| Financing New Zealand horticulture (1984) | |||||||||||||||
Abstract | |||||||||||||||
| Some of the limelight has shifted in the past decade from the pastoral industry to the horticultural industry, but a substantial contribution to overseas earnings is still made by the pastoral sector. Profitability, from both the individual's and country's viewpoint, appears to be the main reason for the new glamour of horticulture. This profitability is not yet reflected in national statistics. Department of Statistics survey results show an average net farm income of only $5,878. The reader should not deduce from this that horticulture is unprofitable as a large proportion of the farms surveyed were still in the process of development and had not reached full production. The publicity given to the profitability of some crops has led to rapid expansion in the area planted. Kiwifruit is a prime example. In 1983 the average sheep and beef farm was showing a return on total capital (after providing for the owner operator's salary) of less than 1 per cent. By comparison, mature kiwifruit orchards provided a return of more than 5 per cent (these returns ignore capital gains). This higher profitability led to a near seven fold increase in the area planted in kiwifruit between 1977 and 1983. Traditionally horticulture did not attract a great deal of interest from investors of equity or loan capital because of horticulture's low status in comparison to agriculture. However attitudes began to change and as the industry gained credibility, capital sources (both equity and loan) formerly uncommitted or lightly involved, became heavily committed. Evidence of the growing confidence of farmers in horticulture can be found in a recent Survey of New Zealand Farmer Intentions and Opinions (Pryde and McCartin, 1984). In this survey farmers were asked (irrespective of the product they produced) their opinion of the future market prospects of various primary products. Overall the results show more optimism in horticultural produce than any of the other major product types. Although horticulture is developing rapidly into a significant industry, it is still treated, at least insofar as most financial statistics are concerned, as a part of agriculture. This has made it difficult to obtain data relating to the financing of horticulture. As a result, this paper is generally confined to a discussion of the relative importance and the roles of the various sources of capital rather than a quantitative analysis of their contribution to the horticulture sector. | |||||||||||||||
Publication details | |||||||||||||||
| |||||||||||||||