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Financial Stress And Consumption Expectations Among Farm Households: New Zealand'S Experience With Economic Liberalisation

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  • G. A. G. Frengley
  • W. E. Johnston

Abstract

A review of New Zealand's experience with assistance to agriculture through the 1960s and 1970s and the subsequent deregulation of the sector in the mid‐1980s provides background to this study. Data for sheep and beef farmers are used to elaborate the variety of financial changes in the boom and bust cycles that followed the policy changes. Changes in farm business stress are examined using some conventional financial ratios. New measures which partition household expenditure between consumption and investment are then developed. These better explain the stress experienced among farm households as a consequence of the readjustment process and provide insight to the impact of the legacy of debt, encouraged by government intervention, on farmers' current and expected household consumption over recent years. New Zealand's experience reveals that farm household consumption stress has been unevenly distributed. This suggests that policy concern, following the removal of government assistance to agriculture, should focus principally on the mitigation of the household distress caused by ongoing farm debt commitments.

Suggested Citation

  • G. A. G. Frengley & W. E. Johnston, 1992. "Financial Stress And Consumption Expectations Among Farm Households: New Zealand'S Experience With Economic Liberalisation," Journal of Agricultural Economics, Wiley Blackwell, vol. 43(1), pages 14-27, January.
    • Handle: RePEc:bla:jageco:v:43:y:1992:i:1:p:14-27
    DOI: 10.1111/j.1477-9552.1992.tb00194.x
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    References listed on IDEAS

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    1. Johnston, Warren E. & Frengley, Gerald A.G., 1991. "The Deregulation Of New Zealand Agriculture: Market Intervention (1964-84) And Free Market Readjustment (1984-90)," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(1), pages 1-12, July.
    2. J. Hirshleifer, 1958. "On the Theory of Optimal Investment Decision," Journal of Political Economy, University of Chicago Press, vol. 66(4), pages 329-329.
    3. Harrington, David & Carlin, Thomas A., 1987. "The U.S. Farm Sector: How Is It Weathering the 1980's?," Agricultural Information Bulletins 309352, United States Department of Agriculture, Economic Research Service.
    4. Walter E. Chryst, 1965. "Land Values and Agricultural Income: A Paradox?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 47(5), pages 1265-1273.
    5. Reinsel, Robert D. & Joseph, Anthony, 1986. "The Financial Condition Of Agriculture: An Income Analysis," Staff Reports 277899, United States Department of Agriculture, Economic Research Service.
    6. Sandrey, Ronald A. & Reynolds, Russell G., 1990. "Farming Without Subsidies: New Zealand's Experience in the 1980s," 1990 Conference (34th), February 13-15, 1990, Brisbane, Australia 145356, Australian Agricultural and Resource Economics Society.
    7. Joseph, Anthony & Reinsel, Robert D., 1986. "The Financial Condition of Agriculture: An Income Analysis," 1986 Annual Meeting, July 27-30, Reno, Nevada 278072, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Cited by:

    1. Vink, N., 1993. "Entrepreneurs And The Political Economy Of Reform In South African Agriculture," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 32(4), December.

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