Farming In New Zealand – The Ups And Downs In Profitability Since The 1860’s

– Dorothy – 6/3/98

An interview with Graham Miller

Many farmers in Marlborough are urging the Government to declare Marlborough a disaster area because of the prolonged drought which is

Graham Miller
Graham Miller

turning the province into a brown dustbowl. The situation is very serious, and is not of the farmers’ making. Looking back over the years since farms were established by the pioneers in New Zealand we can see that many times farmers in New Zealand have had to cope with crises thrust upon them, not only by exceptional weather, but also by economic changes beyond their control.

To get a clearer picture of some of the economic factors affecting farming since the 1860’s I interviewed Graham Miller, a very long-time researcher into this topic.

How did Graham become interested in agricultural economics and the history of land? Graham began his career as a qualified accountant and licensed sharebroker. He was concerned about the possibility of a second world war and became secretary of the Peace Pledge Union. Then two weeks after he married he lost his job because of his “Labour opinions”. He saw that his future in the business world would be limited by his Christian pacificism.

He moved to Christchurch and attended classes on world affairs at the Workers Education Association. There he heard that a bursary was being offered for the study of history. He was awarded the bursary and completed a B.A. topping New Zealand in Stage 3 history. (In those days students in all New Zealand universities sat the same papers.) This success led to his appointment as a lecturer in economic history at what was then Canterbury University College. He completed his Master of Commerce and continued to lecture there for twenty five years. Retirement did not end his work. At nearly ninety he continues his research and his writing and is a regular visitor to the New Zealand room at the Canterbury Public Library. His primary interest is the history of land.

Farming in New Zealand in the 1860’s and 1870’s Farming in New Zealand was going through a period of expansion in this period. However in 1879 a major recession occurred because of the cut-off of overseas capital from Scotland for pastoral farming. This resulted from the failure of the City of Glasgow Bank in October 1878. When it was known that among the reasons for the failure was its policy of lending to New Zealanders, other institutions in Scotland and in England which had lent freely to New Zealanders, stopped New Zealand loans. The massive inflow of capital which had occurred from 1871 to 1878 stopped abruptly. The day that the cable in the papers announced the failure of the bank the sale of Crown land ceased. This led to a substantial recession, affecting the South Island more than the North. The strain of keeping farms going was a heavy toll on farmers and their families.

Factors bringing improvements Gradually the situation of the farmers improved through better farming techniques, especially the growing of clover and the use of superphosphate brought in from the island of Nauru. The other change for the farmers was the introduction of refrigeration on ships which could carry frozen meat from New Zealand to Britain. This developed slowly and its success came from the development of new breeds of sheep.

Early use of Merinos The first sheep imported into New Zealand were Merinos. These sheep were very well suited to native grasses and large runs. They were a good type of sheep for the runholders who depended on wool for their income, but they have a small frame and they are bony and do not fatten easily. The breeds of English sheep used in England to produce mutton did not do well on native grasses. For them it was necessary to provide small paddocks with English grasses.

Other breeds gradually introduced The first Border Leicesters were introduced into Otago from Scotland by the New Zealand and Australian Land Co. in 1859. Lincoln sheep were brought to the farm at Longbeach in Canterbury by Mr Grigg in the early sixties and from these Canterbury’s first breeder, Mr Threlkeld of Flaxton, started the first stud flock in Canterbury. Romney Marsh sheep were first recorded as brought into Canterbury in 1865 in the Mount Grey district. Southdowns were imported into Canterbury in the early sixties for the butchery trade. They became more popular when the export of frozen meat was established.

In the late 1860s and 1870s half-bred sheep were produced with English and Border Leicester and Lincoln rams and Merino ewes. The result was a higher price for their wool and a better carcase for the butchery trade.

James Little and the Corriedale James Little was sent out from Scotland to New Zealand in charge of some Romney Marsh sheep being imported into Otago for two farmers, one of whom, Dr Webster, owned a property named Corriedale. James Little worked for him and won prizes with his Romney flock. Then Dr Webster gave him permission to experiment with cross breeding. His cross bred sheep, Corriedales, had better conformation and produced wool that was a little better in both weight and quality.

On the death of Dr Webster, James Little bought a farm of his own in North Canterbury and in 1878 or 1879 established his own stud flock breeding Corriedales using Lincoln rams and the sturdiest possible Merino ewes.

At about the same time the New Zealand and Australia Land Co. had started breeding Corriedales in South Canterbury.

Export of frozen meat It was W. S. Davidson, the general manager in Britain of the New Zealand and Australia Land Co. who established the frozen meat trade. He had worked on New Zealand sheep stations so he had firsthand knowledge of the problem of selling sheep meat outside the producers’ areas. He heard about a successful shipment of Australian frozen meat and in 1880 arranged with Bell, Coleman and Co. who had developed refrigeration machinery to fit the sailing ship, ‘Dunedin’, with refrigeration equipment. Thomas Brydone, the Land Company’s superintendent in New Zealand, supervised the arrangements. He worked with J. Macpherson, the manager of the Totara run. Slaughter yards were built at Totara.

Beginning in December 1881 about 240 sheep were killed each day, taken on ice by rail to Port Chalmers, the port of Dunedin, and loaded on to the ‘Dunedin”. A breakdown of the machinery brought an early end to this attempt and Dunedin people bought New Zealand’s first frozen meat.

The second attempt was successful and when the ‘Dunedin’ sailed from Port Chalmers in February 1882 a new era in New Zealand farming began.

A memorial to the work of Thomas Brydone was erected some years later on Sebastopol Hill overlooking the Totara estate. The buildings at Totara which were the first freezing works in New Zealand are preserved as historic buildings and are close to the main south road south of Oamaru.

Changes in sheep farming following frozen meat exports When the export of frozen meat began most of the sheep farms in Canterbury and north Otago still had flocks of merinos, so the least expensive option was to produce different types of sheep through cross-breeding. Hence the increased popularity of the Corriedales and other crossbreeds.

Different breeds of sheep are needed for different farming conditions. The Corriedale is a mixed purpose sheep, producing good wool and carcases. However it is a breed developed for hard dry climates and in wet climates it is prone to footrot. The Romney, originating from the Romney Marshes is a wet weather sheep. The Merino is still used in the high country of Canterbury and Otago. There are now at least twelve breeds of sheep on farms in New Zealand.

The frozen meat trade also caused changes in the way the sheep farmers managed their flocks. Farmers on large runs began to grow English grasses and turnips as feed so that they could carry larger numbers of sheep. Sheep farmers were no longer dependent on wool for their income and small farmers could grow clover, oats, new grass, and rape as feed and fatten lambs for the export market. The early farmers had taken little care of their soil, but now crop rotation was used, and clover provided much need nitrogen for the soil and superphosphate was applied to enrich the soil.

Break up of the large estates The land hunger in New Zealand became strong in the late 1870s and peaked in the early 1890s. Many ideas were put forward and explored for the break up of the large estates. The prolonged depression of the 1880s increased the pressure for change. There was anger against the land monopolists and in particular the absentee British owners. Politicians made political capital out of schemes for reform, but on being elected found the difficulties a considerable deterrent. However in 1891 the Liberal-Labour Party came into power. John Ballance increased the land tax on large holdings and imposed a tax on unimproved land so that large holdings would become unprofitable and force the owners to sell to the Government which in turn would lease out crown land as smaller units.

The outstanding example of the success of this policy came when the trustees of the Cheviot estate in north Canterbury appealed against their tax rate, failed and eventually sold out to the Government. It was subdivided and let as small holdings. The population of 83 in 1891 then increased to 650.

More prosperous years Farm profitability increased from the 1890s and during World War 1 there was a strong market for wool and all food that could be produced was sold.

Introduction of marketing enterprises After the war there was a concerted effort to improve sales of farm products with the foundation of the New Zealand Meat Producers Board in 1922 and the Dairy Produce Control Board in 1924.

The slump hits farmers. The slump in prosperity leading to the great Depression of the thirties began with the muddled economic policy of the British Government. The pound was overpriced after the war and the British Government put it back to the gold standard. This had the effect of overpricing it still further. In the later part of the nineteenth century Britain had experienced buoyant markets, rising populations, and favourable economic growth ‘with some vicissitudes’ to use Graham’s phrase. Britain was New Zealand’s main market.

Then came the Ottawa Economic Conference in 1932. Britain decided that goods produced in Britain would be free of tax. Goods produced by countries in the Empire would incur a moderate tax, and those from other countries could incur a higher tax. Wool was exempt from tax but dairy produce and meat were taxed.

Influenced by the high prices for farming products before and during the war many farmers had borrowed heavily for development after 1918. They were paying high interest and prices were falling. From 1931 the situation became so bad that the farming industry virtually collapsed. Many farmers unable to keep up their mortgage payments walked off their land.

Farmers’ debt was in two forms. Their first mortgages secured on the land were mainly loans obtained through solicitors or from mortgage companies. Their second mortgages were owed to finance and farm companies, stock agency firms and trading banks.

The Labour Government in 1935 legislated for a review of loans on farms. The legislation set up commissioners to look at applications for a review of debts. This was severe on those who had lent on second mortgages to keep the farmer going during the depression.

A period of prosperity From 1937 there was a rise in prices and certain markets and the demand for wool and food led to prosperous conditions during the Second World War from 1939 to 1945. This prosperity continued until the next threat to New Zealand’s markets came with the onset of the European Common Market in stages from the early 1960s.

Subsidies for farmers Britain had subsidies for its farmers for a long period – subsidies which were disadvantageous to the New Zealand farmer. The New Zealand government responded with subsidies for New Zealand farmers. This pattern of assistance from the government peaked under the National government of Sir Robert Muldoon – 1975-1984. It was abruptly discontinued under the Lange/Douglas government which was elected in 1984.

The government support had been in the form of subsidies, for instance on sheep killed for export, and in low interest loans for development from the Rural Bank. When the subsidies were cut and the low interest loans were changed to loans at market rates – an enormous increase often to around 18% – many farmers were forced off their land.

An overview Graham summed up the situation. The theme of farming is that it is subject to dependent variables at home and abroad. At home these variables are soil conditions, stock quality, the provision of adequate pasture, soil fertility, and the variability of climate. In export markets in other countries there are all the variabilities that arise from their governments’ policies. Graham believes that those who farm do it because they value the way of life, not because of profitability.

Watch for coming articles on the development of some different farms.