Friday, April 26, 2024

Ele Ludemann: Shades of 80s agsag

North Otago was particularly hard hit by the agsag of the 1980s.

The problems with farms that were too small to be economic units were compounded by recurring droughts.

Inflation and interest rates were high, input costs were too and the axing of subsidies by the Lange government resulted in very low prices for stock. Returns were so low that farmers were getting bills from meat works because what they earned didn’t cover the costs of transport and killing.

Some predicted farmers would be forced off their farms in their thousands. Some were but there was safety in numbers – banks and stock firms knew forced sales when there were few, if any potential buyers, would only depress land values further and worked with farmers to allow them to hold on until things improved.

Farmers’ adult children left for education or work elsewhere and at least one partner, usually but not always the wife, went to town for work, earning enough to keep farms and families afloat.

However, people and businesses servicing and supplying farms were hard hit. Jobs were lost and businesses failed.

The current situation isn’t too bad for those in dairying or cropping but beef returns are only just okay and it’s horribly reminiscent of the 80s agsag for sheep farmers.

Widespread drought, shearing costs which exceed the price of wool and low returns for lambs and sheep mean few who depend on these stock for their income will be making a profit.

Stock and real estate agents are already telling some sad stories and at least one in many farming partnerships is looking for work off farm.

Low prices for sheep meat are partly due to sluggish markets in China and partly due to an over supply in Australia.

Demand for by products including pelts and tallow is also contributing to low returns.

Why wool prices are so bad is hard to fathom. It ticks so many green boxes – free range, renewable, natural . . . and it’s versatile. Strong wool is now not only used for carpets, it has a variety of other uses including cosmetics, surfboards and coffins.

A silver lining to the low price for wool is that it is relatively cheap to use in research for what might – fingers crossed – lead to another wool boom.

That won’t come soon enough for too many who are feeling like they’re back in the 80s and contemplating giving up.

Some who can will sell. Others will hang on, hoping and praying that rain will come before it’s too cold for pasture growth and demand for sheep meat and wool will bounce back, as it eventually did when the ag was over.

Ele Ludemann is a North Otago farmer and journalist, who blogs HERE - where this article was sourced.

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