Comments

David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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30/11/10

Why farm profits don't stack up


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Andrew Gawith, Director of Gareth Morgan Investments, has written an article on how farmers have sought capital gains rather than yield:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10690919&ref=rss

He concludes that:

Capital returns seem likely to remain the mainstay of total earnings for farming but the industry is vulnerable to falls in land prices (which is happening now).

A combination of falling farm equity and pitifully low income returns quickly make farming an unattractive banking proposition. More focus by banks on ensuring income returns at least match the cost of capital would help shift the balance between income and capital returns as farmers would find it more difficult to get funding for over-priced farms.

That in turn might create a more robust and vibrant farming sector.

Farming may not be as commercially inept as it first seems, but it is speculative. The financial benefits are almost entirely dependent on capital gains (rising land prices); income is puny and unreliable.



tags: farm profitability, capital gains

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