Bring Home Messages from USA Farm Study Tour
OPINION: I've just returned from the road trips of all road trips.
Our farm study tour covered 41 states in the United States, five Canadian provinces and 30,144 kilometres. In anyone's book that was some serious mileage on the road, but it was also a great learning curve.
Whichever way you look at them the numbers in the US are staggering. There are 320 million people, 77 million beef cattle, 14 million dairy cattle, 5.3 million sheep, 71 million pigs, 233,000 poultry and turkey farms and 2.1 million farmers.
The average farmer is similar to New Zealand at 58.3 and 90 per cent of farms are family farms. The average family farm is 430 acres (174 hectares) and 14.1 per cent of US farm land is irrigated.
The average US family farm has sound equity with debt of about 14 per cent on total family farm assets and this is a major plus for any working farmer. It's my observation that many family farms undervalue their own labour input and that's a call that could probably be made also in New Zealand.
Corn and soybeans are the two biggest crops with hay coming in at number 10. Poultry and pigs are at five and six and areat a sales level pushing into beef trading.
Nearly half of US family farms have a low gross farm income. Even a small farmer is called a rancher. The average beef cow and calf operation is 40 cows but there are big numbers of them with almost invariably one spouse working full time off farm and New Zealand mayalso be getting close to this.
The average US woman outlives her husband by five to seven years and the US financial planning industry is starting to really notice this.
There are about 44,000 commercial camping grounds in the US. Americans owning a caravan and a vehicle might own or lease a lot about the size of two garages in a park. Many people living there permanently once retired have no mortgage or debt and many of them find they can live within their income in these situations. The industry figure for retirement is that you need to have saved 10 times your final years salary by 67 years of age to enable you and your partner to get through to 93 years. Many American retired couples do not achieve this and maybe we will start to see more of this in New Zealand.
The current average monthly social security benefit for a retired US worker is $1360 or $16,300 a year.
In my opinion, New Zealand has nothing to learn about the US health system which is costing two to three times the present NZ family cost. It is easier to stay well than to get well in America.
On the road I saw that perhaps 50 per cent of US people still support Trump and the other half do not. He seems to like fighting fires and even lighting them. He seems to treat every problem or issue as though it is a real estate deal. It is hard to see him lasting beyond four years. The farming group though tends to support him perhaps because US farming is in its fourth year of low profitability.
Some US states have had 'full throttle agriculture' as their industry key mission statement . Kiwi farmers had that also some years back, but we know that expansion, expansion and even more expansion is not a policy - it's only going to create a problem.
The US has a few things New Zealand does not have. The Golden Gate Bridge is now 80 years old and has a full time team of 32 painters, five painter labourers, 19 iron workers, three iron worker foremen plus an overall superintendent – 60 staff in all. The paint protects the steel and the steel holds the bridge together – rust never rests. Two painters have fallen off the bridge and died. The oldest painter has a harness he puts on and has talked about a dozen people out of making suicide jumps.
Grass fed beef is getting some media space in the US but synthetic meat and almond milk also are getting some space. In a recent survey 7 per cent of people in the survey thought that brown coloured almond milk came from brown cows. The US is spending billions on so-called synthetic meat and milk. The dollars being spent are so significant that even if only a small amount of the investment comes to something it will not help New Zealand.
As we passed the many houses in our travels it struck me that there are no paling fences between them. Ride on lawn mowers is an enormous business. There are 40 million acres (16 million hectares) of turf grass lawns – that's bigger than the state of Georgia. Americans spend US$40 billion on lawn fertilisers, and pesticides each year which is more than their nation spends on foreign aid yearly.
Talking to Americans, they like our lamb, our white wine and our isolation. Their population is 70 times NZ but many of them know little about us or exactly where our country is.
Over there it struck me that Mr Trump and North Korea leader Kim Jong-un are a volatile mix. About half of our total exports worth $61 billion go to Asia so disruption is almost likely. Interest rates also do not like uncertainty and disruption.
I've been fortunate to travel a lot and it's obvious to observe that the US and the United Kingdom have both displayed the effects of inequality of income and inequality of asset ownership. Neither of these issues are easily fixable and much of the world is an uncertain volatile place at the moment.
We need to take this on board and cut our cloth accordingly.
Pita Alexander is an accountancy and agribusiness director at Alexanders.