only limit ed  
opporttmi ties  for increased  production ,  future development i s  
unlikely to  b e  profitable . This i s  becaus e these  farms have 
too  fe\v resources  which are insuffici ently productive in t erms 
of likely future c o s ts and prices . 
For  repres entative farm A future intens ification of  
product i on is  likely to  be  profitable . This profitability 
results from lo1v operating c o s ts , high labour productivity and 
the emphas is on directly productive inputs e . g . fertili ser  and 
23 1  
s tock .  I t  i s  likely that development of this kind will  
continue to  be  implemented  on farms of thi s type . 
CHAPTEH EIGHT 
THE POTENTIAL FOH. AND FEASIBILITY OF I NCREA S ED 
PRODUCTI ON I N  Tl iE HORO\v i iE�UA AREA 
8 . 1 Introduction 
232 
The prolitability of  future hill  com1try development has 
been analysed  in the las t  two chapters . This chapter  examines  
f·eas ible s tocking rate s  for  the Horowhenua hill  country and the 
likely po tential  for production increas es . The maj or inputs 
required to achieve the s e  increas e s  are then di s cus s ed .  The 
re sults  from the previous two chap ters are us ed in examining 
the feas ibility of increas ing production .  The chapter  
concludes with a dis cus sion on the l ikelihood of  s ignificant 
produc tion increas es  occurring in the near future and the 
alternatives to  hill country farm development . 
8 .  2 Po tential S tocking Rates on HorO\vhenua Hill C oun.try 
Data from the random survey indicates  that the average 
carrying capacity on survey farms i s  J , J  E . E .  per productive 
acre . Furthermore , the maximum s t ocking rate  does no t exce ed  
4 . 5  E o E .  per product ive acre . In relation to s tocking rates  
being achieved on other areas of  N orth I s land hill  c ountry this 
repre s ents a low level of product ion . 
Recently high s t o cking rates  have been obtained on areas 
O l  hi ll colliltry throughout the North I s land . For  example  
Inglis ( 25 ) achi eved a carrying capacity of  7 . 5  E o E o  per  acre 
on '' easy" Ruahine hill  c ountry in 1 965 . On the harder 
Wanganui hill  c ountry Tripe ( J7 ) has reached a s tocking rate of  
5 . 0  E . E o  per productive acre . A t  the demons tration farms o f  
Tango io and Waerenga-o-Kuri
( 1 ) s to cking rates  of 6 . 0  E . E o  per  
acre  and 7 . 5  E . E .  per acre respec tively have been obtained . 
233  
F inally , on  a farm s cale , a carrying c apacity of five owes per  
acre has been achi eved at  the Te Awa hil l  colli""l try research 
s tat ion .  
The above evidence sugges ts that high s t ocking rat es are 
obtainable  on many N orth I sland hill  c ountry farms . lvi th 
respec t  to the Horowhenua hill  cow1.try , many survey farmers 
c onsider  that s ignificant production inc reas es  are pos s ible . 
D e spite  this , i t  carm.o t be firmly s tate d  that high s ta cking 
rates  are either generally pos s ible or readily obtainable  on 
this area of hill  c ountry . Two important factors hinder the 
a t tainment of high s t a cking rates  viz .  an unfo.vourable 
environment and a lack of knmv-ledge . 
The physical environment of the Horowhenua hill country 
i s  no t conduc ive t o  high s t ocking rate s .  The hill s o ils  are 
of  low natural ferti lity and the pas ture growing s eas on i s  
nei ther long nor c ontinuous . During the winter growth ceases  
for  three  to  four months while  in the swmner droughts influ-
ence  the s tock numbers it  is poss ible t o  carry . The 
prevalence of low producting native gra s s es means that the 
feed value of autumn saved pas ture is s eriously affected  by 
fro s ts . This in turn affects the number  of s t ock i t  i s  
p os s ible t o  winter .  
The problem o f  low producing pas tures is  accentuated  on 
s ome prop erties by the topography . S i t ing of fences  i s  
difficult so  that subdivis ion i s  generally inadequate  for good 
pas ture management .  Grazing pres sure i s  not sufficient t o  
( 1 ) For  a des crip t i on o f  the s e  farms and a report on s tocking 
rat e  trials the reader i s  referred to reference ( 38 ) . 
2J4 
e ither improve the pas tures or  prevent reversi on ,  
C ompounding the effec t  o f  thes e  phys ical fac tors are poor 
management techniques . The s e  include inadequate  pas ture 
utilisation ,  which on many farms leads to reduce d  pas ture 
production and revers ion .  O n  these  farms fert i l i s er 
applications are was ted becaus e increas ed  pas ture growth i s  
not uti l i s ed .  I n  general the results  of the T e  Awa hill  
country res earch s tation are not  being appli ed t o  the hill 
country farms .
( 2 ) Thes e  fac tors make i t  difficult to  
accurately forecas t potential  s tocking rates for the 
Horowhenua hill c ountry . 1vhile  the res tricting  c limatic  
factors cannot be altered ,  it  could be poss ible to  alter  
management techniques by an intens ive advisory s e rvice . 
D e spite  the dif'ficultie s  involved a number  o f  e s t imates  
have been made of feas ible s tocking rat es for the area , Field 
officers o f  the Land and Survey department s tate  that a s tocking 
rate of 1 0  E . E .  per acre i s  pos sible , This s t ocking rate  i s  
not ,  however ,  cons idered by the writer to  b e  a feas ible level 
of production .
( J ) 
During ( J ) has s tated  that the potential o f  the hill  
country s heep farms i s  between four and s ix e;v-e e quivalents in 
( 2 ) There are exceptions to thi s general s tatement e , g , cas e 
farm A ,  
( J ) Mitchell (Grass lands ) has s tated  that a ryegras s pas ture 
producing 1 8 , 000-20 , 000 lbs of dry matter  per  acre has a 
pot ential of 1 0  E . E .  if  two-thirds of the pas ture i s  
uti l is ed by the animals ,  The highest  pas ture production 
recorded on lo>vland farms in the Hormvhenua di s tri c t  i s  
1 2 , 000  lb of  dry matter  per acre , I t  i s  highly 
improbable that this l evel  of production i s  being or c ould 
be  achi eved on the hill  c ountry , Hence to support 1 0  
E . E Q  per acre at leas t 6 , 000 lbs o f  dry mat t er per acre 
has t o  be purchas ed . This 1-vould be unprofitable  • . 
235 
the high rainfall areas .
( 4 ) In  the low rainfall areas 
expos ed  to c oas tal  winds the potential s tocking rate i s  
likely t o  be les s . 
Es timates o f  potential s t o cking rates made by survey 
farmers varied according to locali ty . In the higher rainfalJ_ 
areas e . g . Shannon and the O taki Gorge , estimates  1vere as high 
as 6 E . E .  per acre . On the drier more exposed  coas tal  areas 
of Packakariki , 1-laikanae and Te Horo the highest  e s t imat e  was 
5 E . E .  per acre . 
From his O\vTI obs ervations the author considers that  a 
carrying capacity of 4 . 5 E . E .  per acre is po s s ible on all 
Hormv-henua hi ll c ountry under the pres ent level of technology . 
In the higher rainfall areas s tocking rates of 5 . 5  E . E .  are 
feas ible . 
8 .  2 .  1 Po tential  Increases  in S t ock Nwnbers 
The potential production increase  on t.he Horowhenua hill 
country lvas de t ermined in terms of e1ve equivalents . I n  order 
to  do this two asswnptions were made . These  were : -
( i ) land us e d.ata from the random survey farms applies  to  
all hill  country farms . 
( i i ) s t o cking rates of  5 . 5 E . E . per acre are feas ible on 
JO per cent of the hill c ountry area . 
The to tal area of the hill c ountry is  approximately 70 , 000 
acres . By applying land us e data  from Table 4 . 2  this area is  
s een to  cons i s t  o f : -
54 , 600 acres of productive land 
( 4 )  This refers to  hill country areas with an annual rainfall 
of greater than 50 inches . 
236 
7 , 700 acres of  potentially productive land 
7 , 700 acres  of was te  land . 
The pres ent carrying capacity of  the produc tive lm�d i s  
3 . 3 E . E .  per acre . Hence the total number of  e\ve equivalents 
being farmed at pres ent 
= 54 , 600 acres x 3 . 3  E . E . per acre = 1 80 , 1 80 E . E o  
By intens ifying production on the exi s ting productive 
land the potential production increas e would be  
plus 
54 , 600 X 2Q X 1 . 2 E . E . 
1 00 
54- , 600 X 30 X 2 .  2 E . E . 
1 00 
,. 8 1 , 900 E . E .  
I f  the po tentiall.y productive land \vas cleared and 
developed the to tal increas e would equal 
8 1 , 900 + ( 7 ,  700 X 70 X l� , 5 ) + ( 7 ,  700 X JO X 5 , 5 ) 
1 00 1 00 
= 8 ·1 , 900 + 36 , 9 60 
a 1 1 8 , 860 . 
C ompared to  the pre s ent carrying capac i ty of  1 80 , 1 80 E . E .  
this repres ents a pot ential increas e of 65 . 9  per  c ent . 
8 . 2 . 2 Inputs Required  t o  Achieve Produc tion Increas es  
As suming that hill  country farmers had an incentive to  
develop ,  then four major  inputs would be required t o  achi eve 
the potential  product i on outlined in the previous s e c tion .  
The s e  inputs are capital , improved labour product ivity , improved 
managerial skill and an intensive advis ory s ervice . Thes e  
inputs are briefly dis cus s ed  in the follow"ing subs ections : -
( i ) Off farm capital 
237 
In the pas t increas es  in s tock nwnbers , and therefore 
production ,  has largely been the resul t of reinves tment o f  
farm income .
( S ) Today declining farm income means that the 
greater proportion of capital  has to  c ome from s ources  out s ide 
the farming s e c t or .  
The amount of  capi tal required wi ll  vary •vi th  the type  of  
development and the individual farm s i tuation . However ,  i t  i s  
probable  that the amoru1t required will b e  the greate s t  for low 
equity and small s i ze farms and for development involving land 
clearing . This point can be illus trated  by referring t o  the 
capital requirement s  of deve lopment programmes devised for 
repres entative farms . 
An examination . of thes e programmes indicates that for 
repres entative farm F
( 6 ) approximate ly $ 1 0 , 000 of addit i onal 
capital i s  required  for development . A similar amount i s  
also  required for repre s entative farm G • 
( 7 ) For  the adequate 
" income farm" \vhere development i s  res tricted  to  intens i fi c a-
tion $ 3 , 000 of capital input is  required ,  
At  the pres ent time i t  i s  unlikely that farmers would be 
prepared to borrmv ]_arge smns of money . 
( 8 ) Nor is i t  l ikely 
that the amount of  development capital required by s ome 
farmers would be forthcoming from l ending ins titutions .
( 9 ) 
( 5 ) Ross  ( 39 ) has s tated that " examination of  changes in farm 
income and output over the las t 45 years shows that 
inves tment and output have been c los ely associated  and tlat 
inves tment i s  largely affected  by the l evel of  farmers ' 
incomes . "  
( 6 ) A low equity undeveloped hill  c ountry unit . 
( 7 ) An example o f  a small Horowhenua hill c ountry property . 
( 8 ) S e e  s ection 8 . 4  
238  
Hence  additional credit facilities  may be required before any 
1vorth1vhile development c ould or  would be Ul'ldertaken . 
( i i ) Imn:J:'oved labour produc tivity 
At  the pres ent t ime there is  one labour w1.i t per 1 ,  1 73 
E . E .  On thi s bas is  another 1 0 1 permanent labour units  1vill  
be  required to  handle the potential increas e of 1 1 8 , 860 E . E .  
Such an increas e would be w1.likely t o  o ccur . R e s tric ting 
fac tors are the lack of  sui table  labour and the inability and 
unwillingness  of  farmers to  pay wages which would attract 
labour from the indus trial areas . 
Hence labour pro duc ti  vi ty ,,ril l  have to  be improved .  
C ons i deration will have t o  be given to  one or  more of  the 
following as pects : .. ( 1 0
) 
( a ) i n c r e a s inG the numb e r  of  s t ock per  labour 1-mi t  and 
accepting a s lightly l ower s tock performance . 
( b ) making more us e of ccntract labour . 
( c ) making us e of  labour saving device s . 
( d ) better work organisation and working in with o ther 
farmers . 
( e ) cha..YJ.ge to  a l e s s  labour intensive sheep  e . g . 
P erendale .  
( f ) subs tituting capital for labour . 
Thes e  changes have already been implemented  on s ome farms 
( 9 )  Factors which are l ikely t o  restri c t  the amount of  
development finance l ent by l ending ins t ituti ons are lmv 
e quities , l ow resource productivity and dec lining income . 
C ampbell ( �-0 ) has s tated that the willingnes s  and ability 
o f  bankers and o ther lenders t o  provide capital i s  
substantially influenced  by the amount and trend of  the 
farm income . 
( 1 0 ) These  aspects  are dis cussed  in s ome detail in ( 4 1 ) .  
239 
as ris ing c o s t s  force hil l  country farmers to improve their  
effic iency . 
( i i i ) I mpr ove d man ace r i a l  ski ll  
This  i s  required for both produ.ction and finan c i a l  
control .  As  s to ck nrunbors rise  management becomes of  
increas ing importance .  F e ed supplies  mus t be  utili s ed  to  the 
bes t  advantage s o  that they meet  the s tock requirements 
throughout the y ear .  
F inancial c ontrol o f  r e.::. 0urces  mus t als o be  improved .  
Farmers are generally no t c o s t  cons cious until  a time of 
financial  s tres s . Today faTin income is  extremely s ens i tive 
to changes in prices  and c o s ts . If  incomes are to  be  main-
tained then :farmers mus t improve the way in which they manage 
their  re s ources . Resource s  will have to  be directed to  where 
their  marginal produc tivity is the greates t . ( 1 1 ) 
In  order to  do this , managers 1vill  have t o  )TID.ke more us e 
of s e rvi ces  which speciali s e  in plaru.1.ing and budget i:Og . .  
Succe s s  in increas ing production will  depend upon decis ions 
being  t e s ted  for their financial feasibility before they are 
implemented . D e c i s ions implemented  1vi thout t e s ting are 
likely to be  e conomically i rrational , to  lead to inefficiency 
and hence lo1v income . 
( iv ) An int ensive advis ory s ervi c e  
Such an advisory s ervic e  will be  required . ·t o  give advice  
on planning, budgeting and evaluation as  1vell  as  day t o  day 
management advi c e . In order to  allo1v farm managers t o  make 
( 1 1 ) For  the Horowhenua hil l  country this is l ikely t o  mean 
tha t  on mos t farms res ources  will  have t o  b e  direct ed  to  
intens ificati on rather than to land development . 
240 
judgements and decisions they must  receive the be s t  pos s ible 
information . Thus there is  a need  to keep the farm manager 
abreas t of  new te chnology and i deas . 
For this reas on advis ors trained and experienced  in giving 
management and financial advi c e  are required . The s e  advi sors 
in addition to working with the farmer would als o be required 
to maintain c lo s e  liaison with accountants and lending 
ins titutions . They may als o  be  required to supervis e  the 
implementation of the actuaJ ..:.evelopment plan . ( 1 2 ) 
Becaus e of  the intens ive nature of this s ort of  advisory 
s ervice  there  is  a limit to the number of  farmers one advis or 
c ould s ervi c e . Hence i t  is  po s s ible  that in order t o  provide 
this intens ive s ervice , the Department of Agri culture would 
require nt least  an additional tl,ro advis ors in the area . ( 1 J ) 
8 .  J The F e a s i b i l i ty of  Incyeas ine; Production 
The reac tion o f  H o r owhcnua hi l l  country farmers to  a 
continuing c o s t  pri c e  spiral will  vary according t o  their 
individual s i tuations . Influencing factors will  be  the l evel 
of debt , s i ze of'  farm, pers onal income requirements and the 
level of fixed costs . For many farmers , increas ing production 
may be the only way of  maintaining a viable unit . 
This s tudy has analys ed the feasibility of incre as ing 
production on three repres entative farms . The result s  of  
( 1 2 ) I t  is  c onceivable that in  the future becaus e o f  the 
s carcity of capital , farmers \vi.ll have to accept  s ome form 
of financial c ontrol in order to  ensure that profi table 
product i on increas es occur . This would in e ffect  be an 
extension  of the Marginal Lands type of loan in which the 
recipient farmer is placed  on a budget for a number ofyea.rs. 
( 1 3 ) This s tatement implies that the Department of  Agriculture 
is  bes t equipped  to  provide such a s ervice . 
the s e  analys es  were outlined in chapters 6 and 7 .  The 
implications  o:f  the r e s ults  are now examined .  
In  dis cussing the results  of  the analyse s  i t  mus t b e  
r emembered that : -
( i ) the progranunes analys ed were tho s e  which  would be  
implemented  by the representative farmers . 
( ii ) 
( iii ) 
( 1 h )  no  allowance was made for ris ing input c o s t s .  
no  allo,vance  could be  made f or  changes in te chnology 
or  government poli cy .  
( iv ) analyses  of  ex ante programmes involve a large degree  
o f' uncertainty . 
The analys es  showed that variation in res ourc e s truc ture 
and in the method of'  financing deve lopment influence s  the 
feas ibility o f' development , For  indivi dual farm s i tuations 
nwnerous o ther factors  will  als o  be o:f importance .  Th.es e  
fac tors include the degree  o f'  mana e;erial skill , s tock  
per:formance  levels  and the rate  of'  deve lOilment . Hence  i t  i s  
no t pos s ible  to  categorically s tate that a prograrrune 
unprofi table for the repres entative farm will  also  be  
unprofi table  for  s imilar farms . This s tatement can only be  
made  if'  the principles  of'  the development plan are re-budgeted  
and re-evaluated for  the  individual farm s i tuation.  
C ons equently only broad  s tatements  can be  made about the 
implications of' the ex ante  analys es . 
8 . 3 . 1 Undeveloped Hil l  C ountry U�its  
( 1 4 ) Since the commencement of'  this s tudy farm input c o s t s  
have c ontinued  t o  ris e .  Be tlveen January 1 96 9  and 
January 1 970 c o s t s  ros e by three per  c ent ( 36 ) . 
For  mos t  of  these  farms a ma j or factor res tricting 
development is the inability to eoncrate surplus income for 
development . A large amorn'lt of  finance  has t o  be borrowed if  
development is  to be  undertaken . The analys es have shown that 
for the representative farm this is unprofi tabl e .  
The lack of " ploughbaok" ( 1 5 ) s terns f'rom borrow·ing done 
prior to the wool  s lwnp and c o st  price  spiral . \<!hen viewed 
in the l ight of today ' s  pri c e s  and costs , thes e farmers have 
s imply overcom itted  thems e lves . At  the time o f  bor1 vwing 
their polic ies  may have been perfec tly s ound . The subs equent 
fall in prices  and rise in c o s ts has altered this and affected  
their future . This applies  especially where  the farmer has 
borrowed to the limit o:f his farm ' s capacity or to the l imit 
of  his willingness  to  borrow . Under these circumstances  
future development 1vill  have t o  cons i s t  of improved s to ck 
performance . This 1vill  be a s lmv process  and i s  unlikely to  
be  suffici ent to  keep pace with the pre s ent inflationary 
l eve l .  Therefore the outlook for the heavily indebted 
undeveloped  Horowhenua hill  c ountry farmer is  bleak . 
For  the undeveloped hil l  c ountry farmer 1vho has s ome 
" ploughback" the emphasi s  mus t  be on intensifi c ati on .  
Expenditure mus t b e  c oncentrated  on the direc t ly productive 
items of s to ck and fertilis e r .  
8 . J . 2 The Small Hill C ountry Property 
-
Analys is of  the development programme for the repres enta-
tive farm has indicated that the programme is  unlikely to  be  
( 1 5 ) P loughback can be defined  as the amount o f  post  tax 
inc ome availab]_e for re-inves tment in the farm .  
profitable . 
2 L�J  
This programme did  however ,  include expendi ture 
on indire c t ly productive items e . g . water  supply , as well as  
the purchas e  of breeding c ows . I t  is  poss ible that for 
s imilar farms if finance  'vas c oncentrated  on intens ification 
profi table produ ction increas es  could be obtained .  
Despit e  this the bas ic  problem remains . - That is  that the 
small  Horowhenua hill  country farm has too few res ources 
sufficiently productive in terms of todays prices  and cos ts . 
Thes e  farms are unlikely to -;_, ..,. able to c ontinue to make an 
acceptable s tandard o f  living w-:Lder the anticipated  cost  pric e  
regime . Changes in farm s truc ture mus t take place , Thes e 
changes may involve amalgamation and cons equently a reduction 
in the nwnber  of small  farmers . 
" A d equa t e  I n c ome " Farms 
( 1 6 ) 
Thes e  farms are at  presBnt retu1�ing an adequate  income t o  
the people engaged in farming them . The feas ibility of future 
development on thes e farms was analys ed us ing repres entative 
farm F as an example . The analysis  revealed that under the 
as swnptions made future intens ification would be bo th 
profitable and worthwhil e .  More importantly , i t  indicated 
that even at  lo\v equities  borrmving for deve lopment is  s till  
feas ible . 
However the continuation o f  rising c o sts  and low product 
pri c es could alter this s ituation . The amount available for 
ploughback will decreas e and the desire t o  borrmv wil l  
( 1 6 ) Thes e  farms include large income earning farms e . g . 
random survey farms 1 3 , 1 4 and 1 5  and large family units  
e . g . random survey farms 5 and 1 9 . 
244 
diminish .
( 1 7 ) Thes e  factors will in turn affect  the total  
product i on increas e achieved ,  
8 . 4  The L i ke l i ho o d  oi' P o t en t i a l  Produc tion Increases  Being 
A chi eved 
The previous subsection has indicated that for s ome 
farmers pro fitable production increas es  are s till  pos s ible . 
Despite this , the author believes that s ign.ificant production 
increas e s  are ID1.likely to  o c cur becaus e of a general lack of  
c onfidence  in the future of � , � ll coill1. try farming .  
( 
1 8 ) This 
lack of  c onfidence means that farmers are ID1.likely to  borrow 
freely even though development capital may be  available .  
S tewart ( 4 2 ) emphas ised  this point \vhen he s tated  
1 1  • • • • the availability of  loan fill1.ds do es not necess al,i ly 
mean that they will  be us ed ,  Even where imaginat ive 
lending policies  bas ed on potential production increas es  
are in  operation ,  confidence  in  the ��ture i s  the 
nec e s sary s timulus . This  is especially s o  lvhere the 
pres ent equity ratios  are being squeezed  • • • •  " 
Hence i t  is  ID1.likely that increas ed  inc entives , such as 
the fertiliser subs i dy or increased  loan funds will  lead t o  
subs tantial production increas es  on this area of  hill  c oill1.try . 
The maj ority of  hill c ountry farmers '"i ll re frain from 
( 1 7 ) The wider the gap between the required inves tment and the 
farmers ploughback the les s propens i ty there '"ill  be to  
borro'" · This applies  espe cially in s i tuations where  
there is  a large degree  of  uncertainty about the future . 
( 1 8 ) This lack of c onfidence  s t ems from s everal factors . 
Thes e include s tatic  prices  and ris ing cos t s  and hence  
declining ploughback , the inability of  the heavily 
commi tted  farmer to  borrow capital , low resourc e  produc­
tivity , low woo l  pric e s  and the dependence on wool  for 
50 per c ent of  the income and the uncertainty regarding 
the e ffect  of Bri tain j oining the E . E . C . 
developing nntil  their c onfidence in the future of  hill  
conntry farming has been res tored .  This  will  probably require  
improved prices  and the control of' the cost  pric e  spiral and 
hence government action .  
8 . 5  A l ternatives  To Development 
If' production increas e s  are not feasible farmers mus t look 
at o ther methods o f' maintaining viable nnits . A t  the moment 
Horowhenua hill conntry farmers are reacting to the likelihood 
of continuing declining incomes in one of two ways viz .  by 
working off their  farms and by attempting to s e ll  their  t·arms . 
S ince  the completion of  the surveys , five farmers have 
accepted  wage employment . 1v or  king off t h e  farm enables  
living s tandards to  be maintained but leads t o  de c l ining 
productivity due to less  effic i ent s tock and pas ture 
management .  This i s  frequently accompanied by a fall  in the 
capital value of the farm as  pas ture production de clines and 
reversion increas e s . As  a r esult thi s measure c an only be 
regarded as  a t emporary adjus tment and not as a long term 
s olution . 
For  s ome farmers the mos t  appropriate adjus tment i s  to  
leave farming , This adjus tment is  sui table for farmers "\vho 
have the skills and the capital  required to obtain an 
acceptable  income in other indus tries . The s t ronge s t  pres sure 
to leave farming is on the small  s i ze and heavily committed  
farmer .  
Recently one hill  country uni t has been s o ld and eight 
o ther farms advertis ed  for s al e ,  A t  the moment , however ,  
thes e farmers are experiencing difficulties  in s elling their  
f'arms . ( 1 9 ) This applies particularly to  the owners of'  
246 
m1.developed hi ll country properti es . I t  appears that the s e  
farms are "unattractive " to  people wishing t o  inves t in 
farming . I f' thes e farmers are unable to  s e l l , then their 
s t an dard of living and the  value of their as s e ts mus t 
inevitably dec line . 
The inabil i ty of  farmers t o  s ell  their properties  will 
reduce  the rapidity and the extent t o  which amal.camation 
oc curs . 
I t  appears that wi thin the Horowhenua hill  countr y region 
amalgamation i s  likely t o  be res tric ted to a fe1v large farms . 
The s e  farms have the abil i ty t o  finance the purchas e of 
addi t ional land and are able  to  generate capi tal for future 
deve lopment . For  o ther hill c ountry farms amalgamation i s  o f  
doubtful value . The addi tion o f  undeveloped blocks t o  low 
income properties  would reduce equities t o  very low l evels and 
virtually eliminate the ability t o  borrow . The problem o f' 
low res ource productivity would be enhanced ,  debt s ervicing 
charges increas ed  and there  would be little  p o s t  tax income 
available for development .  Such properties would be 
extremely vulnerable t o  future pri c e  falls and/or c o s t  
increas es . 
8 . 6 C onc lus ion 
This s tudy has indicated that on s ome Horowhenua hill 
country farms profitable production increases  are s ti ll  
( 1 9 ) For  example  one farmer has had his farm advertised  for 
sale  for two years . During this perio d  he has not 
r e c e ived an offer for i t . Ano ther farmer 'vho 'vas unable  
to  sell  hi s farm at tempted to  s ell i t  in blocks , but 
again could not s e ll . In general the asking prices  are 
higher ( $ 5  tq $ 1 5 per acre ) than the government 
valuation . 
pos s ibl e , but on o thers future development is infeas ible . 
1vhere future development i s  unprofitable and amalgamation 
impos s ibl e ,  adjus tment to  a c ontinuing situation of' s tatic  
prices  and rising co sts wi ll be  difficult .
( 2o )  Failure to  
adjus t 1vi l l  lead t o  de clining farm equities and the emergence 
of a low income problem .
( 2 l )  Under these condit ions , and 
becaus e phys ical fac tors re s trict  land use to  e i ther pas toral 
farming or fore s try,  the que s t ion and policy aspect s  of 
affores tation need  careful c vnsideration .  I t  i s  conceivable  
that wi thin the near future fores try could be  at  l eas t as 
profitable  as sheep farming on many Horowhenua hil l  country 
sheep farms . 
( 20 ) This  same problem is  als o oc curring on o ther North I s land 
hill country areas e . g .  inland Taranaki . S ee The 
Dominion N ews paper,  March 5 ,  1 97 1 , p . 5 .  
( 2 1 )  This problem is  already becoming apparent on the 
Horowhenua hi ll country , In 1 9 69/70 three  of the s ix 
cas e farms had net income s  of l e s s  than $ 2 , 000 and three 
net incomes of between $ 2 , 000 and $ 3 , 000 . 
Calving perc entage 
Cas t-for-age 
C attle  c las s es 
calves 
,,reaners  
yearlings 
heifers 
cull c ows 
s te ers 
bullocks 
C rutching 
Culling 
Dipping 
Docking 
Drenching 
Ewe equivalent 
Fecundity 
Flushing 
248 
GLOSSARY OF TEill S 
i s  defined as the nwnber  o f  calves 
1veancd divided by the nwnber of 
breeding cows mated .  
the culling of anim<lls o f  a certain 
age e . g . cas t for age five year ewe s . 
called calves from birth until  
lveaning , 
calves after weaning and w.1.til  1 2  
months of age . 
one year olds . 
us ed  t o  di s tinguish young female  s tock 
from old  female s t ock,  e . g . heifer  
calve s , weaner heifers , yearling 
heifers , two year heifers , three year 
heifers , four year cows , five year 
cows , e t c . 
c ows removed from the bre eding herd at  
any point in  time , 
cas trated  male s tock . 
cas trated  male  s t ock older than three  
years . 
the removal of the bel ly and/or tail  
ivool  of  a sheep . 
the removal of w.1.wanted s to ck from the 
breeding herd or flo ck .  
the removal of  external paras ite s  
e ither by spraying ( spray dip ) or  by 
to tal inuners i on ( plunge dip ) . 
the removal of  the tail and , in the 
cas e of males , the tes tes  of lambs . 
the dos ing of  animals t o  kill  internal 
paras it e s . 
i s  the ratio of the annual feed require­
ments of an animal to  the annual feed  
requirements of  a 1 20 lb Romney 
breeding ewe . 
means fertility or  the ability t o  
reproduce .  
i s  the practice  of  increas ing the 
feed  intake of. breeding ei"les  ( usually 
through s aved pasture ) immediately 
before and during the mat ing period .  
The aim i s  t o  s timulat e  the ovarie s  
t o  ripen and shed more eggs . 
Lambing perc entage 
Mixed aged s t ock 
:f\1obs tacking 
S e t  s t o cking 
Shearing 
S heep c las s es 
lambs 
hoggets  
tlvo too ths 
four too ths 
s ix  too ths 
rams 
wethers 
S tore s to ck 
Tupping 
iv e aning 
2Lt-9 
the nwnber of lambs do cked divided by 
the nw1ilier o f  ewe s mated .  
s t o ck of  various age groups ; 
all  s t ock are c onfined to  one mob and 
moved from paddock to paddock as the 
paddocks are gra zed out . 
the prac tice  o f  c onfining s t ock t o  
certain paddocks . 
the removal o f  the wool  from sheep . 
bo1 ··� in the s pring and remain as  such 
until  February/Harch of  the fo l l owing 
year . 
lambs older than s ix months but ]_e s s  
than one year . 
hoggets  over one year of  age . 
two years o f  age . 
three  years of  age 
entire  male s heep  
cas trated  l amb s , hogge ts , two t o o ths 
e t c . 
s t o ck in go od  c ondition ,  but no t f a t . 
the mating o f  rwns and breeding ewes . 
the s eparation of the lambs and e1ve s .  
A 1  
APPEN DIX A 
LEITER SENT TO SURVEY FARNERS 
Dear Sir ,  
You  may or may no t have heard of the propos ed hi ll c ountry s.t�.u�\ 
w·hich I am about to  undertake for a M .Ag . S c .  degree .  
The purpose  of  the study is  to : 
1 .  Obtain up-to-date information on the hill  c omLtry 
sheep  farming situCJ + i . on and t o  define barriers to 
increas ed  production .  
2 .  To determine the profitability of future hill 
c ountry deve lopment . 
The survey is  be ing spons ored by the Department of 
Agri culture and wi ll involve visit s  to  a nwnber  of farmers in 
this area . These  vis i t s  will involve a look over the 
property and examination of phys i cal and financial records . 
Your farm has be en s elected  in the survey and I would be 
grateful if I could l ook over your property and dis cuss 
management practices  with you . 
Would you pleas e give this matter s ome thought during the 
next few w·eeks . I will  be telephoning you later t o  make 
suitable arrangements .  
Yours faithfully , 
(R . E . Halford ) 
Farm Advisory O fficer ,  Levin . 
APPENDIX B 
DREEDING COli REC O i\-CI LIATI ON PROGRAH 
This appendix briefly outlines the breeding cow 
reconciliation �rogram devi s ed by the author . ( 1 ) In  
B 1  
cons tructing the program a s tock ori ented approach was us ed .  
The program requires that end o f  year tarr;et breeding c o 1·.r 
numbers be specified for (n t 2 ) years of  devel opment . 
cmvs 
The analys i s  is res tric ted to s i tuations where breeding 
firs t calve as three  y ear olds .
( 2 ) 
Given a buying policy and a replacement policy the 
program de termines  annual income , expenditure , lives tock 
s tandard value change and taxable income values .  This 
information is  both printed  on paper and punched on cards . 
The punched cards are available for incorporation into 
Gardner 1 s sheep development evaluation program . 
A sub program derives s imilar inf'ormation
( J ) for a 
s tatic  pre and pos t deve lopment program . The information 
from this program is required in evaluating the profitability 
of a development programme using the pres ent value measure . 
Various buying and s elling policies  can be practis ed .  
F or  example all weaner heifers can be s old and mixed aged cows 
( 1 ) Full details are available from the author .  
( 2 ) This res triction is  a reflection of  the fac t  that  
breeding cows firs t calve as  three year olds on  the 
Horowhenua Hill country . I t  would however be pos s ible 
to modify the program to allow heifers to calve as  two 
year olds . 
( J ) The one exception is  that there i s  no figure calculated 
for the change in the livestock s tandard value . Thi s  is  
because the opening and closing lives tock numbers are 
the s ame . 
B2  
purchas e d  as  replacements . ( 4 ) The number of  repJ_acement 
breeding s t ock required in any one year is initially . 
calculat ed  in t erms of weaner  heifers . This figure is  l ater  
adjus te d  according to  the various replacement policies  being 
followed . For example if three  year heifers are purchas e d  
for replacements then the nrunber o f  replacements in terms of 
'veaner  heifers is  reduced  by the deaths and cullings ( if  any ) 
allowed for in the weaners in years one and t'vo . 
i f  breeding c ows are use d  to  ' break in ' land then s to ck 
performance  will often deteriorate . The program recognis es 
this t o  s ome extent by allowing the calving percentage to  be  
changed during development . Stock los s es however cannot  be  
altered .  Nor can the culling rates  for the various c las s e s  
of s tock . 
The main details  of the program are srunma.ri s ed  in the 
flow chart on the following pages . 
( 4 ) There are three  weaner heifer policies . All  'veaners 
can be sold ,  replacements only retained or  all heifers 
retained . S imilarly there are four buying policies  viz .  
weaner  or ris ing one year heifers can b e  bought , two 
year heifers c an be bought , three  year heifers bought or 
mixed aged cows bought . 
Flow· Diagram 
Re: \":\"C) ::s:. � � \i\" 
\:)�� 
BJ  
C. t:\\...C..V.\-�g N\A��e,c;a._ 0� 
C...\!\\...\)� � VJ�\":\NG:t) 
�\l '\ :t� �\)t).tttt)lJ� 
�9-..�t)'l:\lG �\OC..� --
t>E\E��"'.N� NO 0 � 
wE�"-'a� � e:t.Fe'R.� \o 
�E: ���. �a\... �\.1.��� 
SEL\.... ��"�W � 
����O�\JG c.cw� 
V>�'l:.l\TT El-.1\J 
��E:EO:I:NG 
c...� '-C.. V.. \-pt\\::: � v.w..... � �'-\':: � 
�� � 'V-u.�c..�\-vse� 
<:...�\-C..U\...�E C...'A�N(.,� :t.'N \....:I:.\J��\C<..� 
B4 
��"-\��'0...� \J�\...V.� , �""'��� �(C�� 
�w � N �' ::c"-1 c..c ""'\;: 
(.:\�\J� 
C....C\ '-c...v.. '-�""T:!.. (:)� ':::. 
��� 7v.'\J(.\o\\E_\) 
R\E Q..\l.:t.a..� � 
APPENDIX  C 
A METHOD  OF REDUCING TriE BASE  Y EA H  POST  TAX CASH 
S UR P LU S  If\ GA.RDI\ ER 1 S PROGRAH 
Gardner 1 s  program calculates the profi tability of  
C 1  
development us ing the pres ent value measure . In so  doing the 
bas e  year pos t tax cash surplus is  us ed  as the level of 
personal drawings throughout developmen t .  This sum is  us ed  
irrespective of the figure allowed for  (by the adviser  o r  
farmer ) in the phys ical development plan .  ( 1 ) Consequ . .. L tly 
i t  as swne s that development is  financed entirely by borrowed 
money . ( 2 ) For the development programmes analysed this had 
the effe c t  of rendering them �mprofi table . 
I t  was therfore ne c e s s ary to evaluate the profitabi l i ty 
of the programmes w1.der realis tic levels  of pers onal drawings . 
In order to  do this a method had t o  be devised  to  reduce  the 
bas e year pos t tax cash surplus , The me thod us ed  and the 
rat ional e  for it is outlined in this appendix .  
B 1  Reduction of the Bas e Year P o s t  Tax Cash Surplus 
The method us e d  to divert income from c onsumption t o  
development was t o  add on additional c o s t  t o  the bas e  year 
expenditure . This reduced the bas e year post  tax cash 
surplus by the added  c o st  less the reduction in taxation e . g . 
for repres entative farm F and an 80 per c ent equity , adding a 
c o s t  of $ 1 , 893 effec t ively reduced  the base year post  tax 
( 1 ) In this s tudy a sum of $ 2 , 000 was used as  the level of 
personal drawings during development .  
( 2 ) Obviously if the pre-development pos t . tax cash surplus 
i s  required for  pers onal drawings and this l evel i s  
maintained during development then no surplus farm income 
i s  being inves ted in farm development . 
C 2  
c ash  surplus
( 3) by $ 1 , 467 ( $ 1 , 893  minus reduced taxation of  
$ 426 ) . As  a result the amount of off farm capital required  
to  finance the progranune 1vas reduce d  by $ 1 ,  1+ 67 per annum. 
This is  s imilar to  inves ting $ 1 , 467  of' surplus farm income 
i n  development . 
Adding the addi tional cos t does not  invalidate  the pos t  
tax  pres ent value figure . The same cash flows are s till  
involved .  The effe c t  of increasing the  bas e year expenditure 
i s  t c  reduce  the figures  for the additional expenditure before 
tax  and the addi tional expenditure afte_£ tax during phys ical  
development . This i s  equivalent to reducing the actual 
overdraft figure by the amount of the pos t tax inc ome diverted  
to  development . Thes e  aspects  are illus trated by tables  
B 1  and B2 . 
Table  B 1  is the actual computer printout of the example  
previous ly mentioned . The bas e year surplus has been reduced  
from $ 3 , 467  t o  $ 2 , 000 by adding an additional c o s t  of  $ 1 , 893  
to  the bas e year . The data in table B2  has been hand 
budgeted  using the a ctual bas e year surplus i . e  • .  $ 3 , 4 67 . The 
reason for hand budge ting was to allow $ 1 , 467 of pos t tax 
income to  be  us ed  each  year for financing development . Thi s  
enables  a check t o  be  made on the val idi ty o f  the pos t tax 
present value figure in table B 1 . Because o f  different  
figures for  total expenditure and taxation ( $ 1 0 , 1 46 and $ 48 
for  B1  and $ 8 , 253 and $474 fof B2 ) the figures in column 
( 1 0 ) and ( 1 1 ) diffe r .  All o ther figures  are identical .
( 4 ) 
( 3 ) And hence the level of pers onal drawings us ed in 
calculating the pres ent value . 
C3  
In  table B 1  the addi ti onal overdraft figure ( co lunm 5 ) 
is  equal to the added expendi ture af'ter tax ( c olwrm 1 1  ) minus 
the addi tional gross  income ( column. 8 ) . 
i . e .  additional overdraft = $ 1 , 1 8 1 - ( -$ 1 , 1 7 1 ) = $ 2 , 35 2
( 5 ) 
In  table B2  the addit i onal overdraft figure has been 
calculated  in the same way except that  from this figure has 
been subtracted $ 1 , 467  which is available for financing 
development . 
i . e .  additional overdraft = $ 2 , 648 ( -$ 1 , 1 7 1 ) - $ 1 , 4 67 
= $ 3 , 8 1 9 
"" $ 2 , 352 
$ 1 , 467 
This i s  exactly the same figure as in table B 1 . S inc e the s e  
figure s  are the same the overdraft interest  incurred in year 
one but which becomes chargeable  in year two , is identi cal for 
the two s i tuations . Hence the t otal expenditure figures , the 
taxabl e  income figures  (not  sho>vn ) and the t o tal  tax figures , 
are the same . This pro c e s s  is repeated throughout the 
financial  evaluation.  
The additional overdraft and the additional cash surplus e s  
are the added profits from development . S inc e the s e  are the 
same the pres ent values calculated by the computer ( table  B 1 ) 
and by hand ( table  B2 ) are als o the s ame . Thus adding an 
addit ional c o s t  t o  the bas e y ear expenditure , in order t o  
divert p o s t  tax income from c onsumption t o  development , does  
( 4 ) This i s  not  s trict ly true , The corresponding figures 
do  vary by one or two due to  rounding errors  in the 
c omputer program . 
( 5 )  The actual figure shown is  $ 2 , 353 .  
a rounding error . 
The e rror o f  one i s  
not invalidate  the pos t  tax pres ent value calculati on .  
Adding an artificial cos t t o  the bas e year expendi ture 
would, however ,  give an incorre ct  pr e  tax pres ent value
( 6 ) 
c alculation ,  becaus e the added expendi ture before tax would be 
incorrect . 
( 6 ) This i s  the profitability o f  the development progranune to 
the nation .  
Table B·1 Ac tual C omputer Printout 
I 
Overdraft
, 
Year Bas e Cumu- Cumu- Additional Additional Tax Actditiona} l To tal Added Added 
Year lative lative Overdraft C a s h  Gross  Ex pen- Expen- Expen- Interes t 
Surplus Over- Credit  Surplus Income diture diture di turc 
draft Before After  
Tax Tax 
( 1 ) ( 2 ) ( 3 ) ( 4 )  ( 5 ) ( 6 ) ( 7 ) ( 8 ) ( 9 ) ( 1 0 ) ( 1 1 ) ( 1 2 ) 
$ $ $ $ $ $ $ $ $ $ $ I 
Base 2000 48 1 0 1 46 
I 
1 2353 - 2353 - - - 1 1 7 1  1 1 375 1 226 1 1  8 1  -
2 4694 - 234 1 - - - 1 40 1 239LJ- 2245 2 200 1 4 1 
3 7 1 4 1 - 2446 - - 570  1 32 1 1 3062  30 1 7  281  
4 7569  - 428  - 1 66 1 563  1 20 1 9  1 870 1 9 9 1  4 28 
5 65 1 3 - - 1 055  666  2504 1 0 976  827  1 448 454 
6 4 295 - - 221 8 1 299  3449 1 0 1 26 - 22  1 23 1  390 
2294 1 35 6  3449 
i 
7 2000 - - 9993  - 1 50 1 1 55  257 
8 372  - 2372 1 4 1 5 3449 9 855 - 293 1 07 6  1 20 
9 28 1 1 - 2439 1 469 3449 9735 -4 1 3  1 0 1 0  - I 
Post  Tax P re s ent Value $ 24 , 1 75  
Payback Y ear 8 r-:--Increas e In  P os t  Tax 
. $ 2 ,  LJ-J9 
Vt 
Drawincs 
Table B 2  Hand Budgeted  C omparis on O f  Data In B 1  
Year Base _ Cwnu- Cwnu- . Additi onal Addit ional Additional Tax Total Added Added Overdraft 
Year lative lative Overdraft  Cash  Gro s s  Expen- Ex pen- Expen- Interes t 
Surplus Over- Credi t  Surplus Income di ture diture di ture 
draft Before After  
Tax Tax 
( 1 ) ( 2 ) ( 3 ) ( 4 ) ( 5 ) ( 6 ) ( 7 ) ( 8 ) ( 9 ) ( 1 0 ) ( 1 1 ) ( 1 2 ) 
$ $ $ $ $ $ $ $ $ $ $ 
Base 3467 474 8253  
1 235 2 - 2352 - - 1 1 7 1 - 1 1 375 3 1 22 2648 -
2 4692  - 2j40 - - 1 40 - 1 2394  4 1 4 1 3667  1 4 1 
3 7 1 39 - 2447 - 570  - . 1 3 2 1 1 4958  4484 28 1  
4 7567 - 428 - 1 5 63 1 66 1 20 1 9 3766  3458  428 
5 65 1 1 - - 1 056  2504 666 1 0 976  2723 29 1 5 45 '+ 
6 4293 - - 22 1 8 3449  1 299  1 o -1 26  1 873  2698  390 
7 1 99 9  - - 2294 3449 1 35 6  9993  1 740 2622  257 
8 374 - 2373 3449 1 4 1 5 9855  1 60 2  2543 1 20 
9 28 1 3 - 2439 3449 1 469  9 735 1 482  2477  -
P os t  Tax Pres ent Value $ 24 , 1 75 
Payback Year 8 
Increas e In  P o s t  Tax 
Drawin gs $ 2 , 439  0 0\ 
APPETDI X  D 
GROSS  .HARGINS FOH BHEEDIT\'U EI·.'ES AND DREEDIN"G COIV"S 
ON HORO \I; H E.N LJA J li LL COUNTRY 
D 1  
This appendix calculates  the l ikely gros s  margins for a 
breeding ewe and breeding cow on the Horowhenua hill  country . 
In  determining the gros s margins , average s to ck per:formances  
recorded in the two surveys  have been us ed . The. result of 
the calculations indicates  that for the given assu111p tions , 
bree ·  . . _lg ewes  are likely t o  be more profitable than breeding 
c ows . The degree of  profitability 1vi ll  vary with individual 
farms depending upon the s tock performance obtained and with 
the re lative cattle and sheep pric es . For farmers wi th high 
calving percentages and low cat tle  l os s es i t  i s  poss ible  that 
breeding cows may be more  profitable than breeding ewes . On 
the ::naj ori ty of  hill country farms hmvever ,  the bre eding ewe 
will  yj_ eld a greater financial re turn . 
De t�_ination of Gross  Hargin§. 
Basi c  Data 
( i ) Breedir�g E\,,e 
Lambing percentage 
1-lo o l  Production 
D eaths 
�ve replacement rate 
Ewe equivalent 
( i i) Breeding C ow 
Calving percentage 
D e aths 
C ow replacement rate 
Ewe equivalent 
85 per  cent  
e1ve 8 .  5 lbs 
lamb 2 . 0 lbs 
ewes 5 per cent 
cas t-for-age five years 
one 
85 per  c ent 
cows 6 per cent 
cmvs culled  as e ight year olds 
five 
Prices 
( i ) 
( i i ) 
Gross 
( i ) 
B r e e d ine;: E>ve 
ivo o l  $0 . 2 2 . 5  per  
C ,F  . A . ewe $ 3 . 20 
S tore  shorn lamb $�- .  00 
Replacement ewe $ 6 . 00 
Cat t le 
lv eaners $35 . 00 
Cull CO\vS $ 65 . 00 
Replacement c ow $ 80 . 00 
Marg:in 
Breeding E\,Te 
Gro s s  Returns 
1 0 . 0  lb wool at 22 . 5 c per  
• 85  lamb at  4 . 00 
• 25 C . F .A ,  ewe at  3 . 20 
Variable Costs  
Shearing 
C rutching 
Animal Health 
Deaths 
Depreciation 
Intere s t  ( 7% )  
Gros s  Margin per 
Breeding Ewe 
0 . 20 
0 . 0 6 
0 . 32 
0 . 30 
1 . 50  
0 . 42 
pound 
pound 2 . 25 
3 . 4o 
� 
$ 6 . 45 
$ 2 . 80 
D 2  
( �� )  Breeding C ow 
Gro s s  R e turns 
• 85 lv e aner  S teer  at  $J5 
. 1 7 Cull c ow at  $ 65 
Variable C osts  
Supplementary fee d  ( 5 bales  
of  hay per  c ow at  50c 
per bale ) 2 . 50 
Animal Health 0 , 80 
Deaths 4 . 80 
Depre ciat i on 1 J , 6 6 
Intere s t  ( 7% )  
Gross  Margin per  Breeding 
e o,., 
Gros s  Hargin per Ewe 
Equivalent 
s . 6o 
29 . 75 
1 1  • os 
$ Z4 0 . 80 
$ 1 J . 44 
$ 2 . 69 
On a per  ewe equivalent bas i s  the gros s  margins are : -
Bree ding ewe 
Breeding c ow 
$J . 65 
$ 2 . 69 
DJ 
E1  
APPENDIX E 
THE COST OF C L E A R I N G  1vEEDS ON THE I IOHO\vHE�UA HI LL COUNTRY 
The development of unproductive hill country involves 
c learing the land of  one or more maj or weeds . Thes e  weeds 
include gors e ,  fern ,  tauhinu and manuka s crub . S ome areas 
of native bush can also be succe s sfully cleared . I t  is  
neces sary to  know the  cost  involved in clearing weeds in  o rder 
t o  give s ome priority to the allocation of capi tal . C apital 
is one factor which limits land deve lopment . I t  mus t 
therefore be allocated to processes  which give the greate s t  
return from i t s  us e .  
This appendix lists  land development methods us ed  on the 
Horo>vhenua hill  c ountry . C o s ts are a s s es sed  on both a per  
a cre and a per  ewe equivalent increase  basis . The c o s ts 
given were those  ruling in 1 9 69/70 . 
E1  Dens e Tauhinu 
The tauhinu can either be  cut and then burnt or burnt 
( 1 ) 
stan.ding . Both methods have been succe s sfully used .  
Cutting increas e s  the cos t  but may be  preferable  in s ome areas 
where  tauhinu reinfes tation i s  a problem and in s ome s easons 
>-rhen poor  burns are likely . Burning i s  carried  out in the 
autumn after >vhich  the area is overs O\m with a sui table  
s eed mixture ( 2 ) and s ix hundred weight ( 6 cwt ) of  molybdic 
( 1 ) Up to  eighty per  c ent of  the tauhinu is likely t o  be burnt . 
( 2 ) S e ed mixture s  will vary according t o  individual farmers  
preferences . However ,  a suitable seed  mixture should 
include a high proportion of c lovers and s ome grass  s eed  
e . g . cre s t ed  dogtail ,  to  suppl ement lmv fertility natural 
grass es .  Rye grass is the mos t desirable  gras s species 
t o  have in a new pas ture but e s tablishment from oversmving 
on this c las s o f  hill  country has not  been good.  
superphosphate
( J ) per  acre . 
In  the s pring 4 cwt of superphosphate i s  applied 
followed by annual appli cations o f  maintenance fertiliser . 
Any regro\vth tauhinu is  cut or pulled by hand at  various 
intervals . 
An initial  increas e in carrying capacity of  2 . 5  ewe 
equivalents ( E . E . ) per  acre is pos sible .
( 4 )  
D eve lopment C o sts  
Dollars P er Acre  
F encing 8 . 00 
Cutting
( 5 ) 2 . 00 
S ee d  5 . 00 
Fertilis er  1 _7 . 00  
S to ck 1 5 . 00 
C o s t  per acre $ 47 . 00 
C o s t  per ewe equivalent increas e $ 1 8 . 80 
E2  Manuka S crub 
E 2  
Depending on the t opography the manwca s crub can be 
e i ther cut by hand or wi th a flail chopper .
( 6 ) The manuka 
( J ) The ini tial fertiliser application should be  n1olybdic 
superphosphate  as  the maj ority of hill  country i s  
molybdenum responsive . This is  especially true o f  
areas c overed with tauhinu . 
( 4 ) The increases  in s tocking rates  are thos e  actually 
obtained in the first  two years by hill  c ountry farmers 
in the Horowhenua region . Individual farmers may 
obtain higher or l ower increases  becaus e of  s easonal 
influences  e . g . drought or managerial ability . 
( 5 ) This figure is  the cost  of cutting unburnt tauhinu . 
( 6 ) This tractor drawn machine c ons ists  of  a s eries  of 
rotary blades which  cut and crush the manuka . 
EJ  
i s  then burnt and overs own in  the autw1m wi th s e e d  and 5 cwt 
of molybdi c superphosphate . In the spring ano ther J cwt 
of superphosphate  is applied followed by annual maintenance 
applications . 
Ini t ial  s to cking rate  increase s  of 2 . 5 E . E . per acre 
have been achieved within two years . 
Development Costs  
Method One - Hand Cutting Dollars Per  Acre  
CuttiHg 20 . 00 
Fencing 8 .  00 
S e ed 5 . 00 
F ertiliser  1 3 . 60 
S tock 1 5 . 00 
C os t  per acre  $ 6 1 . 60 
C o s t  per ewe equivalent increase  $ 24 . 64 
Method ��o - Machine Cutting Dollars Per  Acre  
Cutting and crushing 5 . 00 
Fencing 8 .  00 
S e ed 5 . 00 
Fertili s er 1 3 . 00 
S tock 1 5 . 00 
C o s t  per acre 
Cost per ewe equivalent increase  
EJ  Fern 
$46 . 60 
$ 1 8 . 64 
There  are two methods of  clearing land infes ted with 
bracken fern and water fern . ( ? ) The difference in the two 
( 7 ) S 0me times known as hard fern . 
approaches i s  r elated to  the extent to whi ch the vegetation 
has been burnt in the pas t .  I f  the vegetation has not  
previous ly been burnt the mo s t  e f f e c t i ve method i s  burning 
in the autunm follmv-ed by overs owing with s e ed and 5 cwt of  
molybdic superphosphate .  Thi s i s  followed by another  J cwt 
of superphosphat e  in the spring . Qui cker es tabli shment of  
pas tu  res  oc cur from this method than from crushing '"i th  
cattle  and then overs owing . However ,  the latter method i s  
pref.:.. : :red on areas which have been frequcn tly burnt in  the 
pas t .  
I ncreas es  o f  2 . 5 E . E .  per acre have been achieved  in two 
years . 
Development C o s t s  Do llars Per A cre 
Fencing 8 . 00 
Fertiliser  1 3 . 00 
Seed  5 . 00 
S t ock 1 5 . 00 
Co st  per acre $ 41 . 30 
C os t  per  ewe equivalent increas e $ 1 6 . 5 2 
E4 S cattered Bush 
The area to be developed is fenced off and cattle  used  
t o  clear the under growth and break down s ome of the smaller 
bush.  ( 8 ) In  the autunm the bush i s  burnt and overs ovrn with 
7 cwt of molybdic superphosphate  and a suitable s eed  mixture , 
( 8 ) To be suc c e s s ful it is  necessary to  graze cattle  hard . 
This can re sult in high los s e s . Individual farmers  
may prefer to  cut more bush . and graze cattle  more 
l eniently . 
The unburnt bush can be  cut wi th a s lasher or chainsmv- .  
I n  the spring J cwt o f  superphos phate  is  applied  and 
thereafter annually . 
An initial increas e in carrying capacity of  1 . 5 E . E .  
per  acre i s  pos s ible after two years .
( 9 ) 
Development C osts  Dollars Per Acre 
F encing 8 , 00 
Cutting 6 .  00 
F ert��iser  1 7 . 00 
S eed  5 . 00 
S tock 9 , 00 
C os t  per acre  $4s . oo 
C os t  per ewe equivalent increas e $JO , OO 
ES Dens e Gors e 
ES 
The author was unable to obtain detailed  financj_al c o st s  
for  the c learing of  dense gors e in  the survey area . Hence  
the  costs  shO\m are  e s timated c o s ts . 
A small  area i s  fenced off and burnt in the autumn , 
The burn is  then. overs own with s e ed and 6 cwt of molybdic 
superphosphate per acre , In  the spring J cwt of  superphos-
phate is  applied , The area is  s tocked in a way which allo·w-s 
the clover t o  establish over the winter .  The s t ocking rat e  
i s  then increased  in the spring in  order to  control the 
regrowth gorse ,
( 1 o ) 
Follow up s prays commencing in the 
( 9 ) This lower init ial increas e is due to lower natural! fertility, 
( 1 0 ) A better  result will  be obtained with wethers but the s e  
are l e s s  profitable than ewes . I f  blocks are small 
enough and the e've numbers high enough there may be 
sufficient dry ewes and hoggets to  provide the nece s sary 
s tock c oncentrations . 
E6 
s e cond year are necessary to  kill  the regrowth not controlled  
by the stock .  
Initial increas es  o f  2 . 5  E . E .  have been recorded within 
two years . 
Development C o s t s  Do llars P e r  Acre 
Fencing 
S e ed
( 1 1 ) 
Fertiliser  
S tock 
Spraying
( 1 2 ) 
C o s t  per  acre 
C o s t  per ewe equivalent increas e 
8 . 00 
1 0 . 00 
1 5 . 00 
1 5 . 00 
J6 , 00 
$ 84 . 00 
$ JJ . OO 
Table E1 gives a swnmary of development c osts as s oc iated 
with the removal of weeds on the Horowhenua hill c ountry . 
The table indicates  that land covered  in fern i s  the cheapes t 
land to  develop while land covered in dens e gors e i s  the mos t 
expens ive . Areas of bush and gors e should only be developed 
after land has been cleared of fern ,  tauhinu and manuka . 
Table E-1 Land Development Co st s  
Development O f  Cost  Per  Ini tial  E . E .  
Acre Increas e --
Dens e tauhinu 47 . 00 2 . 5 
Manuka s crub ( i ) 6 1  • 60 2 . 5  
(i:i) 46 .  60 2 . 5 
Fern 4J , JO 2 . 5  
Bush 45 . 00 1 . 5  
Dense gors e 84 . 00 2 . 5  
C o st  Per  E . E .  
Increas e 
1 8 . 80 
24 . 64 
1 8 . 64 
1 6 . 52 
JO , OO 
J J , 60  
( 1 1  ) 
( 1 2 ) 
Spraying kill s  the clover plants  and a s e cond oversowing 
i s  often required . 
This allows for spraying of the gorse  over s everal y ears . 
F 1  
APPENDIX F 
THE PRESENT VALUE NE.�. � -iURE OF PROFITABILITY 
This appendix outlines  the present value measure us ed to  
determine the profitability of  future development . An 
evaluati on of profitability i s  necessary in order to : 
( i ) de termine lvhe ther the combination of  inputs 
c ompris ing the devel opment programme i s  likely to  
be profitable . 
( i.i )  de termine which of  the alternative development 
programmes is the mos t  profitable . 
Farm development can be  regarded as a c ontinuous input ( 1 ) 
continuous output process . Inputs of  capital are followed by 
cash returns in one or more succeeding y ears . The flo1v of  
benefits  usually takes the form of  gros s  output . This  c ommences  
s ome t ime after the ini tial input and continues for a varying 
period int o  the future . The flow of c o s ts generally c ons i st s  
of  a heavy ini tial investment and a flow of  operating c o st s . 
The s tream of  benefits  and costs can be brought t o  a 
c omparable  bas is  ·by using c ompour�d interest  t e chniques . ( 2 ) 
All values can e i ther be c ompounded forward t o  a c ertain point 
( 1 ) 1-lhile  many inputs in farm development can be  applied  in a 
s ingle time period e . g . f encing , o thers can be  regarded as 
s el f  generating and capable of improvement to a higher 
productive capacity with the passage of t ime . In 
addit i on management and biological factors c ould well 
dictate  an ordered s equence of  inves tment over s everal 
t ime periods . 
( 2 ) The rationale  for the us e of  c ompound interes t i s  that any 
specific  development programme ties up res ources  which 
c ould have been used for  alternative inves tment . 
F 2  
in time o r  dis counted back t o  the present . ( J ) Usually the 
latter  method  is employed us ing a s elec ted  rat e of  in t eres t .  ( lf ) 
Benefi t s  from inves tment o c cur in the form of  income and 
capital gains . Allowance has t o  be made f o r  capital  gains 
and this i s  usually done by cap i tali s ing the post  development 
surplus . The present value measure is  then defined as the 
sum of the disc ounted additional surplus es  during development 
plus the dis counted  additional surplus es after  development , 
capi talised  at  the s e lected  J..' c<  c e  of  interes t .  ( 5 )  
F 1  Calculat ing Pres ent Value 
For  calculating the pre s ent value of a development 
progrrurune , a bas e year ( 6 ) ( with i ts fixed relationships between 
inputs and outputs ) is us ed  as a bench mark . The variations 
from this are imputed  as the benefi ts and costs  as s o c iated 
wi th the development programme . ( ? ) 
( J ) Both me thods will  provide exactly the same answer to  such 
ques ti ons as " i s the inves tment a profitable one ? . "  
( 4 ) The rat e  s elected  tends to  be a value judgement and is 
usually the current rate of interes t .  Where a large 
amount of uncertainty is pres ent the di scount rate i s  
often adjus ted  ( i . e .  increased ) t o  allow for this in 
value t e rms . 
( 5 ) An alternative approach i s  to  s o lve the s treams of  benefits 
and c o s ts  for the internal rate  of re turn . For a particu­
lar inves tment this i s  defined as the rate  of  intere s t  at  
whi ch the  pres ent value o f  gross  revenues and pres ent 
values of expenditures are equal , i . e . ne t pre s ent value 
is zero . The inves tment with the highe s t  internal rate  
of return is , however ,  not necessarily the mos t  profitable . 
( 6 ) A bas e year represents the management of the farm 
immediately prior to deve ·lopment . 
( 7 ) The pres ent value method i s  e s s entially s tudying t\vo 
s i tuati ons ; one in which development has not o c curred and 
one \vhere development has been carried out . The 
undevel oped s i tuation is us ed  as the base for c omparing the 
developed s ituation .  
F3  
There are four maj or s teps in  calculating the net  pres ent 
value . ( 8
) 
Thes e  are : -
( i ) determining the pre-development cash surplus 
s i tuat i on .  
( i i ) e s timating development inputs and costs , the input 
levels  and the profits during the development peri od , , 
( i i i ) calculating the post  devel opment cash surplus . 
( iv ) defining the additional profits due to  development . 
The method  o f  de termining the present value can be  
illus trated by means of  a hypothe ti cal  example . C ons ider  a 
development programme that runs for five years 1vi th the post  
development s i tuation be ing reached in  year six .  As sume that 
prior t o  development the annual cash surplus is $ 2 , 000 and 
during development cash surpluses  o f  $ 1 , 000 , $ 1 , 000 , $ 1 , 500 , 
$ 1 , 800 and $ 3 , 200 are re corded . After  development has been 
comple t ed the cash surplus increases  t o  $ 3 , 500 , 
G iven that the pre-development cash surplus i s  $ 2 , 000 then 
the additional profits
( 9 ) that oc cur during deve lopment are 
-$ 1 , 000 , -$ 1 , 000 , -$5 , 000 , -$ 200 and $ 1 , 200 , After  
development has b e en completed  the additional annual profit 
resulting from development i s  $ 1 , 500  ( $ 3 , 500 - $ 2 , 000 ) . 
In  order t o  determine the pre s ent  value i t  i s  nece s sary 
( 8 ) The pres ent  value of  an inves tment can be expres s e d  e i ther 
as a capital  sum ,  in w·hi ch case  i t  is  kno\m as the net 
present value , or as an annual payment where i t  i s  called  
the annuity payment from the investment , 
( 9 ) The additional profits  that o ccur as a result of  develop­
ment will  e i ther be po s i tive or negative depending ·upon 
the relative s ignificance of the additional revenue and 
costs  that o c cur during development , 
to  bring the s e  profit s  to a comparable t ime basi s . This i s  
achi eved by discounting with a s peci fic interest  rat e . 
The pres ent value ( P . V . ) formula for profi ts  o c curring 
during d evelopment i s  given by -
P . V .  = n- 1 
E 
i= 1 
"\vhere £ = the sum of  
Vi  
n - nwnber of y ears of the development progranun (: 
r = discount rate expres s ed  as a dec imal 
Vi = development cash profit in the i th year of devel opment . 
For the example  given , the pres ent value is : 
P • V • = - 1 , 000 - 1 ' 000 -5 , 000 
+ 
( 1 . 06 ) 1 
+ 
( 1 . o6 ) 2 ( 1 . o6 ) 3 
- 200 
+ 
( 1 • 06 ) 4 
= $- 1 , 5 1 5 
1 ' 200 
+ 
( 1 
The present value formula for the po st development profits  
(v )
( 1 o ) i s : -
P . V .  "" V 1 
r 
For  the example : -
P .V .  = $ 1 , 500 1 
. 06 
= $ 1 8 , 680 
( 1 0 ) This formula as sumes that the additional profi t continues 
indefinitely and that i t  remains c ons tant . 
F5 
In general terms the present value formula for the 
entire s tream of development cash profits  is : -
Net  pre s ent value = n- 1 
� Vi  V 1 
i: 1 
r 
For  the exampl e  given the net pre s ent value equals  
- $ 1 , 5 1 5 + $ 1 8 , 680 = $ 1 7 , 1 65 
Taxation has been i gnored  in this example . The pres ent 
value determined indicates  t''  ..... value o f  the development 
programme to the nat ion . 
( 1 •J ) The pres ent value obtained when 
taxati on i s  c onsidered is  the pres ent value of  the po s t  tax 
added cash profi t s . This represents the value of  the 
development progranune to the farmer .  
F 2  Problems Involved In  Calculating Pres ent Value 
A number of problems ari s e  in us ing the pres ent value 
measure . Thes e  problems include formulating the corre c t  bas e 
year and post  development s ituation ,  specifying an appropriate 
dis c otmt rate and s e lecting future c o s t s  and price s .
( 1 2 ) The 
difficulties involved create doubts about the validity o f  the 
figures  obtained . The pres ent value figure will only be  
c orrec t  i f  the development programme i s  implemented exactly as 
specified and all as sumptions hold true . In  a dynamic  
agriculture this is  unlikely t o  happen . Emphasi s  should 
( 1 1 ) A development progranune "\vhich i s  profitable to  the nati on 
can be m1profitable to  the farmer .  This  i s  oecause 
taxation can c laim more  than 1 00 per c ent of  the pos t  
tax profits . Holden ( 6 ) and Cartwright ( 9 ) have given 
examples of this . 
( 1 2 ) A dis cuss ion o f  the s e  and o ther problems as s o ciated  with 
the present value can be  found in ( 34 ) . 
therefore be  on the relative magnitude of the figure rather 
than the exact figure . 
S o l omon ( 35 ) has summarised  the inadequacies  of  the 
:F' 6  
pres ent  value as a measure o f  profitability . H e  has s tated  
that the  theoretically correc t  measure  of pres ent  value i s  s o  
uns table  with respect  t o  pro j e c t  life and return o f  a pro j e c t  
that s imple  measures such a s  Payback which doe s  allow for 
obs ole s c ence ,  te chnical change and nncertainty of  the future 
may be j us t  as us e ful in real  ,,rorld investment decis ions . 
Us e of the present value measure does , however ,  reflec t  
the s i ze of  the pro j e ct  and provides a pro j e c t  rarucing . 
Alternative us es  for money necess itate  the s e l e c tion of  an 
opportuni ty c o s t  of  capital and the measure recognis es the 
subj ective time preference o f  people for money . The measure 
als o allows for income and expenditure streams which fluctuate  
over t ime . F or thes e reas ons i t  i s  a better measure of  
profitability than ratio  measures , such as Re turn on Capi tal , 
or the P ayback measure which fail  in respect t o  one or more of  
these  cri teria .  
G 1  
APPENDIX G 
SUPPLEMENTARY EVALUATION DATA FOR REPRESENTATIVE FARH F 
This appendix c ontains addi t ional evaluation data from 
the three deve lopment programmes analysed  for repres entative 
farm F ,  The data i s  c ontained in tables which are s elf 
explanatory . Data in tables G·1 , G·2 ,  G-J , G·4 , Gy and G8 aug·ment 
sun�ary data in chapter  s ix .  Data  in tables  G..S , G6 , G-9 and 
G� O indicate  the effect  of  the fertiliser  subs idy on develop­
ment programmes  two and three .  
Table G-1 Programme One - Annual Overdraft Requirements and Intere s t  Charges For Various 
Equi ty Levels  
•, 
Development An..."YJ.ual Overdraft Cumulative Overdraft Overdraft Interes t  
Year $ $ $ 
E8 E7 E6 E5 E8 E7 E6 E5 E8 E7 E6 E5 
1 1 5 55 2242 3007 3400 1 555  22lJ-2 3007 J400 - - - -
2 2066  2795 3606 40J8  3622  5037  66 1 3 74 23 93  1 34 1 80 204 
3 3362  4 1 34 4994 5468  6985 9 1 7 2  1 1 607  1 285 8 2 1 7 30 2  396  445 
4 289 1 37 1 0  462 1  5 1 39 9877  1 2882  1 6 229 1 80 1 2 4 1 9  550 696  77 1  
5 ft 65 1  1 4 800 1 21 9 9225 1 2896 1 7029  1 9 1 6 6 5 9 2  77 2 973  1 08 1  
6 �1 44 1 + 7 72  + 1 403  7 78lJ 1 2 1 23 1 7028 1 9483 553  773  1 0 2 1  1 1 49 
--------
Q 
1\) 
--- --
Table G--2 Programme One - Post  Development Data 
Equity Gross  Income Total Cash Taxable Taxa ;ion Pos t Tax 
Expenditure ( 1 ) Income Cash Surplus 
$ $ $ $ $ 
E1 0 1 6 , 469  1 1 , 086 7 , 088  1 '  883  5 , 383 
E8 1 6 , 469  1 2 ,  1 25  6 ,  206 1 ' 466 4 , 344 
E7 1 6 , 46 9  1 2 , 627 5 , 780 1 ' 28 1  3 , 84 2 
E6 1 6 , 469  1 3 , 1 4 1 5 , 3 25 1 ' 093  3 , 266 
E5 1 6 , 469  1 3 , 665 4 , 8 1 2 897 2 , 804 
Note  -
( 1 ) Does not include pers onal drawings . The pos t tax cash surplus is  the sum which 
is  available for personal drawings . 
--
i 
Q 
\...,J 
Table G;3 Programme Two - Annual Overdraft Requirements and Interes t Charges For Various 
Equity Levels 
Development Annual Overdraft Cumulative Overdraft Overdraft Interes t 
Year $ $ $ 
E8  E7 E6 E5 E8 E7 E6 E5 E8 E7 E6 E5 
1 2350 3037 3802 4 1 95  2350 3037 3802 4 1 95 - - - -
2 2339 3067  387 8 4289 4690 6 1 05 768 1  8484 1 4 1 1 82 228 25 1 
3 2444 32 1 6 4075 45 1 6  7 1 34 932 1 1 1 75 7  1 300 1 28 1  366  460 509 
4 425 1 1 24 1 9 88 2456 7559 1 0446  1 3745 1 5456 428 559  705 7 80 
5 + 1 058 +40 1 379  726  650 1 1 0004 1 4 1 24 1 6 1 82 453  626  824 927  
-
Q 
+:" 
Table G-4 Programme Two - Pos t  Development Data 
Equity Gross  Income To tal Cash Taxable Taxa l .Lon 
Expenditure ( 1 ) Income 
$ $ $ $ 
E1 0 1 5 , 645 9 , 932  7 , 1 29 1 , 903 
E8 1 5 , 645 1 0 , 95 3  6 , 2 1 2 1 , 469 
E7 1 5 , 645 1 1 , 948 5 , 77 2  1 '  277 
E6 1 5 , 645 1 2 , 0 1 8  5 , 298 1 ' 0 82 
E5 1 5 , 645 1 2 ,  47 8  4 , 7 77 884 
Note -
( 1 ) Does  not include personal drawings . The pos t tax cash surplus is  
i s  available for pers onal drawings . 
----
P o s t  Tax 
Cash Surplus 
$ 
5 ,  L�63 
4 , 44 1  
3 , 946 
3 , 375 
2 , 9 1 6 
the sum which 
0 
\..rt 
Table G5 Programme Two - The Effec t  Of  The Fertiliser Subsidy on Annual 
Overdraft Requirements 
. 
Development Year 
Equity 
Bas e Pos t 
Year 1 2 3 4 . 5 Development 
Value of the Fertilis er  
Subsidy ( $ )  365 5 1 5  665 7 1 5  665 400 400  
Reduction In Overdraft 
( $ ) E8 j N .� 5 1 5 6 8
4 787  425 
� E7 5 1 5  696  7 87 626  
E6 5 1 5 696  7 87 7 1 7 379  
�N .A . 
Increas e I n  Cash 
Surplus ( $ ) E8 434 2 1 9 
E7 454 227  
E6 1 20 237 
Reduction In Overdraft 
) ) Interes t  ( $ )  E8  J 1  7 2  1 20 1 5 6 ) 
E7 l N .A. lN
.A 
J 1  7 2  1 20 1 57  
�N .A .  
E6 3 1  7 2  1 20 1 6J ) 
Increas e In  Taxation ( $ ) E8 1 1  8 1 2  1 74 234 1 80 
E7 98  205 2 1 9 1 74 
E6 7 8  68  1 7 9 1 6J 
Note -
� N .A .  denotes  non applicable .  Q 0\ 
Table G6 Programme Two - The Effec t  Of  The Fertiliser Subs idy On The Profitability 
Of  Development 
Equity Bas e Year 
Post  Tax � 1 ) 
Cash Surplus 
Payback 
�-----.-----,.-�--��---.--=---.-�--��--�year) D 
Pres ent Value Maximum Overdraft 
A A B c c A I B c 
$ 
E8 
Subsidy 2000 29760 
No Subsidy 2000 24 1 75 
E7 
Subsidy 2000 20370 
No Subsidy 2000 1 45 1 2 
E6 
Subsidy 2000 931 2 
No Subsidy 2000 -
Notes  -
26430 1 235 81 1 
21 1 3 6 1 8542  
5 1  37 l 5 1  7 2 l 5 1  99 
I 7559  7 635 7702  
7 
8 
1 7 656  1 4853 1 7 830 I 7 899 1 7 969 1 9 1 2045 9929 1 0446 1 0548  1 0 641  1 1  
7 233 s443 1 1  64 1  1 1 1 1  32 , 1 1  227 1 1 3 
1 4 1 24 * 
I 
7 
8 
I 9 1 1 
I 
1 4  
( 1 ) Used as  the level of pers onal drawings in calculating profitability .  
( 2 )  * Denotes payback not achieved within nineteen yBars • . 
( 3 ) A = 6 . 0  per cent interes t .  
B = 6 . 5  per cent  interes t .  
C = 7 . 0  per cent interes t .  
I 
7 
8 
1 1 � 
1 1 4  
I 
I 
I 
Increas e In 
Pos t Tax Cash 
Surplus 
$ 
1 1 93  
974 
1 25 6 
- 1 0 29 
1 335 
-
Q 
......J 
Table G7 Programme Three - Annual Overdraft Requirements and Interes t Charges For 
Various Equi ty· Levels  
Development Annual Overdraft Cwuula t i  ve Overdraft Overdraft Interest  
Year $ 
E1 0 E8 E7 E6 E5 E 1 0 E8 
1 862 231 3 3000 3765 h423 862 231 3 
2 2 223 3766  4494 5305 6003 30856  6079  
J 9 1 6  25JJ JJ05 4 1 65 490h 400 1 86 1 2 
4 +1 539  + 1 77 5 1 1 1 297 2038 2462 8435 
5 +2923 +1 652  +1 0 7 1  + 287 349 46 1  6783 
$ 
E7 E6 E5 E1 0 
3000 3765 4423 -
7494 9070 1 0426  5 1  
1 0799  1 3235 1 533 1  1 85 
1 1 3 1 0  1 4532  1 7369  240 
1 0239 1 4 245 1 7 7 1 9  1 47 
$ 
E8 E7 
- -
1 38 1 80 
36L� 4h9  
5 1 6 648 
506 678 
E6 
-
225 
544 
794 
872  
Q 
CO 
E5 
-
265 
625 
9 1 9 
1042  
Table GS · Programme Three - Post  Development Data 
Equity Gross  Income Total Cash Taxable 
Expenditure ( 1 ) Income 
$ $ $ 
E1 0 1 5 , 1 33 9 , 939  6 , 598 
E8  1 5 , 1 33 1 0 , 9 9 1  5 ,  6 8 1  
E7 1 5 , 1 33 1 1 , 49 9  5 ,  24 1 
E6 1 5 , 1 33 1 2 ,  084 4 , 7 67 
E5 1 5 , 1 33 1 2 , 5 62 4 , 246 
Note  -
· -
Taxa . ion 
$ 
1 , 642  
1 '  238 
1 ' 060 
880 
698 
( 1 ) Does not include pers onal drawings . The pos t tax cash surplus is 
is  available for pers onal drawings . 
L.__ __ __ -- - ------------- --------- ----- ------ ------ --
Post  Tax 
Cash Surplus 
$ 
5 , 1 92 
4 , 1 40 
3 , 632  
3 , 047 
2 , 5 7 1  
the sum which 
Q 
\0 
Table G9 Programnie �;Three - The Effec t  of The Fertiliser  Subs idy On Annual Overdraft 
Requirements 
Development Year 
Equity Bas e P o s t  Year 1 2 3 4 5 Development 
Value of the Fertilis� 
Subs idy ( $ ) 365 565 665 700 490 390 4 1 5 
Reduction In  
Overdraft ( $ ) E8 ) 565  699  776  - -
l
N .A · E7 lN
.A
. 565 699 7 7 6  480 -
E6 5 65 699  7 7 6  490 -
Increase In Cash 
Surplus ( $ ) E8 246 - - - 450  328 237  
E7  265 - - - - 348 247 
E6 287 - - - - 357 259 
Reduction In  
Overdraft . 
Interest  { $ ) E8 ) 34 76 1 22 1 50 
� N .A . 
I 
r
.A
· E7  34 7 6  1 23 1 5 1 
E6 34 7 6  1 23 1 53 
Increase In 
Taxation ( $ ) E8 1 1 9 - - - 1 62 2 1  2 1 7 8 I 
E7 1 00 - - - 1 33 1 93 1 68 
E6 78  - - - 1 1 5 1 86 1 5 6  
Note  -
I � N .A .  denotes  non applicable .  
Q -" 
0 
Table G 1 0 P rogramme Three  - The Effec t  of  the Fertiliser  Subs idy on the Profi tability 
O f  Deve l opment 
. 
Equity Bas e Yeaf Pre s ent Value Maximum Overdraft P ayback I ncreas e In 
P o s t  Tax 1 ) $ $ .  (year ) P o s t  Tax Cas h  
Cash Surplus Surplus 
$ A B c A B c A B c $ 
E8 
Subs i dy 2000 25 605 22628  20085 6572  6605 6639 7 7 7 
No 'Subs i dy 2000 1 9970 1 7 273 1 4 967  8620  8663 8706 9 9 9 673  
E7  
Subsidy 2000 1 6089 1 3709  1 1 67 2  8702  88 1 2 896 1  1 0  1 0  1 0  
No Subs i dy 2000 1 0006 7 885 6063 1 1 32 1  1 1 4 20 1 1 5 20 1 3 1 3 1 3 7 2 3  
E6 
Subs i dy 2000 4588 2788 1 2 6 1  1 2009 1 2 1 1 2 1 22 1 6 1 6  1 7  1 7  
No Subs i dy 2000 - 1 4539  * 
Notes  -
( 1 ) Us ed  as the leve l of  pers onal drawings during deve lopment . 
( 2 ) * Deno tes  payback not  achieved within nineteen years . 
( J ) A = 6 . 0  per c ent  interes t .  
B = 6 . 5  per c ent interes t .  
C = 7 . 0  per cent interes t .  
I - -- --- ---------
Q ...... ...... 
i 
H 1  
APPENDIX H 
SUPPLE:tviENTARY EVALUATION DATA FOR REPRESENTATIVE FAIDI G 
This appendix c ontains addi ti onal evaluation data whi ch 
augments data dis cus s ed in the firs t part of  chapter  s even . 
The data i s  contained  in tables  w·hich require no further 
explanation . 
Table  H-1 Repres entative Farm G - Annual Overdraft Requirements  and Interes t Charges  
F o r  V a r i ous Equi ty Leve l s  
I Development Annual Overdraft Cumulat ive Overdraft Overdraft J nteres t 
Year $ $ $ 
! 
E9 E8 E7 E6 E9 ES E7 E6 E9 E8 E7 E6 
I 
1 1 62 3  1 9 2 9  2247  25 65 1 62 3  1 9 29  2 247  2565 - - - -
2 23 1 7 264 2 2979  33 1 6 3940 4 5 7 1  5 2 26 588 1  9 7  1 1 5 1 34 1 5 3 
3 4775  5 1 1 8  5 L� 7 6  5 833  87 1 5  9 690 1 0702  1 1 7 1 4  236  274  3 1 3 35 2 
4 2666  3030 3409 3787  1 1  38 1  1 27 20 1 4 1 1 1  1 5 502  '"=; 2 2  5 8 1  6� 2 702  
5 836  1 1  9 2  1 57 1  1 96 1  1 22 1 9 1 3 9 1 2 1 5 683 1 7 463  682  7 63 846 936  
6 + 6 9 1  + 364 + 1 7  340 1 1 5 72  1 3548  1 5 666  1 7 803 733  I 8]4 9l� 1 1 047 I L_ _____ -------- --- --- - - -- -- ------- -- - I 
::r: 
l\J 
Table H-2 Repre s entat ive Farm G - P o s t  Devel opment Data 
Equi ty Gros s Income Total C ash 
Expendi tur� 1 ) 
$ $ 
E1 0 I 1 3 , 354 9 , 3 1 9 
E9 I 1 3 , 354 9 , 63 1  
E8  I 1 3 , 354 9 , 874  
E7 1 3 , 354 1 0 , 030 
E6 1 3 , 354  1 0 , 385 
Note  -
( 1 )  Does not  inc lude pers onal drawings . 
i s  available for pers onal drawings . 
I 
Taxable  
Income 
$ 
4 , 7 22 
4 , 55 1  
4 , 367  
4 , 1 7 8 
3 , 990  
Taxation 
$ 
7 68 
7 1 0  
647 
5 85 
5 2 2  
P o s t  Tax 
C ash Surplus 
--
$ 
3 , 935 
3 , 7 23 
3 , 480 
3 , 224 
2 , 96 9 
The post  tax cash surplus is  the sum which 
::;:: 
w 
Table H·3 Repres entative Farm G - The Effe c t  of  the Fertiliser  Subs idy on the Profi tability 
of  Devel opment 
Base Equi ty Year 1 
Value of  the Fertiliser  
Subs idy ( $ )  1 60 350 
Reduc tion In Overdraft 
( $ )  E1 0 322  
E9 335 
E8 
N.A.  
350 
E7 350 
I ncreas e In  Cash 
Surplus ( $ )  E 1 0 1 22 -
E9 1 26 -
E8 1 26 -
E7 1 26 -
Increas e In Taxation( $ )  E1 0 38 28 
E9 34 1 5  
E8 JL� -
E7 34 -
Reduction In  Overdraft 
Interes t ( $ )  E 1 0 >: ) 
E9 ) ) �N.A. �NA .  
E8 
E7 ) ) 
Note  -
I {1T"" N . A . deno tes  non appli cable . -
Development Year 
2 3 4 
350 L� 6o 5 1 5 
369  502  5 86 
370 503 587 
37 1 503 588 
J7 1 50J 589 
- - -
- - -
- - -
- - -
- - -- -
- - -
- - -
- - -
1 9  4 2 7 1  
20 4 2  72  
2 1  43  73  
2 1  4J 7 L� 
--
5 6 
460 460 
448 -
448 -
477  -
5 1 5 -
- 396  
- 406 
- 42J 
- 44 1 
1 1 9 1 9 8 
1 1 9 1 89 
9 2  1 74 
54 1 5 9 
1 07 1 JlJ. 
1 07 1 35 
1 09 1 J7 
1 09 1 LW 
P o s t  
Devel opment 
460 
) ) N  .A . 
� 
295 
300 
J04  
306 
1 65 
1 60 
1 5 6 
1 54 
) 
) 
� N  .A . 
) 
I 
I 
I 
I 
:::r: 
+-
Table H4 Repres entative Farm G - The Ef1e c t  of The Fertiliser  Subs idy On The Profitability 
Of  Deve lopment 
Equity ! Bas e Year 
P o s t  Tax ( 1 )  
Cash Surplus 
$ 
E9 
Subs idy 2000 
No S ubs idy 2000 
E8 
Subs idy 2000 
No Subs idy 2000 
E7 
Subs idy 2000 
No Subs idy 2000 
No t es -
Pres ent Value Haximwn 
A 
1 5422  1 29 1 1 
· 9 1 45 6949  
1 05 9 4 1 3846 8� L� 1 I 
5 � 1 -1 j 32 1 0 
c A 
• J 0 766  997 7 1 00 80 •J 0 1  84 , 1 1  
5056  1 2220 1 2348  1 2473  1 4  
64 1  4 1 1 1  622 , 1 1 74 1  1 1 1  6 22 1 1 4 
- 1 3 9 1  2 1 40 60 1 4206 1 8  
1 545 1 1 3366 1 1 350 1 1 1 3637 , 1 7  
1 63 1 4 * 
Payback Increas e In 
( year P os t  Tax Cash 
B 
I 
c S urplus 
$ 
I 1 2  I 1 2 I 1 274  1 5  1 5  1 1 00 
I 1 4  I 1 4  I 1 290  * * 1 1 1  6 
I 1 7  I 1 8  I I 1 1  30 
1 il 
Used  as  the level of  pers onal drawings during deve lopment in  calculating profi tability . 
* Payback is  no t achieved wi thin nine teen years . 
A = 6 . 0  per c ent interes t .  
B = ·· 6 . 5 per cent int eres t .  
C = 7 . 0  per cent int eres t .  
::r: 
\.)1 
I 1  
APPENDIX I 
SUPPLEHENTARY EVALUATION DATA FOR REPH.ESENTATIVE FAlU-1 A 
This  appendix merely c ontains supplementary evaluation 
data  from the analyse s  of  the deve lopment progran�e devis ed  
f or  repres entative farm A ,  The data , c ontained in tables , 
augments and subs tantiates  s tatements made in the s e c ond part 
of chapter  s even . 
Table I·1 Repres entative Farm A - Annual Overdraft Requirements and Intere s t  Charges 
For  Various Equi ty Levels 
Development Annual Overdraft Cumulative Overdraft Overdraft  Intere s t  
Year $ $ $ 
E8  E7 E6
* 
E8  E7  
·)(-
E6
* E6 E8 E7 
1 937  1 39 6  1 370  937  1 39 6  1 370  - - -
2 364 845 804 1 30 1  2 24 1 2 1 74 5 6  83 82 
3 83  579  543 1 384 2820 27 1 1 7 8  1 34 1 3 1  
4 + 358 1 33 6 9  1 026  2953  2780 83 1 69 1 80 
Notes  -
( 1 ) * Personal drawings for E6 equal $ 1 , 232 . 
··--
! 
' 
H 
!\) 
Table I·2 Repres entative Farm A - Post  Development Data 
-
Gross  Income Equity Total 
( 1 ) 
Expenditure 
$ $ 
E 1 0 I 1 2 ,  887 8 , 662  
E8 I 1 2 ,  887 9 , 488 
E7  I 1 2 ,  887 9 , 9 1 2  
E6 I 1 2 ,  887 1 0 , 587 
Note  -
( 1 ) Does not include pers onal drawings . 
available for personal drawings . 
. 
I I Taxation Post  Tax Cash Surplus 
I $ I $ 1 '  1 22  4 , 225 
838 3 , 399  
7 2 2  2 , 975  
539  2 , 300 
The pos t tax cash surplus is  
H 
\...) 
Table  I·3 Representative Farm A - The Effe c t  Of The Fertiliser  Subs idy on Annual 
Overdraft Requirements 
Equity Bas e  Year Year Year Year 
Y ear One Two Thre e  Four 
$ $ $ $ $ 
Fertiliser Subs i dy 
( $ ) 325 400 425 450 475 
Reduc t i on In Annual 
Overdraft ( $ ) E8 
�N.A. 
307 323 83 -
E7 3 1 6 347 370  1 33 
�6  � 7 1  80 1 03 6 9  
Increas e I n  Cash  
C re di t  ( $ ) E8 247 - - 266  35 2 
E7 25 6 - - - 235 
E6 25 9 - - - 34 
Reduc tion In Overdraft 
Int ere s t  ( $ ) E8 ) ) 1 2  32  55  
E7 fA. �N.A. 1 9  40 6 1  E 6  ) 5 9 1 6  
Increas e In Taxati on 
( $ )  E8  78  9 3 1 1 4 1 33 1 7 8 
E7 6 9  84 97 1 20 1 68 
E6 66 70 90 96 1 28 
No t e  -
P o s t  
Development 
$ 
500 
jN .A . 
3 1 3  
3 23 
334 
jN .A . 
1 87 
1 77 
1 66 
( 1 )  For  E6 pers onal drawings are allowed to  increas e by $ 259  i . e . from $ 1 , 232 t o  $ 1 , 49 1 . 
-
H 
+:-
Table I 4 Repres entative Farm A - The Effect  of the Fertiliser Subs idy on the Profitability 
of  Development 
Equity Bas e Year Pres ent Value Payback Naximum Overdraft 
P o s t  Tax ( 1 ) 1 vP.ar) 
Cash Surplus A B c A B c A B c 
$ 
E8 
Subs idy 2000 22774 20630 1 8798  4 4 4 667  669  67 1 
No subsidy 2000 1 7462 1 5 7 1 2 1 4240 5 5 5 1 384 1 39 2  1 395 
E7 
Subs idy 2000 1 5633 1 L�009 1 2624 6 6 6 1 7 89 1 7 99 1 809  
No Subs idy 2000 1 0687 941 6 8330 7 8 8 2792 281 7 2842  
E6 
Subsidy 1 49 1  1 2752  1 1 320 1 0097  7 7 7 2466  2L�80 2493 
No Subsidy 1 232  1 1 420 1 0080 8935 7 7 7 27 9 1  281 6 2842 
Notes  -
( 1 ) Used as the level of pers onal drawings during development in calculating 
profitability in terms of 8 .  pres ent value . 
( 2 ) A = 6 . 0  per c ent interes t .  
B = 6 . 5  per cent interes t .  
C = 7 . 0  per cent interes t .  
Increase In  
Po s t  Tax Cash 
Surplus 
. . 
$ 
978  
1 0 1 2 
1 1 42 
1 068  
H 
\..Jl 
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