Land Prices

It amazes me how one good year and only the promise of others can cause such frantic land speculation. The prices being paid for dairy farms and the number of confirmed conversions for next season is unbelievable. Everyone is getting in on the act and pushing the price of land well above what it can reasonable expect to return. This is great of you farm for capital gain, not so good if you are starting out and what to work towards farm ownership. The recent surge in land prices is particularly worrying as you can now only buy land if you have a lot of cash behind you. This well healed buyer is often not interest in working the piece of land they have purchased, rather seeing it as an investment opportunity. The increase in this kind of buyer is leading to an increase in absent land owners who expect others to do the work. This change in farmer demographic from owner/operator to investor is worrying for the industry and could be it's down fall. Owner/operators will ride the commodity cycles because they are in it for the love of their land and stock, they will go without to keep their farm going. Investors on the other hand have no emotional connection with the land and see it as a business that must perform. This clinical view of a farm as a business only has brought some people high levels of success, but it also weakens the industry. This is because of a number of reasons:

1. Labour. It is all good and well owning 60 farms, thousands of hectares of prime dairy land and tens of thousands of cows, but who are you going to get to run the dam things. With all these new conversions going in and the increase in high-input operations, the demand for labour is going through the roof. But the problem is the more the farm becomes a factory, the less passion workers hold for the farming lifestyle. This is exacerbated by the growth of service towns around these new dairying areas and the increase in milk volumes that conversions and high-input creates. Dairy factories, tanker-drivers, stock-truck drivers, fuel-tank drivers all take their labour from the same pool as farms, however these services can pass the costs on to their customers and dairy companies get first dibs on the milk cheque so to compete in these markets farmers need to squeeze the higher labour cost out of their bottom line. Workers need to be paid their fair value regardless of the payout.
2. New entrants into the industry. With the prospect of farm ownership, and now even owning your own herd a near impossible feat for most people starting out in the industry, it can be very difficult to retain enthusiastic, motivated people within it. Why would someone with any ambition slog it out for years in the pouring rain or someone else's cow shed if they can never get anywhere? Stuff that, why not take your ambition and drive and apply it somewhere you can make money, develop equity and have every weekend off as well. (and not have to live in a shitty, small, cold 1940's house).
3. Intensification. Apart from the labour issues this creates, intensifying your farming operation to produce more MS per hectare leaves NZ dairy industry in jeopardy. The higher cost of importing feed, fert, fuel and soon, carbon credits erodes NZ's place as the lowest cost producer of milk even further. Don't even get me started on the issue of skyrocketing import costs as the world's supply of feed and fuel dwindle into non-existence and how much longer before those who have built their cost structures around intensified production to "grow" their business crap out because they either can't afford or just can't get them.
Good luck to you if you see farming as only a business investment to grow your personal wealth, and not as a treasured lifestyle to promote the growth of people, families, animals and plants. I hope the price you play will all be worth it in the end and that the rest of us in the industry wont have to pay as well.