Key Statistics - article, August 2000, p. 7-11
1999 Agricultural production: national and regional changes1
Farming patterns are changing at a regional level according to the 1999 agricultural production survey. A move away from sheep and beef farming to dairy, deer and forestry activities is reasonably well recognised at a national level. However, as a survey of regional farming activity hasn’t been taken in three years, the same amount of information hasn’t been available at a regional level. This article identifies and discusses some of the national and regional changes that are apparent upon examining the 1999 agricultural production statistics.
In the five-year period to 30 June 1999, sheep numbers have declined by 7.7 percent to an estimated 45.7 million (Table 1). With the exception of 1988, sheep numbers have steadily decreased since 1982, when numbers peaked at 70.3 million, and are now at their lowest level since 1957.
There are a number of factors influencing the decline in sheep numbers. These include:
- Depressed wool prices over the past few years. The Producers Price Index shows wool prices in the March 1999 quarter are at their lowest level since the series began in June 1994. In recent years, wool prices have been adversely affected by the increased supply of synthetic fibres and changing consumer fashions.
- Successive droughts during the 1997/98 and 1998/99 seasons. These forced farmers to reduce their capital stock in order to allow the remaining stock to survive the winter.
- Competition from alternative land-intensive farming activities such as dairy farming and forestry. Over a five-year period from 1994 and 1999, the dairy cattle population increased by almost 0.5 million; in addition, there were 343,000 hectares in new forestry plantings2.
Between 1994 and 1999, the largest fall in sheep numbers occurred in Southland with 1.1 million fewer sheep. There were also falls in excess of 0.5 million in Waikato, Canterbury and Manawatu-Wanganui. Despite growth in dairy and deer farming, the central and lower South Island regions still carry over half the national sheep flock.
The number of breeding ewes declined by 4.1 million between 1994 and 1999 to an estimated 30.4 million. A high number of ewe hoggets being put to the ram in 1999 partly offset the decline. Despite the 11.8 percent decline in the number of breeding ewes, the number of lambs tailed during the year ended 30 June 1999 was only 3.8 percent lower than during the year ended 30 June 1994.
More efficient farm management practices have boosted productivity in terms of higher lambing percentages and heavier lambs. According to the Meat and Wool Economic Service of New Zealand, the lambing percentage has improved from 103 percent in 1994 to 113 percent in 1999, while slaughter statistics show that the average weight of lambs graded for export and local markets has risen from 15.2 kg to 15.6 kg. New Zealand is the world’s largest exporter of lamb, exporting approximately 70 percent of its production. For the year ended June 1999 the free-on-board value of lamb exports was $1,343 million, as shown in Figure 1.
The number of dairy cattle increased 3.6 percent between 1996 and 1999 to an estimated 4.3 million head (Table 2). This is over one million more than were recorded in 1989.
The growth in dairy farming is likely to be the result of relatively lower prices for meat and wool compared to prices for milk products, and growing international demand for processed milk products such as milk powder and casein compared with meat and meat products, as shown in Figure 1. According to Meat and Wool Economic Service estimates, between the 1996/97 and the 1998/99 seasons there were 600 dairy conversions from sheep and beef farms throughout New Zealand, displacing an estimated 1.2 million beef and sheep stock units. This translated to a 9 percent increase in milk processed (excluding town milk supply) between the 1995/96 and 1998/99 seasons, according to the Livestock Improvement Corporation figures.
The bulk of the increase in dairy cattle numbers occurred in South Island regions, particularly in Southland, Canterbury and Otago. The number of dairy cattle in Southland increased by 69.4 percent or 95,000 head from 1996 to 1999. A major reason for this geographical redistribution of dairy farming in New Zealand appears to be the comparatively cheaper land in the south that is suitable for dairying. The Southland, Canterbury and Otago regions all enjoy higher average protein and milkfat production per cow and per effective hectare than any of their North Island counterparts. It is not clear from the 1999 statistics whether this disparity is due to differing farming practices between the regions such as selection of breeds or fertiliser application; or other regional variations such as soil fertility and climatic differences; or a combination of factors. Cheaper land in the south may also allow dairy farmers to achieve greater economies of scale: in 1999, according to Livestock Improvement Corporation figures, the average South Island herd size was 330 cows, compared with 212 cows in the North Island.
The national beef herd is estimated to be 4.6 million at 30 June 1999, a decrease of 4.3 percent on 1996 estimates (Table 3). The decline in the national herd may be largely attributable to conversions to dairy farming and forestry, which has displaced some beef farming activity. Between 1994 and 1999 there were an additional 233,000 hectares of forest planted in the North Island, and 111,000 hectares planted in the South Island 2. Drought conditions in some regions over the reference period also may have affected beef cattle numbers.
Changes in beef farming also have a marked geographical dimension. The decline in beef numbers was predominantly driven by a decrease in the North Island herd, down 7.2 percent. In the South Island, on the other hand, beef numbers are up 4.8 percent since 1996, with Southland, Otago and Canterbury all increasing the size of their beef herds. Despite the North Island decline, beef farming activity is still greater in the north than in the south, with the Manawatu-Wanganui, Waikato and Northland regions carrying over 40 percent of the national herd.
Deer numbers increased 36.2 percent between 1994 and 1999 to an estimated 1.7 million, and are more than double the number recorded in 1989 (Table 4). According to the New Zealand Game Industry Annual Report, 1999, the proliferation of deer farming may be attributed to higher economic surpluses per hectare than sheep and beef farming, and to increasing stability in the deer industry infrastructure. Increased deer farming activity may also reflect farmers’ attempts to diversify and minimise the risk of relying on one type of farming.
Almost all of the increase in deer numbers over the five-year period to June 1999 occurred in the traditional sheep farming regions of Canterbury, Otago and Southland. The concentration of deer in these three regions increased from 43 percent of the national total in 1994 to 58 percent in 1999.
Venison export free-on-board earnings for the year ended 30 June 1999 were $138.0 million, similar to each of the previous two years. Falling prices offset increased volumes of venison exports over this period. Germany is the major market for New Zealand’s venison exports, accounting for 56 percent of all shipments in the year to June 1999.
The number of pigs decreased by 12.7 percent to 368,887 at 30 June 1999 (Table 5). Despite a threefold increase in imports of pig products since 1994 (see Figure 2), domestic production has remained stable. Livestock slaughtering statistics show that the production of pig meat has fallen by only 0.9 percent between 1994 and 1999, as shown in Figure 3. Heavier slaughter weights partially explain the stability in domestic production despite declining pig numbers. The average slaughter weight increased by 4.1 percent between 1994 and 1999 from 59.7 kg to 62.2kg. The stability in domestic production coupled with the rise in imports indicates New Zealanders are consuming more pork, as it has become relatively cheaper.
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1 This article was prepared by Robert Tinkler and Duncan Golby, Business Statistics division
2 Source: National Exotic Forest Description 1999.
Agriculture, Forestry and Fishing