26 Nov 2013

Moves to corporate-style farms carry risk, opportunity

4:02 pm on 26 November 2013

New Zealand farmers will encounter both opportunities and risk as farming in New Zealand moves from family farms to larger, more corporate-style businesses, says a leading academic.

But Waikato University's professor of economics, Frank Scrimgeour told the Future Farming conference in Wellington that the number of farms is declining significantly through amalgamation and the surviving businesses are a lot bigger.

He says that the single independent farming unit will no longer be the norm in New Zealand.

"Big farms are different from small farms - I think we often forget that, at our peril," he says.

A super-farmer with a small farm could do really well, but the same farmer with a big farm was much more dependent on doing things with and through other people".

The United Nations has declared 2014 the International Year of Family Farming, and Professor Scrimgeour says that some individual family farms will remain for a long time.

But, there will also be a lot of "family farms" that are really aggregations of farms, and there will be farming groups dominated by families, with external equity partners.

"Such changes are driven by profitability - the more the family farm struggles, the more the advantages from cashing up to become part of a group by exit or partnership".

"Although I strongly believe these new farming forms .. have great potential for us, they also have greater potential to stuff up, big-time," says Prof Scrimgeour.