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

In 2010 prices for Hawke’s Bay lifestyle property have stabilized to a large degree, although this is a generalized statement and different categories of lifestyle property have been affected in different degrees.  The rural category most affected has been lifestyle building sections or property i.e. bare land property for which values have fallen quite dramatically in comparison to rural lifestyle property with homes. To some extend this situation may reflect an oversupply fuelled by numerous rural lifestyle subdivisions initiated in the “boom” years. Another undoubtedly is the cost of building rural homes together with the current cautious attitude of New Zealand bank managers compared to a few years ago.

By comparison farm prices have been relatively stable although the number of sales has been too few to assess any meaningful trends. It is interesting to compare the relatively resilient 3 year median price trend for farms to lifestyle property which are down in value by nearly 20% (source Real Estate Institute of New Zealand)..

Median Sales, Hawke’s Bay, Farms – 3 year comparison.

April 2008         $1,550,000

April 2009         $1,332,500

April 2010         $1,410,000

Median Sales, Hawke’s Bay, Lifestyle propery – 3 year comparison.

April 2008         $500,000

April 2009         $415,000

April 2010         $410,000

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.

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 (to be increased October, 2010 to 15%) 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.

In the 2010 New Zealand budget it was announced that in October, 2010 the GST tax would be increased to 15% from 12.5% and that personal taxation would be reduced at all levels The new lower tax rates aim to stimulate productivity in the economy and mean that people earning the average wage in New Zealand will soon pay lower effective tax rates than people in Australia and the United Kingdom, easing concerns about economic emigration. ^[8]

In addition it was announced that from the 2011/12 income year, the New Zealand company tax rate will fall to 28%  - encouraging productive investment and lifting competitiveness.

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 currently pay tax at 30% (to be reduced in 2011/2012) 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.

Some agreements protect pension payments as well. The agreement with the United States, for example, prohibits New Zealand from taxing American social security or government pension payments, and the reverse is also true.^[12]

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.

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

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

Hawkes Bay is:
http://www.investhawkesbay.com/investment_and_business/index.htm

A very useful site with comprehensive links to the wine industry in Hawkes is: http://homepages.paradise.net.nz/nzwinelinks/hawkesbay.htm

Most rural homes within Hawkes Bay are located either on or near to a school bus service to the nearest primary and secondary schools.