After 10 years in dairying, Charlie McCaig wonders if he would be so eager to enter the industry now.
In November 2018 I celebrated 10 years of life in New Zealand. Things have changed a lot in those 10 years. We’re now married and have two boys at school as well as a hefty mortgage. My hair is thinner these days too, although I’m unsure which aspect of life to blame for that!
Our farming journey also began 10 years ago and it’s interesting to compare the difference in the dairy sector over that time.
Back then, “Go Dairy” adverts were running on the TV. Jody observed that in the time she’d been away from Taranaki and NZ, dairying had developed a real buzz – children of farmers were returning home to run businesses that they’d not previously wanted a part in, friends talked about ‘going farming’ as they seriously considered career changes to the sector from unrewarding town jobs.
All the buzz caught us up too, and a steady stream of relief milking and job offers was what eventually convinced us to take up employment in the sector.
Climate Change and the emissions trading scheme were not new things back then and I remember asking my brother in law (who farms just down the road) whether he thought, given the looming Climate Change debate, it was a good time to get into dairying. Back then he said he definitely thought it was. Asking him the same question 10 years on, would the answer be the same?
Gone are the “Go Dairy” adverts, replaced these days by Dairy NZ’s excellent “The vision is pure” campaign. Both very necessary attempts to get the rest of NZ thinking about farming but very different sentiments. No longer are we asking NZ to come work for us. Now we are, rightly, asking them to stop solely blaming us for all NZ water quality issues.
It’s taken 10 years, but Climate Change legislation has moved on from “looming” and appears to be about to knock on dairy’s door. I think we all know it’s coming to demand money but none of us are sure how much yet.
Debates around whether or not methane is being correctly accounted for aside, we have an impact and this is the way the world has chosen to address it, for now. I recently read an article that quoted a Waikato farmer as saying that the incoming GHG legislation would likely be the biggest shake up for the industry since subsidies were removed in the 1980s.
Another development is that the government’s Tax Working Group is reportedly going to recommend a comprehensive capital gains tax in NZ. Labour did promise it wouldn’t introduce it until they won a second term but then again, they said they’d build 1000 houses by July and so far, they’ve managed 33.
It seems that the ballooning costs of farming aren’t showing any signs of slowing and with a record number of farms on the market in Taranaki alone, land prices have dropped and the banks are nervous.
Aside from the crash a couple of years ago, sharemilkers’ returns have been pretty good over the last 10 years but obviously the additional costs land owners face will flow on to contract milkers and sharemilkers in due course. With farmers likening the upcoming change to the disruption of the 80s, I’ve definitely spent some rainy days wondering about the future of what we’re all invested in.
I recently chatted with a retired farmer who was lamenting all of the above. Interestingly he felt the 70s and 80s were his best farming years and claimed to have made roughly 12% returns annually in the form of cash and capital gains through that time.
Now in the process of selling to his son, he puts that figure at around 2.5%. That goes along with something I heard recently that said three quarters of the return in farming has been eroded in recent times. I joked when I heard that “so the dairy industry is a one-titter then?”. And you know what we do with one-titters…
