Is Farming Still Profitable in NZ?

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It’s anybody’s question these days: does it still make sense to farm? The answer is yes, and this post will highlight the different reasons. Like other industries, though, it comes with challenges. That is especially true in countries such as New Zealand.

Why Is Farming Still Profitable?

In the recent agribusiness outlook report, Rabo Bank reported another season-high for the sector in New Zealand. It has been another profitable period for the third time.

At least two factors drive the industry’s growth. These are the favorable weather conditions and good New Zealand dollar value. Currency exchange is just the tip of the iceberg. The demand for fresh produce has been unprecedented.

IBISWorld Report revealed that the market for fruits and vegetables in New Zealand grew by almost 7% from 2014 to 2019. It will also continue to grow within the next five years.

This trend is not only limited to the Kiwi region. The fresh produce processing industry, for example, is already worth more than $280 billion. Over 35,000 businesses now comprise the sector.

Farming

Much of the demand comes from the consumers’ desire to eat healthily. Global guidelines suggest consuming at least five servings of fruits and vegetables. A 2019 study, however, showed that only 50% of the Kiwi children were eating enough.

More studies also reveal a connection between chronic diseases and diet. A 2013 article in the Permanente Journal cited how plant-based diets are cost-effective and reduce the risks of heart disorders and obesity. They can even decrease the number of medications a patient should take.

Besides healthy eating, a lot of people are shifting their diet to whole foods for sustainability. Many kinds of research showed that high meat consumption correlates to increased global warming and climate change.

Weathering the Challenges

Farming these days benefit from the changing taste buds and lifestyles of consumers. There’s only one problem: challenges continue. Farmers need to invest in modern agricultural machinery for many reasons. One, skills shortage is real. With fewer workers to till the soil and grow food, labor costs soar. These will make fresh produce less competitive in the market.

Second, soil and terrain conditions across New Zealand can vary. In North Canterbury, the area can be more rugged and harsh. Third, climate change can alter the composition and quality of the soil. It doesn’t make the ground inferior outright, but it can affect the way crops grow. In some cases, it might not be ideal anymore to some commonly grown produce in the area.

Farms in New Zealand are also not cheap. In October 2019, the median price was over $25,000 per hectare. It was higher than in the previous month. It can make land expansion difficult for start-up entrepreneurs.

Food importation can also be a problem. That is if local farmers cannot meet the growing demand and the population of New Zealand continues to increase. Farming for new entrepreneurs looks promising and bright. But unless they learn to deal with the challenges and adapt, their business will meet a premature death.

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