The New Zealand government has a regulatory regime in place to control the sale of rural land to other than New Zealand citizens or to individuals who have not been granted new Zealand residency. These regulations mostly affect land over 5 hectares in size. A primary consideration of the Overseas Investment Corporation (OIC) when considering applications by overseas persons for the purchase of land over 5 hectares in size will be the applicant’s intention and ability to take up residency in New Zealand . Other aspects considered of importance could be the intention of the new owner further develop the property and or create further direct or indirect employment opportunities.

The current regulatory regime:

Under the regulations an \overseas person” must obtain consent in order to acquire or take “control” of 25% or more of:

1. Businesses or property worth more than $50 million dollars; land over 5 hectares and/or worth more than $10 million dollars;

2. Any land on most off shore islands;

3. Certain sensitive land over 0.4 hectares (e.g. on specified islands, including or adjoining reserves, historic or heritage areas, or lakes);

4. Land over 0.2 hectares including or adjoining the foreshore.

More information on OIC may be viewed at:

http://www.oio.linz.govt.nz/publications.htm

http://www.oio.linz.govt.nz/faq.htm

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After an extended period of low growth, a substantial proportion of Hawkes Bay rural property has gone on to double in value over the past four years. In 2005 however there are definite indications that prices being achieved for small to medium sized rural lifestyle properties are levelling off and that the frequency of sales (or time taken to sell individual properties) has slowed to a significant degree. To a large degree this is a direct and natural result of local buyer resistance to current high vendor price expectations. It remains to be seen whether or not; after a period of levelling off, land prices lift again, or perhaps fall to levels which promote renewed activity from local buyers. The reality however is that Hawkes Bay rural real estate has different driving forces to other regions, some of which are experiencing a property market downturn. Hawkes Bay has become a preferred lifestyle destination, not only for overseas migrants but also significant numbers of affluent New Zealanders moving from major urban centres, all keen to enjoy the Bay’s superior Mediterranean climate, quality schools, educational opportunities, rural environment and a relaxed rural lifestyle. These are the buyers who have driven lifestyle and semi rural land prices to their present levels and in all probability will continue to do so.

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Historical Background

Within the Hawke’s Bay region, orcharding, viticulture together with various other forms of cash and process food cropping have become increasingly important over the past 30 years, never the less, the pastoral industry; in particular beef and sheep farming continues to be the basis of the Hawke’s Bay rural economy, as it has done from the time of earliest permanent European settlement in the mid 19^th century. The District was amongst the very first in New Zealand to be settled and developed for pastoral farming and from the middle of the 19^th century a number of early settlers acquired or built up very large pastoral runs that at one time covered much of Hawke’s Bay. A break up of these properties into smaller units was initiated in the early 1890’s, a consequence of the Seddon Government’s 1891 Lands For Settlement Act of parliament together with heavy land taxes imposed on large pastoral runs. The act encouraged and enabled land settlement, initially by military and volunteer servicemen, many who had served in the Maori wars. Following world war one the break up of large pastoral runs was further accelerated as a result of government social and economic policy of the day and of course, in many instances, as sons of early settlers inherited and further subdivided properties amongst themselves. Large properties, especially in more favoured farming areas, were broken up to form smaller but economically viable units; commonly of between 900 to 1200 acres. This remains a common size for pastoral properties in Hawkes Bay, although steeper hill country farms having lower stock carrying capacity or potential were significantly larger, while high country properties bordering and within the central ranges were of necessity considerably larger.

The Influence of Sir John McKenzie KCMG (1838 – 1901)

One man more than any, before or since, influenced the ultimate nature of land settlement and the distribution of farming lands in New Zealand and by consequence; the nature of the rural economy and society which has developed through to our present time. John (Jock) McKenzie (1838-1901) was born in Ross-Shire Scotland, son of a tenant farmer. He witnessed first hand and was forever deeply influenced by the misery, suffering and deprivation inflicted by Scottish chieftains as they consolidated traditional lands through massed eviction of their own clansmen. In 1860, looking for a better future, McKenzie migrated to the New Zealand Scottish settlement of Otago. He became involved in politics entering parliament in 1891 where he championed critical land issues of the day. In 1891 was made minister for lands. His story and the affect of his life’s work on the New Zealand rural economy and society – an affect that remains largely unchanged in the 21st century, is quite remarkable – though largely forgotten. His simple philosophy was summed up in the closing couplets of a poem he quoted before the crucial parliarment division on the Lands for Settlement Bill 1894:

“Yet millions of hands want acres,
And millions of acres want hands.”

In The Encyclopaedia of New Zealand 1966; Bernard John Foster (Principal Research Officer, Department of Internal Affairs Wellington) concluded:  “It is to him in large measure that we owe the fact that New Zealand is not a land of great landowners and peasant tenant farmers.” This story (from which this information is summarised) is recommended reading.

 Farming Patterns – Climatic Influence

Local micro-climate, terrain and soil types are the major factors that dictate individual pastoral farming patterns that have developed within the different districts which together make up the wider Hawke’s Bay farming region. This region is a long narrow portion of the North Island’s east coast, lying between the Pacific Ocean as its eastern boundary and to the west the imposing Ruahine and Kaweka Mountain Ranges.

Within Hawkes Bay there are subtle but significant climatic variations to be experienced (depending on the time of year) between the significantly wetter, cooler mountains and immediately adjacent countryside, through to drier, warmer inland and coastal areas. With localized exceptions however, much of Hawke’s Bay experiences a relatively (to much of New Zealand) short, cool winter and hot dry summer. Rainfall varies from between 700 and 800 mm per annum, but with a reliable distribution only between autumn and early summer.

This potential for summer drought is the major factor influencing pastoral farming practices within much of  Hawke’s Bay. Normal limitations to summer pasture growth dictate that many hill country properties operate principally as “store” sheep and beef breeding units.  In effect, depending on the individual growing season, a varying proportion of lambs and young cattle are likely to be sold for finishing on more intensive farms. Other properties, perhaps with better terrain and better developed pasture, are able to finish most or all stock on the property and in good seasons, purchase further “store” trading lambs and cattle for fattening.

The normal seasonal cyclic pasture growth pattern of short winters followed by spring and early summer growth, a (normally)mild summer drought followed by a critical two month period of autumn grass growth, has proven over many decades in Hawke’s Bay to be ideal for healthy livestock breeding and rearing.  Seasonal climatic variations tend to disrupt the life cycle of common animal parasites and diseases and for this reason Hawke’s Bay compares favorably with other New Zealand pastoral regions having higher year round rainfall patterns.

From the equitable Mediterranean climate, most Hawke’s Bay farms experience strong healthy pasture growth from early spring through to early winter. Over broad areas grass growth slows but does not entirely stop, even in mid winter, giving the District a deserved reputation as New Zealand’s best winter livestock country. Autumn droughts are fortunately rare, but did occur in Hawke’s Bay in 2006, a first in the experience of many younger farmers. Autumn droughts are serious events for pastoral farmers who rely on autumn pasture growth to build up livestock condition before winter, especially in breeding stock, as well as provide sufficient pasture reserves through to spring.

The Pastoral Economy in Hawkes Bay

In the early 1980’s the New Zealand economy, including the farming industry, was substantially deregulated by the government of the day, a policy that caused considerable short term hardship to many farmers as well as other business sectors together with their workers throughout the country. In the long term however, deregulation together with removal of all subsidies, tariffs and all manner of bureaucratic business restriction was the impetus required to achieve and to sustain our current level of  prosperity as a viable trading nation; irrespective of seemingly inevitable, cyclical, price highs and lows affecting different primary commodities from time to time.

An immediate effect of deregulation was a reduction in the national sheep breeding flock by about 25%. The Labour Government deregulation included the removal of all farming subsidies and to a large extent the reduction in sheep numbers that followed demonstrates the extent to which farmers had been farming for subsidies to that time. What followed was a significant diversification into other forms of farming, cattle and bull beef farming, deer farming, forestry, horticulture, etc.  Just as significantly, from the 1980’s to the present time efficiency levels have increased, considerably so on a great many properties.
 
Through improved productivity based breeding programs together with better and more sustainable management practices, there have been significant ongoing increases in farm production and profitability within the remaining flocks and herds. As a result the fall in volume of lamb and mutton exports has been considerably less than the fall in breeding flocks. Beef exports have in fact increased substantially.

The immediate, short term problem affecting Hawke’s Bay farmers and common to all New Zealand pastoral farmers are low wool and lamb commodity prices. To a significant degree low lamb prices to the farmer are a result of the artificially high New Zealand dollar value relative to the currencies of our export markets, as well as the relatively short term price cycles dictated by international supply and demand. Low wool prices however have been a relatively long term phenomenon and arguably of even more concern. 

The effect of wool prices on the pastoral economy:

From earliest land settlement, wool has been a primary income source for New Zealand and Hawke’s Bay farmers and the long term sustained falls in wool prices are obviously of major concern. New Zealand is the largest cross bred wool trader in the world and like other North Island farming Districts, the Hawke’s Bay wool clip is almost entirely crossbred wool. Cross bred wools are used internationally for broadloom and hand knitted carpets, knitting yarns and textiles. Sadly, despite woollen carpets and garments having greater aesthetic appeal, wearing ability (in carpets) and even fire resistance, wool prices have fallen in real terms between 3 and 6 % per annum for the past 20 years, a result of effective competition from alternative synthetic fibres as well as, arguably, poor marketing and the inability of the New Zealand wool industry to manage its affairs effectively and gain any significant competitive advantage for a superior commodity. Never the less, a sustained fall in overall global wool production, together with an emerging world wide consumer preference for natural products, suggest that if the wool industry were to implement a united and effective global marketing strategy, the future for New Zealand cross bred wool would be promising in the long term. Increased export quotas, part of a very recent free trade agreement between New Zealand and China are very promising for the long term future of the sheep industry.

A survey of east coast hill country farms (Meat & Wool New Zealand – Economic Service) estimated an average gross wool income for 2007/8 of $36,100 as part of a total gross income projection of $266,000. Other major income sources estimated were sheep (excluding wool) at $127,200 and beef at $89,400. The total net farm profit (before tax) was estimated as a net loss of $1000.00, a serious drop from a $44,400 profit provisionally estimated for 2006/07, $57,486 in 2005/06 and $91,000 in 2004/05. The decline in net profitability is as much a reflection of severe drought that affected much of the East Coast in 2007.

 Farm Productivity in Hawke’s Bay

On farm productivity improvements have resulted not only from the introduction of new sheep and cattle breeds but also by the continuing improvement of existing traditional breeds, in particular, a move away from show bred stud herds and flocks into production recorded and selected breeding systems. Internal farm sub division and pasture improvement using new improved, high production and drought resistant pasture species and the appropriate use of fertilizers continues to benefit the productivity of most properties in the District.

The following livestock statistics demonstrate a substantial drop of stock in all categories, reflecting extended un-seasonal drought conditions between summer and early winter 2007 rather than any long term trend in Hawke’s Bay.

The following livestock statistics demonstrate a substantial drop of stock in all categories, reflecting extended un-seasonal drought conditions between summer and early winter 2007 rather than any long term trend in Hawke’s Bay.

Sheep Numbers

Sheep numbers in Hawke’s Bay at 30^th June, 2007 were reported (2007 Agricultural production Census) at a little over 3.6 million which is about 10% of the national flock numbered approximately 40 million. Hawke’s Bay has the second largest sheep numbers (behind the combined Manawatu – Wanganui Regions) but 5^th largest behind the South Island Regions; Canterbury, Otago and Southland.

Beef Cattle Numbers

Hawke’s Bay cattle numbers were reported as 438,000, lower than both the Waikato and combined Manawatu – Wanganui Regions. In the South Island, Canturbury had a similar total but other Regions significantly smaller numbers.

Deer Farming

Deer farming for both venison and velvet (soft, undeveloped deer antler) has been an important diversification in Hawke’s Bay where in 2007 total numbers were reported to be 88,000. Most deer farming is carried out in areas having an above average summer rainfall. About 85% of the herd is based on Red Deer breeding. The balance is largely comprised of Wapiti or Wapiti – Red Deer crosses, especially for commercial venison production. Venison farming follows a similar pattern to other forms of livestock breeding and finishing. Most properties have breeding herds but a proportion specialise in finishing weaner stags to about 18 months of age, purchased from breeding properties. 

Western Europe; principally Germany, is the principal export market, taking approximately 85% of exports. The future for deer farming looks bright with long anticipated price increases for export venison realised in 2008. Average prices in July 2008 are $7.98 per kg, compared with $4.96 the previous year and a 10 year average of $5.36 per kg. (source Deer Industry New Zealand). Over 2002/03 prices were even lower at around $2.54 kg, believed to be a flow on from the very high prices – around $10.00 per kilogram which were paid to growers in 1999. As a result our principal overseas markets sourced alternative and lower quality supply from Eastern Europe. The long-term future for venison given sensible marketing and stable price structure is likely to be significantly better.

Dairying in Hawkes Bay

Hawke’s Bay is not an important dairy farming District. Scattered areas of dairying are located in localized areas having normally reliable summer rainfall and consequently safe summer pasture growth pattern. Such areas include the Patoka District located inland west of Napier, the Tutera plateau north of Napier and western areas of southern Hawke’s Bay. There are a relatively small number of dairy farms scattered through other areas of the District which use pasture irrigation.

 Commodity Prices in Hawkes Bay

Over the 5 years up until the 2005/06 season pastoral farming in Hawke’s Bay experienced a considerable upturn in prosperity, a direct result of greatly improved commodity prices for beef, lamb and mutton from those experienced in the previous decade, although wool prices remained low. Farmer and investor confidence surged to high levels, a fact reflected in considerable increases in land prices. The combined affect of low lamb and wool prices and unseasonable drought severely has affected farm profitability from 2006/07. Net average farm profit is calculated to have dropped from $91,933 in 2004/05 to $55,542 in 2005/06, to $44,400 in 2006/07.

Future trends look considerably brighter for East Coast and Hawke’s Bay farmers. In June 2008 lamb prices are up 34% on the previous year and USA beef prices more than 20% with further increases anticipated (source Westpac Agribusiness). Westpac predict $4.39/kg average return for NZ lamb in the 2008/09 season compared with $3.83 in the current season and 20 cents kg more for beef with an average of $3.36 for the coming season.

The high value of the New Zealand dollar continues to be a significant constraint on farm profitability however recent falls in exchange rates are significant and are likely accelerate in the near future, together with internal interest rates with which they are strongly related. Most significantly Allen Bollard, Governor of the Reserve Bank of New Zealand, recently emphasised the need for interest rate cuts based on evidence of a softening New Zealand economy. Allan Bollard has considerable room to move on interest rates as The Reserve Banks bench mark interest rates have been maintained at high levels compared to our trading competitors, reflecting successive government’s obsession with maintaining a low national inflation rate. High internal interest rates have made New Zealand a natural choice for international currency investment and speculation which has been the principal driver for New Zealand’s artificially high exchange rates.

 In the long term it is anticipated that the New Zealand pastoral industry will be a major beneficiary of a reduction and hopefully even the elimination of European, Asian and North American farm subsidies.

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The following very brief description and comment on the Hawke’s Bay wine industry is made with the admission that the information given and opinions offered are of necessity, very generalised.  There are bound to be exceptions to most facts or opinion offered and perhaps even inaccuracies. Comment and constructive criticism on this article will always be appreciated.

Grapes for winemaking were first planted in Hawke’s Bay by Roman Catholic missionary priests who established their first vineyard in 1851. Their presence remains today through the premium wines produced at the Green Meadows Mission Estate Winery. Another early settler to establish commercial plantings was Bernard Chambers, who established a vineyard on his Te Mata sheep station near Havelock North in 1892 (The internationally recognised Te Mata Estate was developed from this old vineyard in the 1970’s by John Buck and fellow investors. This outstanding winery continues to demonstrate the ability of this site to produce great wines). In 1895 an Italian viticulturist, Romeo Bragato, travelled through the country visiting Te Mata on the way, looking at viticulture prospects. He is recorded as stating that the District “would make wine of the finest quality”. Bragato identified the presence of Phylloxera in New Zealand. He was subsequently appointed Government Viticulturist in 1902 where he started a vine grafting program based from the Te Kauwhata Research Station using Phylloxera resistant root stocks.

By the mid 1980’s a significant wine industry had developed in Hawke’s Bay, but not in its present form. In 1986 nearly 48,000 tonnes of white variety grapes were grown, nearly all of which were sweet, bulk wine varieties, especially Muller Thurgau – 20,740 tonnes. The combined total of classic red varieties was only 5349 tonnes.  Most of this production came from vineyards on fertile silt loam soils and today many of these sites are replanted to apple or stone fruit orchards. In 2004 the transition of the Hawke’s Bay wine industry from fertile growing sites to vineyards having the free draining  soils and low natural fertility considered necessary for consistently high quality wine production, is largely, although not entirely complete. Significant plantings of what can be best described as “bulk”, medium to low quality Chardonnay and Bordeaux style wine grapes, continue  production on relatively fertile soils.  On these sites the natural effect of fertility, organic matter and just as importantly in these soils, closely related soil moisture retention, will, depending on seasonal growing conditions, result in excessive vine vigour, high fruit set and yield. Without compensating management, high crop loading together with excessive canopy growth and shading, inevitably reduces the potential of the grapes to achieve a satisfactory degree of ripeness (or sugar content measured as BRIX). With careful canopy management, controlled irrigation input and other compensating management techniques, good wine makers can and often do produce medium quality and in good vintage years – quite good and even award winning wines from these grapes. These properties have continued to produce and in many instances to expand, principally as a result of the surprising fact that in past years, wine makers have not paid growers a significant premium for very high quality grapes from low yielding sites, or grapes manually thinned in the vineyard and otherwise restricted in yield to achieve the same effect. The most profitable vineyards have in fact usually been those producing the highest yields rather than the highest quality grapes. This situation is changing and there is now concern for the future of medium or average quality wine in an increasingly over supplied domestic market and a highly competitive export market. This fact was very much evident in the bumper 2004 vintage which for the first time tested the vat storage capacity of the Hawkes Bay wine Industry. Not all Hawkes Bay grape growers found buyers of their crop in 2004 and this has been a much awaited wake up call for some sections of the Industry.

By the 1980’s a few pioneers of the present day wine industry had recognised that the future lay in the production of classic – mainly Bordeaux grape varieties, grown on low vigour soils previously considered shallow, drought prone and of little value for any purpose other than sheep and cattle. The earliest recognition for outstanding Bordeaux style wines grown in this type of environment was probably for the first Coleraine and Awatea wines produced in the early 1980’s at Te Mata Estate on the outskirts of Havelock North. Other growers and wine makers such as Chris Pask at Pask Estate, Alwyn Corban at Ngatarawa Wines and Dr Allan Limmer of Stonecroft were not far behind in gaining success and recognition. From these new beginnings developed what was in effect an entirely new phase in the Hawke’s Bay wine industry. Many outstanding vineyards and wineries have been established gaining national and international reputations. By 2003 approximately 3700 hectares of vineyard plantings were established within Hawke’s Bay, up from 1600 hectares in 1995.  By 2006 it is anticipated that these plantings will rise to approximately 4600 hectares.

Over the recent 2004 vintage Hawke’s Bay growers produced a record 30,429 tonnes, 19,597 tonnes more than in 2003 which was critically affected by severe un seasonal early spring frosts. Nationwide the harvest was estimated at 166,000 tonnes. Hawke’s Bay was New Zealand’s second largest producer behind Marlborough which produced 92,581 tonnes.

While vineyards are scattered over a broad area of Hawke’s Bay, a number of distinct growing areas or appellations may be distinguished. The substantial new vineyard plantings over the past eight years are generally concentrated in these areas. Other growing areas with differing soils and microclimates may well develop in the future as small-scale plantings are established, evaluated and in turn have their successes recognised.

The Gimblett Gravel’s – Located immediately west of the city of Hastings. This area is an old riverbed of the nearby Ngaruroro River. Growing vines in the various grades of stone, gravel, silt and sand, is in some respects similar to hydroponic plant production, where irrigation is the vine’s life support and medium for plant food or macro element and microelement transfer. The river stone and gravel absorbs and retains the suns heat. As a result this is a warm growing environment, proven for its ability to ripen and develop full bodied Bordeaux red varieties – Merlot, Cabernet Sauvignon, Malbec and Cabernet Franc. It is capable of producing a fully ripened, intense style of Chardonnay.  More recently this area has dominated New Zealand’s awards for Syrah, pioneered in Hawkes Bay by Dr Allan Limmer at Stonecroft. Syrah is being planted in increased quantity in Hawkes Bay, especially on stony and red metal soil types having early ripening characteristics.  Syrah is a little different in character from the highly intense, powerful, spicy and fruit dominated Australian Syrah (or Shiraz) with which many New Zealand wine drinkers have become familiar. At its best, Hawkes Bay Syrah has been described as similar in character to the French Rhone Valley wine, combining body with a degree of elegance and an attractive balance of tannins and fruit.

The Ngatarawa Triangle – Located south west of Hastings and immediately south of the Gimblett Gravels, this area, sometimes referred to as the “Bridge Pa Triangle”, lies in a triangle formed by Ngatarawa and Maraekakaho Roads and by State Highway 50.  Most vineyards of the vineyards in this area contain one or more of the three basic soil types; Ngatarawa Gravel’s, Takapau silt Loam – a free draining “red metal” type soil of mixed alluvial and volcanic origin, and shallow clay loam soils with underlying deep free draining volcanic ash. The main varieties grown are Merlot, Chardonnay and Sauvignon Blanc. Alwyn Corban and his partners who established Ngatarawa winery were the first to achieve outstanding success in this area.

Highway 50 – An extensive area of “red metal” Takapau silt and sandy loam soils lying South of The Bridge pa Triangle on State Highway 50, but also extending west from the small settlement of Maraekakaho through the adjoining Kereru Road. In recent years substantial plantings have been developed over this area by corporate wine investors and other boutique wineries. In Hawke’s Bay the Takapau soil series have made a unique and outstanding contribution to the Hawke’s Bay wine Industry over the past decade and as a result have become highly sought after as a preferred medium for premium wine grape production. As with the Gimblett gravel soils, the free draining “red metal’ (volcanic scoria) content of these soils results in a warm, early ripening environment and in the Highway 50 area are considered to be highly suitable for a similar range of grape varieties.

Havelock North. – This area was probably the first in Hawke’s Bay to achieve international recognition through Te Mata Estate’s Coleraine, their premium blend of Cabernet Sauvignon, Merlot and Cabernet Franc. Havelock North produces a range of mainly Bordeaux style red wines, Chardonnay and Sauvignon Blanc. The Havelock North vineyards have a warm sheltered growing environment on the eastern outskirts of Havelock North village, on the lowest north facing slopes immediately below the Te Mata Range and Te Mata Peak. These are clay soils and as such a little unique as a proven site for the outstanding Bordeaux style wines they consistently produce. The necessary “low vigour” effect on the vineyards is amply provided by an impervious mineral hard pan (the famous “Havelock Hardpan”) that in its natural state restricts vine root development and moisture uptake through the course of the ripening season.

Te Awanga – Haumoana – A coastal area between the lower reaches of the Tuki Tuki River and the coastal village of Te Awanga. This area has its own distinctively cool microclimate, being strongly influenced by the cooling effect of daily sea breezes.  Within Hawke’s Bay this is a relatively late ripening site, however the constant and reliable sea breeze and air movement through the vineyards tend to minimise the development of vineyard fungal diseases, etc, and results in a healthy grape growing environment. The area is well known for the constantly outstanding wines produced by Tim Turvey’s small boutique winery “Clearview”. More recently Te Awanga Vineyards have achieved considerable recognition producing under the Kim Crawford label. The cool microclimate is particularly suited for classic white varieties. Warm days, cool nights and reliable air movement through the vineyards encourages the growth of relatively small grapes with thick skins, which, in the hands of a capable wine maker produce both white and red wines of considerable flavour, body and intensity of flavour. Because of the coastal climatic influence, this area is considered to have a relatively low early spring frost risk.

Inland Ngaruroro River – Another growing area with a distinctly cooler microclimate can be found 30 km (as the crow flies) west of Hastings, on the high terraces either side of the Ngaruroro River. The climate here is influenced by the proximity of the nearby Kaweka Mountain Range. Substantial plantings were first initiated by Morton Estate Winery (now New Zealand’s largest independent wine producer), in what is now their flagship winery, Riverview. Other major plantings have been made on the north bank of the river by Morton Estate and by Delegates Wines. In 2003 New Zealand’s largest corporate producer Montana Wines acquired 200 hectares on which substantial plantings have now been initiated. Plantings through this area are almost entirely on Takapau silt and sandy loam “red metal” soils. While a variety of grape varieties have been established the area is undoubtedly best suited to cool climate whites – Chardonnay and Sauvignon Blanc and for Pinot Noir, – mainly for Champagne type wines.  It remains to be proven whether or not, with time and as the vines mature, Hawkes Bay’s cooler climate plantings of Pinot Noir can produce premium quality still wines. Well proven however is the totally outstanding Chardonnay consistently produced by Morton Estate. This is evidenced by their trophy awarded for best Chardonnay in the World in 1997 at the London International Wine and Spirits Competition, as well as numerous other international and national gold medals and Industry accolades through to the present time.

Esk Valley – Visitors leaving Taupo and entering Hawkes Bay via Highway 5 will travel through the picturesque Esk Valley which is located about 12 kilometres north from the city of Napier. This is a long established Hawkes Bay grape growing area, perhaps best known for the consistently excellent wines produced by Esk Valley Winery (Villa Maria, Hawkes Bay Vineyards). Most of the Esk Valley grape plantings are established on very free draining sandy and sandy loam soils. This is a warm, sheltered environment and the valley has an early ripening micro climate, well suited to Bordeaux style red wines and for fully ripened Chardonnay.

Purchasing vineyards and viticulture land in Hawke’s Bay.

The Hawke’s Bay District differs from other broad growing areas within New Zealand through the variation in micro climates and soil types within which wine grapes are grown and arguably, the wider range of premium quality wines that might be produced. Given this relatively wide choice careful site appraisal is essential. If the investor has an ambition to make wine of a particular variety and style then special consideration needs to be given to the requirements of that particular grape variety. However a common pre requisite for premium wine grape production is a low vigour site with free draining soils. In addition irrigation for both vine establishment and subsequently for grape production will be an important consideration. In many French vineyards famous for their fine wines, irrigation is not practiced or even permitted. In Hawkes Bay on shingle, red metal and other very free draining soil types, natural soil water retention can be very low.  Without controlled irrigation water, vines will become stressed when ripening fruit over extended dry periods. Contrary to some opinion, fruit from drought stressed vines is unlikely to make good wine and drought stress can in fact result in off flavour characteristics. This being the case, an otherwise ideal vineyard site is of little value without access to adequate irrigation water (and if necessary frost control water). In addition a legal consent will be required to use that water. Within Hawke’s Bay water consents are issued by the Hawkes Bay Regional Council and are very carefully controlled. In some areas, especially where water is drawn from a stream, river, riverbed or a commonly used aquifer, water rights are already fully allocated. Further water rights are not available and new vineyard or horticultural development simply not possible.

An important factor in selecting a vineyard location is the potential of that site for late spring frost. In 2000 and 2003, Hawkes Bay vineyards – even in coastal areas previously thought immune to frost damage, were severely damaged by late spring air frosts. Some of the very best growing areas in Hawke’s Bay are particularly frost prone. Measures to combat frost include spraying water, frost pots, windmills and hiring helicopters (the latter two are used to move layers of higher air which have not reached freezing level down to the vineyard level). A recent innovation has been the use of tractor drawn mobile LPG heaters.

Within recognised growing areas premium vineyard land has commonly sold at prices between $45,000 and $55,000 per hectare. Land prices within the Gimblett Gravel are usually considerably higher, driven largely by the fact that this land area is limited in size, demand and the fact that blocks are not often made available. Other outer-lying areas very suitable for vineyard development but still predominantly in livestock production are often available for sale priced in the region of $20,000 per hectare providing always that adequate irrigation water is available.

Prices paid for producing vineyards are can be quite variable. There are few if any of the early bulk Muller Thurgau (or similar) vineyards remaining within Hawke’s Bay. In reality very old vineyards have only bare land value, minus perhaps the cost of removing their posts and vines.

There remain however substantial plantings on relatively fertile silt loam soils, what can best be described as medium or bulk quality Chardonnay, Merlot, Sauvignon Blanc and a few other varieties dating from the 1980’s. Many of the established vineyards offered for sale in Hawke’s Bay come into this category. Up until the 2004 vintage there has been an under supply of classic grape varieties within Hawkes Bay and   premium high quality well ripened grapes from low yielding vineyards have not received a substantial price premium over average quality grapes. High yielding vineyards have been the most profitable for growers not involved in wine making and sale prices for this type of vineyard have commonly been between $50,000 and $70,000 per hectare. This situation will not continue given the extensive plantings of high quality vineyards currently coming into maturity and production. Never the less any vineyard or orchard located on a heavier and concequently more fertile soil catagory, particually if adequate irrigation water is available,  is likely to maintain a reasonably high land value because of buyer competition from orchardists and cash crop farmers.

 A largest land rural land areas in Hawke’s Bay are utilised as hill country pastoral farms, a substantial proportion of which have substantial areas of limestone derived soils. There is a growing appreciation that where adequate water is available (commonly so in limestone country) warm, sheltered, north facing slopes can be an ideal medium for a number of grape varieties. Vineyards in the Rhone valley of France (home of Syrah) are commonly based on limestone soils. There are of course other important aspects of vineyard site selection to be considered, however prices for this class of land can be very reasonable. An example of the quality of wine made from grapes grown from this class of hillside site can be seen in the Hawkes Bay winery Brookfield’s 2002 Hillside Syrah, which sent shock waves through the Australian wine Industry by winning in the Sydney International Wine Competition both the top award for best red table wine and for the best fuller bodied red table wine. Another recent Hawke’s Bay wine “Bilancia” from a hillside vineyard won the Syrah trophy in the New Zealand Wine Society Royal Easter Show.

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Hawke’s Bay – A Region of Abundance

Bounded by the mountain ranges to the west that divide New Zealand’s North Island, and to the east by the Pacific Ocean, nature has provided Hawke’s Bay with its own distinctive and superior climate and geography. Early European settlers in the mid 19^th Century recognised that, and established a strong rural based economy and population pattern, which with subsequent agricultural and horticultural development, continues to underpin the economy of the region today.

Climate and Geography

 The North Island’s central mountain ranges impact significantly on New Zealand’s predominantly westerly weather pattern. On the eastern side of the mountain divide Hawke’s Bay experiences a relatively sheltered climate and a comparatively warm and pleasant Mediterranean climate is the result. Most of the Hawke’s Bay region experiences only moderately cold winters, followed by pleasantly warm to moderately hot summers. While the foothills close to the western mountain ranges together with much of Northern and Southern Hawke’s Bay usually experience above average, higher rainfall, most of Hawke’s Bay enjoys an annual average of about 800 mm. This is usually distributed between April (or mid to late autumn), though to the beginning of January (or early summer). Mild, but in exceptional years, more accute drought conditions are often experienced between mid summer through to mid or late autumn.

From Southern through to Northern Hawke’s Bay, the closely linked Ruahine and Kaweka ranges fall away to the rolling hill country and  fertile plains that combine to form most of Hawkes Bay. The mountains and hills are drained by a myriad of streams and rivers that merge to form the Mohaka, the Tutaekuri, the Ngaruroro and the Tuki Tuki Rivers, providing water to the region’s industry and population as well as some of New Zealand’s very best trout fishing. These rivers contribute to an underground acquafer carrying large volumes of pristine filtered water only metres below some of the best horticultural land on the plains of Hawke’s Bay.

Hawke’s Bay can therefore claim an ideal combination of strong soils for pastoral farming, fertile plains laid down by the network of rivers for horticultural crops, and light free draining soils for the grape growing industry. Add rainfall when required, rivers for irrigation and stockwater, and warmth and sunlight hours when needed, the result is an environment supporting a great lifestyle, and highly productive and efficient land based industries.

Economic Development

From the first wave of 19^th century European settlement and up until relatively recent years, pastoral farming dominated the economic, social and political direction of Hawke’s Bay. Serviced early on by Meat Processors exporting frozen lamb through the Port of Napier to the growing United Kingdom Market, and Wool and Hide Processors, the pastoral sector continued to flourish. Following World War II the extensive and fertile Heretaunga plains surrounding the cities of Hastings and Napier became equally well known for it’s rapidly developing orcharding industry. The establishment of J Wattie Canneries (Now Heinz-Wattie) supported and accelerated this development, and now the growing, freezing, canning, dehydrating and export of a vast range of food crops and added value food products has developed and combined to form one of Hawke’s Bay’s most important industries and employers.

More recently Hawke’s Bay became recognised as containing soil types, and over substantial areas an environment considered ideal for the cultivation of cool climate Bordeaux style wine grapes. While wine grapes have been established in the Bay since the 19^th century, it was not until the late 1970’s and 1980’s that the major wine industry in its present form was established. Today Hawke’s Bay is one of New Zealand’s largest grape growing and wine making regions and has achieved considerable international recognition for many of its wine styles and wineries.

Four Districts and Two Cities

Hawke’s Bay is administered by four District Councils, which with the City of Napier and the Hawke’s Bay Regional Council are responsible for providing the services required by urban, rural, and commercial land owners and the general population. Although providing their ratepayers with the localised services required in their districts, they combine their Economic Development and Tourism activities, forming Hawke’s Bay Incorporated to promote the development of the region as a whole.

 Northern Hawke’s Bay – the Wairoa District

Substantially separated from mainstream Hawke’s Bay by the rugged Mangaharuru Ranges and steep coastal foothills, Northern Hawke,s Bay is based around the small coastal rural township of Wairoa. Established originally to service the agricultural industry, Wairoa is approximately one hour and fifty minutes driving distance north from the city of Napier on a sometimes steep and winding, but otherwise high quality State Highway 2.

 The economy of Northern Hawke’s Bay is centred on hill country pastoral farming, and lacking the population, access to the international Port of Napier, and breadth of available soil types, does not enjoy the industrial or economic diversity of other Districts within Hawke’s Bay. The Wairoa District is however justifiably well known for its beautiful unspoilt coastline, beaches, fishing and diving. The most popular beaches are found at Mahia Peninsular and offer some of the best known and most spectacular surfing in New Zealand. Inland from Wairoa, the beautiful Lake Waikaremoana situated in the unspoiled wilderness of the rugged Te Urewera National Park offers spectacular scenery, hunting and fishing. The Wairoa District can also claim some of New Zealand’s most scenic and productive wild trout fishing rivers, many of which are readily accessible to the public.

 Napier and the Hastings District

Although only 18kms apart, the twin cities of Napier and Hastings have developed their own distinctive characters and economic strengths.

The City of Napier, with a population of 53,500 is administered by the Napier City Council, and provides the region’s transport connection to the rest of the country and to the world. Napier Airport has regular flights or connections to and from all key domestic centres, and has been upgraded to manage the increasing traffic and larger aeroplanes accessing the region. Similarly, the Port of Napier continues to grow and develop to accommodate increased export volumes of agricultural, horticultural, forestry based products, and manufactured products directed through the Port from Hawke’s Bay and the surrounding region’s.

 As a result of the rebuilding programme following the devastating 1931 Napier Earthquake the City of Napier has a large number of fine examples of Art Deco Architecture. Now known internationally as the “Art Deco City,” Napier has a full programme of Art Deco events attracting growing numbers of visitors to Hawke’s Bay.

 Hastings City, well known for its outstanding examples of Spanish Mission Architecture, and with a population of 67,000 is the centre of the Hastings District. Although like Napier it has developed a manufacturing base to service it’s land based industries, agriculture and horticulture have traditionally been the mainstay of the economy and are still of major importance. Consequently the centre of the regions livestock industry is Stortford Lodge on the outskirts of Hastings, where the major stock firms or agents and the district’s stock sale yards are located. Similarly, fruit and vegetable export packhouses and coolstores, and food processing companies are established in and around Hastings to service the orchards and vegetable growers located on the surrounding Heretaunga Plains.

 The region’s large number of outstanding wineries, winery restaurants and specialist food producers has encouraged the development of the “Wine Country Food Trail”, with many wineries and winery restaurants open to the public, and proving to be a major attraction and experience in their own right. The District also has a wide range of sporting, recreational and cultural activities available to visitors and residents. These include the Hawke’s Bay Art Trail, some of New Zealand’s better beaches, golf courses, uncrowded trout fishing rivers, as well as access to hunting and tramping through the Ruahine, Kaweka and Kaimanawa mountain ranges.

Central Hawke’s Bay

The Central Hawkes Bay District is based around the thriving rural townships of Waipukurau and Waipawa, which lie about thirty-five kilometres south of the City of Hastings on State Highway 2. With a population of almost 13,000, the district is administered by the Central Hawkes Bay District Council, and as it contains much of Hawke’s Bay’s most productive farmland,  has a largely pastoral, horticultural, and cropping based economy. The Ruahine mountain ranges are a dominating feature on the long western boundary of the District, and the eastern boundary is the largely unspoiled Pacific coastline. There are a number of well known and accessible beaches offering swimming, surfing, boating and fishing, with many kilometres of wide, golden, unspoiled beaches to explore. Inland the Tuki Tuki, Waipawa and a number of smaller streams offer excellent, uncrowded and accessible trout fishing.

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Families and individuals seeking New Zealand residency and especially individuals and companies considering any type or level of investment are well advised to obtain early, competent and most importaintly; qualified advice on the New Zealand taxation issues which will inevitably affect them. In New Zealand competent advice on taxation issues is provided by Chartered Accountants (as apposed to taxation attorneys in USA). The following is a brief summary of some major aspects of the New Zealand taxation system but is not intended to be comprehensive and definitely not intended as a substitute for specific advice from a qualified, experienced chartered accountant.

Taxation in New Zealand is managed and collected at a national level by the Inland Revenue Department (IRD). Taxes are levied both on company and on individual income. In addition there is a flat 12.5% tax on the supply of most goods and services (GST, similar to VAT in Great Britain). In New Zealand GST is generally considered to be a fair an equitable tax system that more evenly spreads the tax burden through society than a purely income earning tax system.

Individuals, farmers, companies and businesses who supply taxable goods and services are registered with the Inland Revenue Department and in practical effect collect GST tax on the goods and services they supply on behalf of IRD. GST is claimed back from IRD on legitimate business purchases and expenses and the net difference is paid to – or claimed from IRD through a regular reconciliation (one monthly, two monthly or six monthly).

Privately owned homes (or house rentals) do not attract GST; however land and buildings used for business and income earning purposes are normally registered for GST with Inland Revenue Department and when offered for sale are sold on a plus GST basis. If the purchaser is registered for GST purposes with IRD then the GST is normally refunded by IRD.

There are no capital gains taxes, land taxes (as for example in USA) or death duties in New Zealand. Local District and Regional Councils levy annual rates (as opposed to taxes) on rural and urban land, however these are relatively modest (compared to USA land taxes) and relate to services actually provided.

From 1^st April, 2009 the following personal taxation rates apply in New Zealand (Tax code M – primary income without student loan):

Up to $14000                                        at a rate of 12.5%

Between $14,001 and $48,000               at a rate of 21%

Between $48,000 and $70,000               at a rate of 33%

Over $70,000                                        at a rate of 38%

Employees deduct relevant amounts of income tax from salary and wages in a system known as Pay-as –you-earn (PAYE). Banks and other financial institutions deduct a relevant amount of income tax on interest and dividends as these are earned; known as Residents Withholding Tax.

At the end of each tax year individual tax payers who have not paid the correct tax (too much or too little) submit a personal tax summary from which over or under payments are reconciled.

One of the first subjects your advisor will wish to discuss is the entity you will use to purchase and operate a New Zealand property. Income earning properties are commonly operated by individuals, partnerships or through a limited liability company structure. However, if considered appropriate for your personal circumstances, your accountant or lawyer may well suggest that you consider the many very real advantages (tax and otherwise) of a family trust structure to take ownership of your new property or company, whether the property is income earning, or simply a lifestyle or residential.

New Zealand companies pay tax at 30% in the dollar earned, which is distributed to shareholders as dividends. Individual NZ shareholders receive a credit in their tax returns for the tax the company has already paid which is termed Dividend Imputation and avoids double taxation. Moreover it is possible to register the company with IRD with “Loss Attributing Qualifying Company (L.A.Q.C.) status. If the company experiences tax losses such losses may be distributed to the NZ shareholders to reduce their personal tax liabilities.

New Zealand residents are liable to pay taxation on all income regardless of the country in which such income is generated. However New Zealand does have double taxation agreements with a wide range of countries which set out which country alone will tax specific types of income.

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Historical background to New Zealand rural settlement

In the year 1840 at Waitangi in the Bay of Islands, a treaty was signed between Maori chiefs and representatives of the British Government. While important aspects and interpretations of the Treaty, as well as subsequent adherence to its principals by colonial officials of the day and successive New Zealand governments is subject to debate and controversy to the present day, the treaty was a hugely significant landmark event in New Zealand history, marking the real beginning of British colonial settlement and development. Whatever the Maori signatories to the document may have believed, from the European perspective the treaty of Waitangi was widely accepted as establishing British authority in New Zealand together with legal rights for British settlers and from that time New Zealand became a destination for migrating British farmers and settlers. Although over the years other minor European ethnic groups also migrated to New Zealand, it was the descendents of British settlers who went on to form the main population basis of the New Zealand farming industry.

Early New Zealand farm settlement schemes, promises and disappointments

For many settlers, migration from Victorian Britain to New Zealand was a consequence of the acute urban overcrowding and deteriorating social and living conditions which followed the agricultural and industrial revolutions within Great Britain. Within Britain notable politicians, radical activists, writers and commentators of the day advocated their own contrasting solutions and reforms to the social and industrial problems of the era, ranging from legislation to create improved social and working conditions, through to violent class revolution. Edward Gibbon Wakefield (1797 – 1862), promoted colonial migration as the answer. Wakefield’s colonial model advocated the creation of colonial settlements which were to be based on transplanting cross section of existing British working, trades and land owning classes from overcrowded England to a new, utopian life in New Zealand. Here, in settlements organised by the New Zealand Company, settlers were to enjoy a greatly improved life amidst an abundance of fertile soils for cultivation in a pleasant and favourable climate. Cheap land on the other hand was not part of the plan. On the contrary, Wakefield advocated that settlers pay high land prices in the new colony, in part to fund ongoing colonial development, but also to discourage emigrant labourers, tradesmen and artisans elevating themselves from their allotted station in the colony. In a publication promoting settlement in New Zealand the Secretary to the New Zealand Company described the colony as “two – thirds cultivatable, blessed with particularly rich forest soils, having few earthquakes, and enjoying one of the most equitable climates on earth” (Ward 1840). The reality was somewhat different. On arriving in New Zealand early British settlers faced survival in a physically challenging environment with mountainous, rugged, densely forest clad hills and coastal plains often dissected by large, braided, flood prone rivers. The development and evolution of rural New Zealand to the countryside we now recognise involved generations of struggle, hardship, perseverance and dedicated physical work. For a variety of reasons the New Zealand Company achieved only limited successes, but their story is taught to every New Zealand school child as the starting point of organised European settlement in New Zealand.

Other prominent early colonialists, notably Sir George Edward Grey (twice British Governor of New Zealand and following his entry into local politics in 1877; New Zealand Premier), advocated the sale of cheap land obtained from Maori land purchases (and in some cases Maori land confiscations) to encourage expanded immigration and farm settlement. Inevitably perhaps given their contrasting views, Wakefield and Grey were to become intractable political enemies.

Not surprisingly the colonial settlement model advocated by Wakefield and the New Zealand Company did not survive their early settlements. Rather, the modern New Zealand rural economy that evolved has its foundation in the policies and reforms affecting farmland ownership and distribution legislated in the late 19th to early 20th century. Early land settlement schemes for migrating British settlers to New Zealand were idealistic in intention, but very limited in scope. They were commonly abused through absentee and “dummy” ownership and created few realistic opportunities for farm settlement relative to increasing numbers of newly arriving migrants. Once in New Zealand the availability and the cost of land and land development made farm ownership unattainable to the majority of early migrants. On the other hand, by mid to late 19th century, substantial tracts of New Zealand pastoral farmland were tied up by a relatively few wealthy land owners in the form of very large sheep stations, in real effect replicating the traditional farm land owning class of the “home country”. It has been estimated that by 1890 through lack of opportunity, British and other new settlers were leaving New Zealand at the rate of 1000 each month for a better future elsewhere.

Progression in New Zealand to an agricultural export economy.

Following early gold rushes New Zealand had little obvious recourse to exploit other than the land and forests and so inevitably, farming and timber became the first significant New Zealand industries. The immense stands of native timber, in retrospect squandered as much as exploited, were New Zealand’s largest industry for much of the second half of the 19th century. Virgin forests were exploited both for export as well as to supply an inevitable building boom within the rapidly expanding colony. At the same time, while early English and Scottish settlers found New Zealand countryside a challenging environment, once broken in the land and temperate climate proved an ideal environment for the traditional British sheep and cattle breeds and farming practices with which they were familiar. From livestock imports and their natural increase stock numbers inevitably increased to the stage where limited local markets for fresh sheep meat and beef became a very real restriction on the New Zealand farming industry.

This situation changed forever in 1882. History was created both for the farming industry and New Zealand economy when the sailing ship Dunedin departed New Zealand’s South Island port of Oamaru for Great Britain, carrying what transpired to be the first successful export of frozen sheep meat and butter. New Zealand mutton and lamb was very well received on the Smithfield market, substantial profits were made by all involved and the direction of New Zealand as an export oriented farming nation firmly cemented. To this day New Zealand farmers continue to export and compete on British and European markets with agricultural commodities broadly similar to those produced by their British farmer counterparts. Over succeeding generations however, significant differences between the British and New Zealand farming industries and their respective economic environments have evolved.

Early Foundations in New Zealand for a modern, agriculture based economy

The legacy of Sir John (Jock) McKenzie

In Scotland an early migration catalyst was the massed clearances and evictions of tenant farmers from the Scottish Highlands by lairds and chieftains who preferred the economic benefits of sheep on their land to the traditional highland occupants; their own kinsfolk. A Scottish migrant to New Zealand; Jock McKenzie (Sir John McKenzie KCMG 1838 – 1901) the son of a poor Ross-Shire tenant farmer, witnessed first hand the Ross-Shire highland clearances and was forever deeply influenced by the experience. In future years this was to have significant consequences for New Zealand. Like many others he migrated to New Zealand searching for a better future however once in New Zealand, motivated by obvious anomalies and abuses of land distribution and tenure, he entered local and ultimately national politics to champion these issues. By the late 19th century McKenzie had progressed to become New Zealand Minister for Lands in which position he continued through successive governments. Jock McKenzie was responsible more than any other of his time, or time since, for determining the ultimate settlement pattern of New Zealand farm lands and as a direct result, the present day social and economic basis of rural New Zealand. His life work which was devoted to his principal “lands for the people” is perhaps best summed up in the closing couplets of a poem he quoted before the crucial division on the Lands for Settlement Bill 1894:

“Yet millions of hands want acres,
And millions of acres want hands.”

His legacy went far beyond equitable farmland distribution and includes creation of the Agriculture Ministry (as it is now known) to encourage scientific agricultural methods, agricultural education and of particular importance at the time, creation of schemes which made loan finance a realistic and affordable option, enabling farmers and settlers purchase and development of agricultural land in New Zealand. It is to him, more than any other individual that in 21st century New Zealand British migrants continue to find a wide range of farming opportunities in a diverse and thriving rural economy. More particularly, an economy based on the enterprise of individual farmers and economically viable and sustainable farming units, rather than a countryside of great land owners and small holder farmers. (Source: Bernard John Foster, M.A., Research Officer, Department of Internal Affairs, Wellington.)

The New Zealand formula: climate, geography, and economic environment

In the 20th century British and New Zealand farmers compete by selling similar agricultural primary products within the European market place. British farmers dependant on financial subsidies often have difficulty understanding why their New Zealand counterparts are able to transport their lamb, beef and dairy products more than 19,000 kilometres, but sell at competitive prices, successfully competing with British farm produce. Answers can be found in a number of fundamental differences between British and New Zealand farming systems, differences driven primarily by a combination of geographic, political and economic factors. New Zealand farming systems reflect production efficiencies made possible in the first instance by the relatively favourable temperate climate and geography common to much of the country. A further significant factor is the average size and scale of operation evident on most New Zealand farms compared to their average British counterpart. Never-the-less, recent history clearly demonstrates that these factors did not on their own result in current levels of efficiency through the New Zealand farming industry. The current economic model formula was not complete until the 1980’s deregulation of the New Zealand economy and the farming industry in particular.

An understanding of the competitive edge demonstrated by New Zealand farmers starts with a basic premise; that current levels of efficiency and productivity demonstrated by the New Zealand agriculture and horticulture industries are a direct impact of the deregulation of economy implemented in 1984. For the New Zealand farming sector deregulation meant withdrawal all existing farm subsidies and support schemes such as concessionary loans, compensation for production costs, and financial support for exports. Free market policies were highly controversial at the time, just as discussions concerning farm subsidies are in Britain and Europe at this time. There is no question that deregulation resulted in short term hardship, not only to New Zealand farmers, but also to other sectors of the economy long cushioned by a highly regulated internal economy and the comforts of tariff protection. Never-the-less, it has been estimated that only about 1% of pastoral farmers (the major beneficiaries of farm subsidies) were forced to leave the land. In most cases these were farmers with large, unsustainable borrowings. For the remaining New Zealand farmers, economic survival and ultimately, ability to achieve satisfactory levels of farm profitability, has been achieved through substantial, and widespread increases in farm efficiency and productivity. Of equal importance, removal of subsidies has encouraged significant levels of farm diversification to better reflect market requirements rather than as in the past; farming to low value, subsidy supported commodities.

Statistics indicate that while sheep numbers declined 35% through the period 1989-90 to 2004-05 – from 69 million to 39 million, actual lamb production increased 15%, up from 364,000 tonnes in 1989/90 to 427,000 tonnes in 2004/05. Over this period a large dairy beef industry has developed together with a major expansion of the New Zealand deer farming industry. It is estimated that while land used in New Zealand for livestock and arable farming declined from 14 million hectares in 1983-84 to 12 million hectares in 2002-03 (a period in which considerable areas were planted to forestry), overall productivity on the remaining land has increased 85% over the same period.

New Zealand farm productivity

Within any farming district of New Zealand, an analysis of the size of an average pastoral farm together with the livestock numbers they carry and their productivity, will demonstrate significant advantages compared to the published livestock statistics of average British sheep and beef farms. Of equal importance in calculating relative farm profitability is a comparison of the labour and management input into British and New Zealand farms, relative to the livestock they carry. Current literature suggests that in many areas of Great Britain a stocking rate of 1000 breeding ewes for each labour unit; shepherd or owner is considered normal. The same ratio might not have been considered unusual in New Zealand in the 1950’s or early 1960’s, however few aspects of the New Zealand pastoral industry have changed more radically. On an average New Zealand pastoral farm one skilled shepherd, or more commonly; one New Zealand farm owner, would normally be considered capable of managing 5000 to 6000 su. (Within New Zealand su is a common farmer’s measure of farm livestock which are calculated in stock units or su. One breeding ewe equates to 1 su. One breeding cow is the equivalent of 6 su, etc. As a basis of fair comparison, a farms su capacity is normally quoted as at mid winter). One individual managing a mixed sheep and cattle hill country farm carrying up to 10,000 su with assistance for seasonal work (e.g., annual shearing muster or lambing), is not considered unusual.

High ratios of livestock to management have not been achieved at the expense of livestock welfare; far from it. Over the past 30 years New Zealand farmers have invested in substantially improved genetic characteristics in their breeding flocks and herds. On many properties substantial advances have been achieved changing from traditional Romney sheep to new and improved breeds such as Perindale and Coopworth, which amongst other desirable characteristics have an inherited ability to deliver their lambs without assistance or intensive shepherding. More commonly however and especially in the New Zealand North Island, farmers have made considerable advances through the substantially improved Romney genetics now freely available.

With the exception of the South Island high country and foot hills where the hardy Merino or Merino crossbred are the dominant sheep breed, the duel purpose (meat and wool) Romney remains the most popular sheep breed in New Zealand. Until relatively recent times hill country farmers relied on intensive low country Romney studs for the supply of flock rams. These stud farms almost inevitably sold flock rams bred from stud rams selected in large part on the aesthetic characteristics required to compete and win trophies in livestock shows, rather than qualities more useful to a hill country farmer. Factors now appreciated as critically affected by genetics, such as fertility, weight gain and of major importance; the ability of a ewe to deliver a lamb without intervention (in part related to pelvis width), were compromised in the search for what stud breeders referred to “conformation”, in their quest for show trophies and ribbons. In the 21st century progressive New Zealand farmers purchase rams and bulls from hill country stud farms which select livestock progeny based on production recording schemes. Stud stock is reared on terrain similar to the farms for which the progeny are intended. Growth rates, fertility levels and other desirable characteristics are recorded and used as the basis for selection, rather than potential for show ring cups and ribbons.

New Zealand farm dogs, bikes and horses

In the early 1970’s some commentators were suggesting that in adopting modern farming methods, future generations of New Zealand farmers would inevitably abandon both the stock horse and sheep dog. In 2008 the farm stock horse which up to the 1960’s almost without exception had been an essential every day part of the operation of New Zealand hill country farms, has very largely been replaced by Japanese ATV’s or quad motor bikes. Conversely, good, well trained sheep dogs far from becoming obsolete, have had a significant role in achieving increased stock to management ratios and are more valuable than ever, a fact reflected by high sale prices achieved for well trained dogs. Nevertheless, once familiar with the larger scale of operation, a capable, traditional British sheep farmer would probably find little difficulty adapting to life on a traditional New Zealand sheep farm or station. Neither would his “strong eye” Collie sheep dogs, although on a larger New Zealand property a British farmer would probably add New Zealand Huntaway breed type dogs to his team. The New Zealand Huntaway is bred and trained to muster flocks from and over substantial distances using “noise” (barking) to good effect.

New Zealand and British farming systems: The climatic factor

The effect of climate on pasture growth patterns in the New Zealand livestock farming industry has a major part in explaining productivity and efficiencies relative to British and European systems. New Zealand has a broadly similar temperate, maritime driven climate to that of the British Isles, with the same range of seasons and a broadly similar rainfall range. Differences as they affect farming practices in each country lie in the relative extremes and length of seasons in each country, but most importantly; the winters. In New Zealand the climate has a dominant westerly pattern. While being the closest country to the Antarctic Continent – from which direction farmers expect cold southerly winter and spring storms, the main weather pattern originates from the moderately warm Central Pacific Ocean. Similarly, the British climate is also maritime based, but with a south-westerly pattern originating from the colder South Atlantic. British climate is also influenced by the nearby European continent. Colder, longer, winters result and critically for farmers, a significantly shorter pasture growing season resulting in the expensive necessity of housing cattle through winter in intensive feedlots. Sheep, especially in upland and moor-land environments, are commonly dependant on purchased or farm produced feed supplements.

Within New Zealand there is a broad climatic range between the sub tropical north of the North Island where grass growth may only slow in winter, through to the substantially colder south of the South Island where grass grows only between spring and autumn. Consequently there are marked differences between and to some extent within different New Zealand farming Districts in respect to pasture growth patterns. The need for farmers to provide supplementary hay, silage or winter forage crops is determined both by local microclimatic as well as individual farm stocking levels. Nevertheless, all classes of livestock in all Districts not only exist, but in winter under good management have potential to thrive and develop without housing or artificial shelter, a major point of difference many visiting British and European farmers find difficult to comprehend.

Financial and personal considerations for British investors in New Zealand farms

A common factor New Zealand farmers share with their British counterparts and farmer’s world wide, is the reality that financial returns are affected by many factors outside of any farmer’s control. Potential farm investors from outside of the farming industry – and as such unfamiliar with the vagrancies of farming as a livelihood, are commonly deterred by relatively low financial returns often demonstrated by New Zealand farms compared to sound commercial property investment or even a secure bank term deposit. In assessing a farm investment, of primary importance is the reality – well understood by generations of New Zealand farmers; that for reasons outside the control of any farmer, farm profitability is inevitably cyclical in nature and financial hardship is occasionally part of that cycle.

Ongoing causes of periodical low or negative farm profitability are low export commodity prices, the effect on farm gate prices of the free floating and frequently over valued New Zealand dollar and from time to time the effects of natural disaster such as drought. To illustrate; pastoral farmers experienced extremely difficult conditions for an extended period between 1983 through to about 1998 with low commodity prices, further aggravated on New Zealand’s east coast (Hawke’s Bay and Wairarapa) by two extended periods of severe drought. Conversely, from 1998 increased levels of farm productivity coincided with significant increases in commodity prices and a favourable New Zealand dollar exchange rate (trading as low as 39 cents to the US dollar in 2002). This combination triggered an extended period of prosperity in the farming sector lasting to about 2005. From around this time however, high internal interest rates relative to other countries resulted in New Zealand becoming a favoured destination for overseas bond investors and currency speculators. As a consequence the NZ dollar rose rapidly in value, peaking at 81 cents to the US dollar in 2007, substantially lowering farm gate lamb, wool and beef prices. Lamb prices to farmers fell to levels little or no more than the cost of production in most areas. Prospects for the 2008 -2008 season (and hopefully beyond) look very much better. Decreased world lamb production coupled with increased demand in Europe look set to combine with decreased New Zealand production (strongly linked to the increasing trend for dairy conversion of sheep farms in the more fertile higher rainfall or irrigated areas) and a weakening New Zealand dollar to result in much better farm gate prices. The prospects for wool look significantly brighter following amongst other things, New Zealand becoming the first nation to sign a free trade agreement with China. New Zealand’s naturally reared, disease free beef continues to attract more markets and better prices.

The large majority of New Zealand farms are family units which very often pass from generation to generation. New Zealand farmers have learnt to be resilient in character, accepting good times with lean. For most New Zealand farmers the incentive to remain on the land includes, but goes well beyond the need for a commercially viable return on capital. Lifestyle and work satisfaction factors while difficult to define, especially by a pragmatic New Zealand farmer, are nearly always of importance. The “lifestyle” factor has a major bearing on the sustainability of farm and farmland prices and overall stability within the New Zealand farming industry.

New Zealand farmers: Sustainable agricultural exporters to Britain and the world

A common motivating factor equally as important as short term profitability to many modern British migrant farmers considering the viability of New Zealand as a destination, are prospects of investment and a life within a genuinely sustainable industry, compared to European counterparts. The long term sustainability of British and European agricultural commodity production systems which remain dependant to any significant degree on financial subsidies and inefficient, air polluting energy sources, is more doubtful.

The international debate on global warming, its causes and remedies, is only about one decade old but now gaining the momentum it deserves. Not before time, as long term implications of unchecked global warming have extraordinary implications for all nations, as was suggested in a widely circulated report by British government chief economist Sir Nicholas Sterne, who concluded that a failure to act now on climate change and cut green house emissions would result in global economic and environmental catastrophe. The British Government, influenced perhaps as much by political factors as much as real science, have considered a range of “green taxes” including a proposal for a global warming “food miles” tax on food and produce which has travelled thousands of kilometres across the world. Inevitably perhaps, European competitors of New Zealand primary export produce have been quick to exploit the food miles argument as a tool or leaver for further protection against New Zealand primary produce imports. In a cynical attempt to exploit “green” sentiment and gain commercial mileage, to promote its own Country Life brand butter British dairy group Dairy Crest UK commissioned advertisements showing Anchor butter traveling 11,000 miles on a rusty old ship from New Zealand.

Fortunately for New Zealand farmers the nonsense typified by the Dairy Crest UK advertisement is not necessarily typical of sentiment in the United Kingdom. British Trade Minister Ian McCartney commented “It would be better for Britain to receive more goods from countries like New Zealand”. Global warming and the “food miles debate” in particular has triggered scientific studies of primary food production, distribution and their associated carbon emissions between New Zealand farmer and European consumer. A 2006 Lincoln University study demonstrated that “food miles” have considerably less affect on global carbon emissions than do the actual farming systems within which they are produced. Much more relevant to the carbon emissions debate was shown to be the overall “carbon foot print” created by a combination of the effects of production together with delivery to retail point by any one food commodity.

The Lincoln University study demonstrated New Zealand primary produce; milk solids, lamb, apples and onions (as examples) to be twice as efficient measured in energy input and carbon dioxide emissions as their European competitors. New Zealand lamb was demonstrated to be four times more efficient. In 2007 a further study compared the carbon emissions of the New Zealand dairy industry with that of the United Kingdom and found United Kingdom farms to produce 35% more emissions per kilogram of milk fats than New Zealand dairy farms. Of equal significance is the fact that produce shipment by sea, even over long distances between New Zealand and Britain or Europe, is relatively efficient measured in carbon emissions compared to long haul road produce transport within Europe and the United Kingdom.

The sad truth is of course, that if the “food miles” theory were to be successfully promoted ahead of genuine science, the real looser would be the environment. Using “food miles” as an argument to protect (for example) the European dairy industry is as logical as an argument would be to protect local pineapple and banana production in heated tunnel houses supplied by inefficient European coal fired power stations. Without reasonable doubt global warming is a problem that will only ever be resolved through global solutions and international cooperation. A rational, sustainable approach to the problem would include encouragement for international carbon efficient food producers and transport systems in preference to quotas and tariff barriers to protect inefficient production systems and purely national interests.

Potential for Joint New Zealand and British farmer produce marketing

In the long term it could be logically argued that real long term interests of British and New Zealand farmers would be better served through cooperation in areas of common interest than through trade barriers and tariffs. The obvious interest common to both is that the British and European market for quality beef and lamb be further developed and grown, and that farmers receive their fair share of retail prices. Sadly, at present there is little effective marketing cooperation even within these nations, let alone between them. New Zealand farmers are adversely affected by an inefficient, competitive export system dominated by two major farmer cooperatives. British farmers have a very fragmented marketing system dominated by five major retail supermarket chains. A joint New Zealand and British farmer trade organization combining marketing expertise and funding to promote quality beef and lamb consumption within Britain and Europe might well have exciting prospects (if it were not to become bogged down and suffocated with the bureaucracy that often afflicts trade boards and organizations). New Zealand farmers do not begrudge British farmers a deserved price premium for high quality fresh regional produce at a price premium over New Zealand imported frozen or chilled product. Prime Scottish Aberdeen Angus beef and Welsh Salt Marsh or Carmarthenshire lamb (for example) is certain to achieve the highest prices for British farmers when overall British consumer demand for quality beef and lamb is at its highest. What is most needed in the interest of both parties is intelligent joint promotion aimed at increasing consumer demand in a market with excellent potential for both.

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From the first wave of 19^th century European settlement and up until relatively recent years, pastoral farming dominated the economic, social and political direction of Hawke’s Bay. Serviced early on by Meat Processors exporting frozen lamb through the Port of Napier to the growing United Kingdom Market, and Wool and Hide Processors, the pastoral sector continued to flourish. Following World War II the extensive and fertile Heretaunga plains surrounding the cities of Hastings and Napier became equally well known for it’s rapidly developing orcharding industry. The establishment of J Wattie Canneries (Now Heinz-Wattie) supported and accelerated this development, and now the growing, freezing, canning, dehydrating and export of a vast range of food crops and added value food products has developed and combined to form one of Hawke’s Bay’s most important industries and employers.

More recently Hawke’s Bay became recognised as containing soil types, and over substantial areas an environment considered ideal for the cultivation of cool climate Bordeaux style wine grapes. While wine grapes have been established in the Bay since the 19^th century, it was not until the late 1970’s and 1980’s that the major wine industry in its present form was established. Today Hawke’s Bay is one of New Zealand’s largest grape growing and wine making regions and has achieved considerable international recognition for many of its wine styles and wineries.

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Education Overview

Hawkes Bay has a number of New Zealand ’s most outstanding and high achieving schools and also has excellent tertiary education opportunities through the Eastern Institute of Technology (EIT).

Early pastoralists established two of New Zealand ’s best known private girl’s schools, Woodford House and Iona College , both at Havelock North. Hereworth School , one of New Zealand ’s best known boy’s private primary and intermediate level schools, was established in Havelock North in the early 20^th centaury. Lindisfarne College was established as a Presbyterian boy’s secondary school at Hastings in 1552 and has gone on to become one of New Zealand ’s most respected secondary schools. Woodford, Iona and Lindisfarne are now integrated into the national state school system but have charters that allow them to retain their special character, traditions and identity, together with educational achievements that have developed their reputations. Napier Boys High and Napier Girls High’ were established in the 19^th centaury and are an example of state schools which have developed an outstanding tradition of excellence in both educational and sporting fields, which continues to this day. Both of these fine schools have boarding hostels.

In New Zealand schools are classified as primary – years 1 to 6, intermediate – years 7 and 8 and finally secondary – years 9 to 13.

Links to Some Hawkes Bay High Schools:

Woodford House: www.woodfordnz.com

Iona Collegewww.iona.school.nz

Lindisfane Collegewww.lindisfarne.school.nz

Hereworth Schoolwww.hereworth.school.nz

Napier Boys High Schoolwww.nbhs.school.nz

Napier Girls High Schoolwww.nghs.school.nz

Primary and Intermediate Level Schooling in Rural Areas

Tertiary Education

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Locations within  Hawkes Bay and District boundaries may be viewed at:

http://www.hawkesbaynz.com/travel_information/maps/

http://aatravel.co.nz/editorial/bigeditorial.jsp?locationId=20005

Travelling time from majorNew Zealand locations may be viewed at:

www.aatravel.co.nz/tourist/northisland_travellingtimesdistances.shtml

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