Determinants of Dairy Farm Ownership in New Zealand

Sharemilking is an integral and important part of the New Zealand dairy industry. Historically, it has provided a realistic pathway for highly motivated young people to enter dairy farming and attain farm ownership. However, the system has been under pressure in recent years because of sharply increased land prices, the need to purchase shares in the local dairy company and declining real returns for milksolids. To confirm these concerns a study was undertaken to identify the determinants of sharem Ikers attaining farm ownership, using the mail survey responses of 100 sharemilkers in the Manawatu region. Six logistic regression models were estimated and the likelihood and odd-ratios of attaining farm ownership were explained. Variables positively associated with farm ownership were availability of equity, age, working on a family far (short-term), and access to off-farm employment for the sharemilker's partner within a reasonable distance of the property. The survey responses indicated that an average of 4% of sharemilkers annually will attain farm ownership in the study region, although 67% of sharemilkers aspired to this goal. Progression to farm ownership from sharemilking will continue to become more difficult, with potential negative consequences to the dairy industry in the long-term, unless proactive industry strategies to assist sharemilkers accumulate equity and experience are adopted.