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Government and agriculture

by  Tony Nightingale

Farmers are traditionally great exponents of free enterprise, yet the government has played a crucial role in farming in New Zealand. State subsidies, research and border protection have contributed to the success of the country’s agriculture.


Land purchase and early farming regulations, 1840–1876

Land purchase

The government’s most important contribution to agriculture was to acquire land from Māori and sell it to European settlers. Once the Crown had the land, governments surveyed it, then sold it freehold or leased it. Land sales were a major source of government income. Māori concerns were of secondary importance, and it was not until the 1920s that the government seriously considered assisting Māori to develop their land.

By 1860 most of the South Island had been acquired from Māori. In the North Island, a large block had been bought in Hawke’s Bay, with other blocks in Wellington, Taranaki, Auckland, and parts of Northland. Increasing pressure for land by settlers and growing resistance by Māori to sell it led to the New Zealand wars in the 1860s, which slowed settlement in the North Island.

Animal imports and disease

Farming expanded rapidly in the South Island, and in the Wairarapa and Hawke’s Bay in the North Island. Sheep and cattle were imported in large numbers, mostly from Australia, from the 1840s to the early 1860s. The open-door policy to animal and plant imports meant that pests and diseases came with their hosts. Scab, footrot, and catarrh in sheep, and pleuro-pneumonia in cattle had caused major stock losses in Australia, but initially little was done to prevent the spread of these in New Zealand. The campaign to control scab brought more government regulations to agriculture.

Scab

Sheep scab is caused by the mite Psoroptes ovis. It is easily transmitted, and causes sheep to lose condition, become less productive, and in severe cases die. Beginning with an ordinance in 1849, governments tried to control the spread of scab by appointing a sheep inspector and making inspection of imported sheep at ports compulsory. Infected sheep were quarantined until they recovered.

In the 1850s and 1860s it became compulsory to brand sheep to identify ownership, and properties running sheep had to build dipping facilities. Later it became compulsory to dip all sheep at least once a year to control parasites. Penalties for possessing scabby sheep became progressively harsher. At first fines were imposed, and later, sheep inspectors could inspect sheep at any time and destroy infected flocks.

Many regions were free of scab by the late 1870s, but it was not until 1893 that the whole country was declared clean.

Lost sheep

Edgar Jones owned a sheep run in the Amuri district. After sheep from a scab-infected property were seen crossing onto his land, Jones tried to avert an outbreak by dipping as many of his sheep as he could muster. When that failed, the sheep inspector ordered Jones to destroy his flock of 7,000, and he was not allowed to restock his run for another two years.

Cattle quarantine

Periodic outbreaks of pleuro-pneumonia, a highly infectious and fatal disease of cattle, were common in the Australian colonies. In 1861 the Canterbury provincial government banned the further importation of cattle from diseased areas, and there were no outbreaks. The Otago government continued to import cattle from Australia and had continued epidemics. Otago’s solution was to destroy infected animals when outbreaks occurred.

Fencing

Fencing regulations to control livestock were enacted from the 1840s. An 1844 ordinance provided for compensation for damage done by trespassing cattle. An 1847 ordinance encouraged fencing and specified that the cost and maintenance of boundary fences be shared by each neighbour. Later ordinances stipulated what constituted a legal fence – this changed as new fencing methods developed.

Railways

Provincial governments began to build railways as early as 1863, but the real boost began in 1871 when the colonial government borrowed to invest in a huge public works programme. By 1880 a main trunk line extended from Bluff to north of Christchurch. In the North Island, the Auckland–Hamilton line had been completed, and there were shorter lines elsewhere.

Especially in the South Island, the extension of the rail system made possible a boom in cropping in the late 1870s and 1880s by providing cheap and efficient transport to ports.


Pest control, new products and incentives, 1876–1892

Plant and animal pests

By the time provincial governments had been abolished, in 1876, the disadvantages of importing animals and plants were clear. Thistles had already been noticed as a pest, and provincial governments had passed thistle ordinances. This ad hoc reaction was typical of the way New Zealand governments responded to specific problems.

Rabbits, perhaps one of the most destructive of all pests, were already out of control in parts of the country. In 1876, central government passed the Rabbit Nuisance Act – the first of many. In 1882 the Small Birds Nuisance Act was passed after plagues of sparrows and finches damaged cereal crops. And in 1884 the Codlin Moth Act was passed in response to an outbreak. Farmers were required to control pests on their land. However, none of this legislation was particularly effective.

New products

Governments in the 1880s and early 1890s were reluctant to subsidise agriculture, in part because there was an economic depression. However, in this period the government did begin to explore what products, other than wool, New Zealand could export to the UK. The Department of Lands established an agricultural branch to investigate silk production and the growing of olives, trees and fruit, including grapes.

Farmers lead the way

Although the government explored alternative crops in the 1880s, most of the experimentation was done by farmers. In the late 1860s and 1870s farmers tried growing sugar beet, tea, and mulberries for silk production. Hops were grown in Nelson, and growers began looking for an export market. An enterprising Italian settler imported 200 two-year-old grapevines to Lake Brunner for wine making. Unfortunately, his property was on the wrong side of the Southern Alps for the enterprise to be successful.

Dairying

The government hired its first dairy adviser in 1883. He visited dairy factories and advised on how to improve management practices and butter and cheese quality. The government gave prizes for the first successful export of commodities. The Edendale Dairy Factory in Southland won bonuses for exporting 25 tons of cheese and 50 tons of butter in 1884.


Land reform and farmer education, 1890s

Land purchase and redistribution

From the early 1890s the new Liberal government took a more active role than previous governments in shaping agricultural production. Partly this was a response to changed circumstances – the first shipment of frozen meat to Britain in 1882 opened up an export market for meat and dairy products. This made small farming viable, and the Liberals set out to put more farmers on the land.

Setting up shop

It was almost 15 years after the first shipment of meat in 1882 that the frozen meat trade began to be profitable. Before that, New Zealanders felt that English middlemen were taking all the profits. Premier Richard Seddon’s solution was for the New Zealand government to set up shops in Britain selling the country’s meat. He got little support from farmers, and the idea went no further.

Between 1891 and 1894 the government passed laws aimed at breaking up the big estates, especially in the South Island. In 1892 it bought the Cheviot Hills station, which was divided into smaller farms. It was the first of many such purchases. In the North Island the government bought more than 3 million acres of Māori land and made it available to Pākehā settlers. The 1894 Advances to Settlers Act offered financial support to people moving onto farms.

Protecting the border

In 1895 the Liberal government took control of animal importation, thereby beginning border protection. However, the government itself imported stoats, ferrets, weasels and mongooses in an attempt to control the rabbit plague, and all but mongooses became pests too.

Educating farmers

As a result of opening up land for settlement, there was a surge in the number of farmers, many of whom had little farming experience. This was cause for concern among leading agricultural improvers. Agricultural and Pastoral associations had long criticised the poor husbandry of under-capitalised farmers, and advocated setting up an agricultural department to foster a scientific approach to farming. The Liberals established the Department of Agriculture in 1892 to collect and distribute information on farming, and promote and foster the farming community.


Formation of the Department of Agriculture

Set up in 1892, the Department of Agriculture was initially intended to develop an export dairy industry, reduce weeds, and help prevent animal and plant diseases.

Dairy industry

In the UK market, New Zealand dairy products faced competition from Canadian and Danish producers, who had more advanced technology, were better organised, and whose products were already of a high standard. When the Department of Agriculture was formed, its four dairy advisers decided that the state would encourage the production of butter and English cheddar using Canadian and Danish technologies, and based on the cooperative principle used in the US.

To control the industry, dairy industry acts passed between 1892 and 1908 led to the branding of all export cheese and butter, and a grading system that rewarded companies for producing higher-quality products. From 1898 the government also gave cheap credit to cooperatives to establish dairy factories. In cooperatives, farmers were shareholders, so they had a stake in making sure milk production was efficient and hygienic. Improved milk meant that New Zealand could make cheese and butter of a quality that could compete in the UK market.

The department’s Dairy Division organised lectures and published material to educate new farmers entering the industry. They tested herds to identify cows that produced high butterfat and could be used for breeding. The production of margarine in New Zealand was made illegal.

Farmer education

Most increases in farm production after 1920 were the result of applying technology to grassland farming. New technologies developed by the department included animal husbandry techniques, the adaptation of chemical fertilisers to local conditions, plant hybridisation, and better understanding of animal diseases.

The Department of Agriculture was charged with educating the burgeoning number of farmers about these new technologies. Initially it struggled with the task. The experimental farms set up in the North Island were inaccessible for many farmers. The department issued numerous pamphlets, and began publishing the Journal of Agriculture in 1910. To reinforce the benefit of fertiliser to grass growth, the Liberal government subsidised the rail transport of lime, while subsequent governments subsidised phosphate fertilisers.

Animal diseases

In 1890 a group of Australasian stock inspectors requested that governments tighten up quarantine procedures and monitor disease. Over the next decade a growing team of veterinarians hired by the Department of Agriculture inspected stock on farms where disease had been reported, instigated compulsory quarantine of all imported animals, contained outbreaks of anthrax, and inspected meat under the Slaughtering and Inspection Act 1900. These inspections improved the quality of meat.

Deadly bones

The deadly disease anthrax is caused by ingesting the anthrax bacillus, which can survive in the soil for 50 years. The disease broke out in several places in New Zealand from 1895, and the number of cases increased annually. J. A. Gilruth, chief veterinarian for the Department of Agriculture, suspected that the likely source was crushed bones imported for fertiliser from India, where anthrax was rife. A sterilisation unit was set up in 1904, and officers were sent to India and Australia to ensure that bones were sterilised.

Plant diseases

In the early 1890s the disease phylloxera hit the infant grape-growing industry, while pests seriously harmed the development of a pip-fruit industry. The Liberal government passed the Orchard and Garden Pests Act 1896 to give inspectors powers to enter properties and order the destruction of diseased plant material.

Noxious weeds

When the Noxious Weeds Act was passed in 1900 it listed blackberry, Californian and Canadian thistle, and sweet briar as the weeds of most concern to farmers. Local councils could also declare other weeds noxious in their area. Landowners were required by law to control the weeds on their property.

Rabbit control

By 1895/96 a quarter of the department’s budget was spent on rabbit control. Rabbit inspectors had the power to bring landowners who failed to clear their land of the pest before the local magistrate. They could also enforce poisoning on properties where rabbits had become too numerous. The Department of Agriculture introduced stoats, weasels and ferrets to kill rabbits, but the mustelids also attacked wildlife. From the 1920s the department helped set up Rabbit Boards, which organised and carried out rabbit destruction.


State-funded research

Exotic grasses

New grasses and technologies designed to increase grass production have been central to New Zealand’s developing agriculture. From the 1870s farmers replaced indigenous grasses with higher-producing exotic grasses.

State research

From 1900 the Department of Agriculture began analysing soil, and researching fertiliser use and grass hybridisation. In 1926 the government established the Department of Scientific and Industrial Research (DSIR) to find practical ways of boosting the country’s economy.

Clover and ryegrass

Agricultural scientist Alfred Cockayne proposed that white clover would provide soil with enough nitrogen to sustain permanent, highly fertile, ryegrass-dominated pasture. Cockayne, along with Bruce Levy, began researching this during the First World War.

Bush sickness

From the 1890s, the Department of Agriculture investigated bush sickness, a wasting disease of stock. It was particularly rife in the volcanic region of the central North Island. The work of the department’s chemist, C. B. Aston, and especially Australian scientists, led to the discovery that the cause was a cobalt deficiency in the pumice soils. When cobalt was added to fertiliser or salt licks, the problem was solved.

The discovery of a perennial ryegrass strain in 1928, as well as the acquisition of cheap phosphate from Nauru in 1920, was fortuitous – applying superphosphate to soil made it fertile enough to grow clover and ryegrass. The government campaigned to convince farmers to grow these new pastures. Using perennial ryegrass and clover in pasture proved revolutionary – many other countries later adopted similar pastures on fertile lands.

Other fields of research

The DSIR and Department of Agriculture also researched plant disease, entomology (the study of insects) and agronomy (the study of crops and their management.


Government support and incentives, 1918–1938

Soldier settlement

At the end of the First World War, government policy was to rehabilitate servicemen by settling them on farms. The government bought land for this purpose or gave soldiers cheap loans to buy their own farms. The scheme triggered a sharp increase in land values, and when prices for farm produce fell in the early 1920s, some ‘rehab’ farmers who were unable to cover their mortgage or rent were forced off their land.

Transport and technology

In the years after the First World War, transport and communication improved – to the real benefit of farmers. The main trunk rail line between Auckland and Wellington had been completed in 1908, and the government was now expanding regional lines. The opening of the Ōtira tunnel in 1923 linked Canterbury and Westland. About this time it was clear that cars, trucks and tractors would replace horses for transport and agricultural work. The government passed the Main Highways Act 1922, beginning an era of highway expansion.

These improvements reduced the isolation of rural communities and the cost of transporting produce. The inter-war years also saw the reticulation of electric power throughout the country, and radio and telephone services were improved.

Producer boards

The Crown increased its support of agriculture between the wars. This was partly because of its success co-ordinating the export of meat, wool and dairy products during the First World War in what was known as the Imperial Commandeer – all of New Zealand’s export produce was bought by the British government at fixed prices until 1921. However, when the UK market became volatile in the early 1920s, the Massey government set up the Meat Board in 1922 and the Dairy Board the following year to co-ordinate marketing in the UK.

During the depression New Zealand tried to negotiate preferential access to the British market, with limited success. So in 1936 the Labour government introduced the Primary Products Marketing Act, which gave the government the power to buy in primary products at fixed prices and control their sale. In fact this was largely used for dairy produce, for which fixed prices were guaranteed. Later the Meat Board and the Wool Board, set up in 1944, did lay down minimum export prices.

Import licensing

From December 1938 the Labour government licensed imports. Although not specifically designed to support agriculture, the measure allowed successive governments to restrict imports that competed with New Zealand’s agricultural production and allow in those that were beneficial.

Freeing up credit

The coalition government (1931–35) passed legislation to reduce the number of farmers defaulting on their mortgages. The Labour government after them extended this relief on the back of improved export prices, and freed up credit to farmers. A tangible example of this policy was the establishment of the State Advances Corporation in 1936.

Farm advisors

In the early 1920s the Board of Agriculture convinced the government that a group of itinerant experts could improve farming methods. These ‘fields instructors’ travelled around the regions advising on fertiliser use, grass varieties, and how to develop marginal land. With the help of farmers, they established experimental plots to test scientific findings under local conditions. These advisers became numerous, dominating the administration of the Department (later Ministry) of Agriculture until its deregulation in the 1980s.


Controlling the war economy, 1939–1945

Stockpiling and bulk purchase

The state’s growing role in the financing and marketing of agricultural produce before the Second World War developed during the war. In 1938 the government formed the Primary Industries Committee to investigate the impact submarine warfare would have on imports and exports. In 1939 they stockpiled imports and exports. In that year they also secured long-term bulk purchase agreements for meat and dairy exports to the UK. Throughout the war, export returns were generally high, although many farmers did not immediately benefit because the government put some money aside to help reduce inflation.

Department of Agriculture control

In wartime the Department of Agriculture became directly involved in farming in ways that had not occurred in peacetime. In response to a request from the UK government in 1940, the department channelled milk into cheese making, and then back to butter after another request in 1942. They developed vegetable growing to feed US troops stationed in New Zealand in 1942 and 1943, and linen-flax production to replace supplies formerly obtained from Europe. After the war, the Linen Flax Corporation was formed.

Land girls

The Women’s Land Service was set up by the government in 1941 to recruit women to replace rural workers who had joined the army. Most of the women who joined were from towns and cities, since rural women had already taken over the work of their men. Initially, the service was voluntary, but by the beginning of 1944 ‘land girls’ could be compulsorily placed on farms. Nearly 3,000 women joined this service.

Mechanisation

From 1943 the government helped mechanise agriculture under the Lend Lease agreement with the US. American tractors and harvesters played an important role in maintaining agricultural production in New Zealand through to the end of the war.

Erosion and river control

Agricultural instructor Lance McCaskill had witnessed large-scale soil erosion in many parts of New Zealand. During the Second World War he enlisted the support of geographers and farmers to persuade the government to pass its first legislation aimed at soil and water conservation. This led to the establishment of catchment boards to oversee river- and erosion-control projects.


Subsidies and changing markets, 1946–1983

Intensification in farming

In the immediate post-war years, Britain wanted as much food as New Zealand could export, so the government focused on maximising production.

Their agenda was to:

  • develop poor-quality lands
  • facilitate irrigation, especially in the South Island
  • advise on developing hill country, especially promoting aerial topdressing.

Research

The government remained actively involved in research, especially relating to animal productivity. Animal research stations had been set up at Ruakura and Wallaceville in 1939, after outbreaks of facial eczema. The Ruakura station gained a high profile, partly because it discovered the cause of facial eczema in the late 1950s, but mostly through its dairy research, farmer education programmes, and its charismatic director from 1943 to 1962, Campbell McMeekan. The Ruakura station was influential in the expansion of dairying in the Waikato from the 1940s to the 1960s.

Direct support

The National government set up the Agricultural Production Council in the mid-1960s. The council lobbied for subsidised fertiliser, concessionary lending for land development, and special assistance for the development of marginal land. These subsidies reflected a very close relationship between successive governments and farmers. But the market for farm produce was changing rapidly. Agriculture was dominant in the export sector, but was declining as a percentage of gross domestic product. This decline might have been more rapid if governments had not supported farming.

Signs of trouble

In the late 1950s, European producers began to dump butter on the international market, undermining prices. New Zealand’s export agreement with the UK came under threat as Britain prepared to join the European Economic Community, which it did in 1973. Governments tried in the 1960s and early 1970s to maintain access to the UK market, and to encourage diversification of markets and produce. However, the Ministry of Agriculture found it difficult to move away from its role promoting wool, meat and dairy.

Types of subsidy

The government offered a number of farming subsidies in the late 1970s. The Livestock Incentive scheme (1977) encouraged farmers to carry more stock. Land Development Encouragement Loans (1978) made cheap loans available to develop unproductive land. The Supplementary Minimum Price scheme (1978) guaranteed farmers price stability for their products, despite declining international prices.

High subsidies

Government subsidisation increased in the 1970s to offset the government’s policy of maintaining a high currency exchange rate and the high prices farmers paid for materials as a result of import licensing and trade protection policies. From the late 1970s New Zealand faced low prices for its products and difficulty securing export markets. There was a stockpile of sheep meat. By the early 1980s, government support for agriculture was equivalent to 30% of the total output from farming.


Deregulation and environmental regulations, 1984 onwards

Withdrawing support

In 1984 the newly elected Labour government devalued the New Zealand dollar. The immediate impact was positive for exporters because it led to increased returns in New Zealand dollars.

However, the next six years were traumatic for farmers. The dollar was floated in March 1985; high interest rates drew money into New Zealand, raised the dollar's value, and reduced returns to exporters, who were usually paid in US dollars. The government phased out most support for agriculture, including fertiliser subsidies, tax concessions, concessionary interest rates, and help controlling rabbits and noxious weeds. Crown agencies began to charge for services such as meat inspection, animal health inspections, quarantine and farm advisory services. By 1990 the farming sector was one of the more deregulated sectors in the economy.

Benefit of deregulation

Deregulation did reduce the costs farmers paid for imported materials and equipment, and from the mid-1990s it became clear that this had made some primary industries, especially the dairy industry, more internationally competitive.

Changing role of government agencies

As a consequence of deregulation, the Ministry of Agriculture and Fisheries became primarily concerned with agricultural policy and some regulatory functions. It divested itself of responsibility for fisheries in 1995, but took up forestry in 1998.

In the early 1990s the government split the research sections of the former Department of Scientific and Industrial Research (DSIR) and Department of Agriculture to form Crown research institutes, which had to seek private backing and compete for state funding. Two of the old producer boards disappeared – the Dairy Board was swallowed up in the creation of Fonterra in 2001, and the Wool Board was disestablished in 2004.

Enforcing biosecurity

Growing international trade and tourism, which partly resulted from deregulation, further exposed New Zealand to the introduction of unwanted animal and plant pests. Environmentalists, and those who worked with animal diseases and quarantine, joined to protect New Zealand’s biosecurity. Biosecurity aimed to comprehensively exclude or manage risks posed by pests and diseases to the economy, environment, or humans. In 2004 the government created Biosecurity New Zealand within the Ministry of Agriculture and Forestry.

Resource Management Act

In 1991 the Resource Management Act became the country’s main environmental legislation. It determines how New Zealand’s natural resources should best be managed or protected. Regional councils became responsible for a range of tasks previously performed by ad hoc bodies such as catchment boards and rabbit boards.

Administering the act sometimes causes conflicts with developers (including farmers) and conservationists. Water, in particular, has become a contentious issue in many parts of the country. Farmers extracting irrigation water from rivers or underground aquifers are sometimes opposed by local communities concerned that these resources are overstretched.


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How to cite this page: Tony Nightingale, 'Government and agriculture', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/government-and-agriculture/print (accessed 28 June 2019)

Story by Tony Nightingale, published 24 Nov 2008