Trustees on several of the Māori-titled farms put a lot of time and effort into looking at the options
for operating their farms under the V5 regulations. The owners then debated the options and made a decision on how to proceed.
On one station, the options that the Trustees put before the owners included conversion of part of the farm to dairy farming, or conversion of the whole farm to forestry. At meetings called to discuss these options, the owners were reluctant to consider tree planting. In part this was because many of them have worked directly on the land, as this Trustee explains:
They have very strong views about what actually happens on the land … Its just because sawmill villages are up on the block [Station], and a lot of the current generation of owners - or their parents or grandparents - worked or lived out there. So they have a very strong attachment to the block.
A second problem with conversion to forest was that the owners, aware of their obligation to hand
the land on, did not want to control the land–use options available to future generations. Forestry,
being a long-term land-use, would effectively limit the ability of the next generation to take advantage of changes, e.g. in technology, that may occur in the near future. The owners were also
reluctant to convert part of the farm to dairy, despite the farm’s NDA allocation being sufficient for a
reasonable sized dairy farm without buying nitrogen allowances. In part this was because of concern for the Lake but, in addition, the capital requirements were too large for the owners to feel
comfortable about undertaking such a change.
Other, alternative land-use options were also considered. Options that have been widely suggested, particularly for this southern part of the Catchment, include blueberry, wasabi and biofuel
production. The interviewed Trustee, however, pointed out that conversion to a new, perhaps risky, land-use may not be acceptable to the owners.
Again, you’re going to have the same issues in convincing your land owners
that that is a better proposition than what we’re currently doing. The
numbers quite often don’t drive decisions - the financial return might not be the primary driver of 40 decision makers148.
Essentially the owners wanted to continue with their current land-use but to also improve farm productivity and thus increase shareholder payments.
Based on the interview with this Trustee, the decision drivers for these owners included:
148 The Trustee estimated that there are around 1400 owners but many are not actively involved with the
1. the owners’ bias towards pasture (as opposed to forest),
2. that the land in the Catchment cannot/will not be sold,
3. a dislike of risk e.g. debt (possibly coupled with problems raising capital),
4. the Incorporation’s ethic of care for the Lake,
5. the need to increase dividend payments to the current owners, and
6. the requirement to pass communal assets on to the next generation in an improved
condition.
None of the interviewed owners of European-titled land, and few of the owners of other Māori-titled
land, appear to have been through such a comprehensive process to determine how they would respond to the regulations. Indeed, some farmers appear to have not fully understand the significance of the changes afoot, according to an ex-Chairman of TLC and consultant to several
Māori Trusts:
Some trustees and governance understood quite quickly how it [the
regulations] might impact them and they made good decisions - like selling nitrogen. But others still are coming to grips with this issue. Maybe they haven’t had the opportunity to sell nitrogen or didn’t understand the opportunity that was being presented. Some should be buying nitrogen.
This applied equally to the owners of European-titled land, as one ex-ballot farm owner explained:
During the years that all this was going on we didn’t purposely change our stock to try to maximise our NDA – not a lot of people did. Most of the farming community thought that it wouldn’t happen and that common sense would prevail – even up until the Environment Court.
Farmers appeared to be focused on the discussions that TLC was holding with the Regional Council and on the (discouraging) results of the research studies that were underway. TLC negotiators, one
of them explained, thought that all they could do was to “…negotiate the best deal [since] the changes were going to happen anyway”.
TLC and Environment Waikato envisioned both European and Māori-titled farmers planting marginal
land and concentrating their farming activities on the better parts. An ex-member of TLC who was a member of the group that consulted with the Council explained the thinking behind this farm practice option:
So [Name] retired their poorer areas which allowed them to intensify their better areas. That was certainly, in terms of the formation of the policy, what was discussed. This is what we wanted to see, - best land use if
possible, - retirement of poorer areas, so that the better areas could be farmed more to their potential.
The Waikato Regional Council incentivised such an approach, according to this same interviewee, by making all land equal. That is, marginal land located far from the Lake was assumed to leach the same amount of nitrogen as highly productive land located close to the Lake, under the same
conditions (e.g. soil type, climate and farm system). In this way farmers gained no extra benefit from retiring highly productive land because of its location, e.g. proximity to a water body. This left the way open for farmers to sell nitrogen and reduce their stocking rates on land of a lesser productive value.
Farmers, however, responded in a much wider variety of ways. For TLC and the Council, the sale of nitrogen allowances could be used to facilitate farm practice changes such as stock reductions and woodlot planting, but for the farmers this was not necessarily sufficient. To achieve their underlying
aims, additional changes may be required. The question that farmers asked themselves was ‘how
could they achieve their aims under the umbrella of the regulations, given the biophysical
environment and development history?’ While the Waikato Regional Council saw farms becoming a
mixture of woodlots and pasture i.e. that farmers would make decisions based on land capability and might trade nitrogen to achieve this, farmers appeared to have a different set of criteria.
Interviewees were clear about their preference for pasture over forest (although woodlots in marginal sites were probably acceptable), and about the need to protect the Lake. Further, they expressed a preference for the lifestyle involved with sheep and beef farming. A sense of place attachment was strong for most of those that remained in the Catchment, even for European-titled farmers. Although almost all farmers mentioned the need to improve the profitability of farming, some saw capital gain as the means to making a profit while others emphasised cash flow, or moving land to a higher use in the sense that profitability had been increased without the need to increase the number of animals, the amount of nitrogenous fertiliser or increase the NDA.
Landowners already in the Catchment seemed to be looking for solutions that would provide them
with ‘satisfaction’ (Fairweather & Hunt, 2011). That is, deliver on one or more of the following criteria:
• retaining their farm (because it is ancestral land and/or because of place attachment and
lifestyle),
• retaining pasture and sheep/cattle/deer stock types (because extensive plantation forests
are not favoured and sheep/beef/deer/dairy support farm systems are preferred and provide work satisfaction),
• making sufficient profit (because dividend payments need to be increased, and/or in order to stay ahead of rising farm costs, and/or to make an adequate return on investment and/or to make sufficient income for an acceptable lifestyle),
• diversification (because that reduces the risk involved in relying on a single income source),
and
• care of resources (including the Lake) and intergenerational transfer (because a long-term
view (i.e. sustainability) is fundamental to owners of Māori-titled land).
Dooley, Smeaton, & Ledgard (2005) undertook a study of preferred farm systems, and the criteria used to distinguish between them, in the Taupo Catchment. Their results confirm most of the criteria listed above. Although the authors warn that the sample size is small (and therefore could be biased) participants in the study overwhelmingly favoured profit (and dividend payments) as their
top criteria, followed by farm sustainability (i.e. continuance), labour, enjoyment, risk (for Māori
participants149) and lifestyle. Environmental sustainability was also ranked as important by some but
other participants felt that the Variation 5 regulations had taken care of this factor and therefore they did not need to take it into account in their personal decision making.
The means of delivering the strategic criteria listed above, under a cap, were elusive. As noted above, land-use change, such as selling nitrogen and planting plantation forest, or conversion to dairy, was rejected by the owners of the Station that was featured in the previous section. The owners felt that the risks were too high and that land-use flexibility for the next generation would be reduced. The interviewed Trustee expands on this below:
We had enough N on the property to have a reasonable sized dairy unit … [but] the capital requirements were a bit scary … [The owners] have the view that they’d rather see farmland than see forest [and] they also wanted to ensure that future generations weren’t encumbered, - that they had some land use flexibility. So hence they weren’t keen on selling all the nitrogen. Cause at the time, the numbers suggested we sell all the nitrogen and plant the whole place in trees. That would have been the most rational economic decision to make, but there was no way that was ever going to be acceptable to our ownership. Even now we have people say - the
accountants - they look back and say, you should’ve done this. Well, maybe,
149 Also supported by Morgan (2009).
The aversion to risk may be reinforced by the publicity that surrounds financial failures. For example, in this southern sector, a property development scheme (involving ex-Landcorp land near Turangi) failed and was featured in the local and national press. Unfortunately, around $6m of Treaty of Waitangi settlement money had been invested by Ngati Turangitukua (McMicheal, 2009) into Te Whenua Venture Holdings, with the intention of developing a 2500 house town on the land, in conjunction with ex-cabinet minister Richard Prebble. The money was lost when Te Whenua Venture Holdings was placed in liquidation in 2009 (McDonald, 2009) and the case was highlighted for several days in the media.
but what about the future generations? They’ll look back and they’re locked into trees, and trees may become unprofitable at some time in the future.
Farm practice changes were similarly unlikely to deliver on the decision making criteria listed above. Reductions in stocking rates, and minor mitigations were not likely to provide an improved profit and offered nothing in the way of risk reduction or farm sustainability for the next generation.
Amalgamation was a possibility and two Stations did, in fact, form a partnership shortly after the start of this study in order to gain economies of scale.