Kiwi farmers prepared for financial setbacks from global warming - study

Kiwi farmers are prepared to survive any major financial uncertainty arising from setbacks such as global warming, according to new research.

A Lincoln University study, which surveyed more than 400 farmers, found the majority of farms are financially stable and are "highly likely" to survive most price downturns.

Associate Professor Peter Nuthall said financial resilience was important given changing weather patterns stemming from global warming, as well as new trade agreements which may lead to price volatility.

Most farmers are in "a zone of stable functioning in which they can operate and absorb financial shocks in at least the short term," said Prof Nuthall.

"While there are new farmers, particularly in the dairying area, that have high levels of debt, on average the debt levels are not high."

On average, 62 percent of fruit and viticulture operators have 100 percent equity compared to only 10 percent of dairy farmers.

Although profit levels were not high relative to farmers' investments, Prof Nuthall said that had been the case for decades but had not caused issues due to farmer resilience. 

"This does not mean some farmers have not struggled financially, particularly over periods of low pay-outs, including low wool prices, and periods of severe drought," but the majority had the equity to cope, he said.

While 12.8 percent of farms had at least $8 million in debt, 12.2 percent had an asset total greater than $20 million.

"The debt levels have gone up enormously in terms of farming, but in terms of individual farms it is not a great problem for large numbers"