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Kiwi farmers say there's a better life after subsidies

`REAL JOB' New Zealand cut all its farm subsidies in 1985. This caused farmers to stop being peasants, diversify and `do a real job again,' the survivors say

AP , MANAWATU, NEW ZEALAND

Chrissie, left, and Charlie Pedersen walk on their Himitangi dairy, beef and cropping farm in Manawatu, New Zealand, on Aug. 21. Charlie Pedersen is president of New Zealand Federated Farmers.

PHOTO: AP

Gazing over the lush pastures of their farm, Charlie and Chrissie Pedersen still remember vividly how close they came to losing it all.

"It was hell, but we didn't admit it because that made it more unbearable," Chrissie Pedersen, now 48, said.

It was 1985, and the government of New Zealand had made a momentous decision -- to scrap farm subsidies in a country where farming had been king ever since Britain colonized the islands in 1840.

Farmers' incomes plunged by 40 percent. Land and stock prices slumped. There were suicides.

Twenty years later, the message from New Zealand's farmers to their counterparts in the US and the EU is: There's life -- in fact a better life -- after subsidies.

Granted, twin-island New Zealand is only the size of Colorado with a population of 4 million, and represents a mere thimbleful of the world's agriculture. But the evidence is there, its farmers say: Since the government's decision to abolish all 30 agricultural subsidies, their productivity has grown, farming's share of GDP has risen as has the rural population, and family farms have survived and are thriving.

It didn't always look promising.

Up to 1970, most New Zealand farm produce was exported to Britain, more than 17,700km away. But then Britain joined the EU-to-be and the guaranteed market began to wither away. For New Zealand, big change became inevitable.

When it came in 1985, it was brutal. The Pedersens' 113 hectare dairy farm in Manawatu, 100km north of Wellington, was barely making enough to pay the mortgage.

To feed the family, Pedersen went back to teaching and his wife worked weekends as a radiologist. Every day for 10 years, before and after work, they milked their cows

Nationally, going cold turkey was a group effort. The government used the state-owned Rural Bank to show commercial lenders the lead in debt restructuring and encouraged them to go easy on mortgage defaulters. The banks, facing massive losses if farming collapsed, wrote off up to 40 percent of farmers' debts. The worst-hit families were given welfare payments.

And the farmers learned to work harder and do with less.

"We were young, so we put our heads down and just worked the farm," Ruth Rainey, now 46, recalled in an interview. "We didn't buy anything basically for years."

Pedersen, now 48, believes the government was acting "from a social conscience rather than from an economic plan."

Pedersen remembers then finance minister Roger Douglas telling a farmers' meeting as late as 1989 that theirs was "a sunset industry. Agriculture will never again be the major contributor to this economy."

Instead, farming today is 16.6 percent of total GDP, up from 14.2 percent in the late 1980s, and in the year to April this year it racked up exports worth NZ$18 billion (US$12.7 billion), more than half of all New Zealand exports.

The farmers have learned to diversify. During the subsidy era New Zealand had 72 million sheep -- 18 for every human. By last year the number was just 39 million, but more efficient methods mean the islands still produce the same amount of meat, and freed-up land is being turned over to growing grapes for wine and other exotic crops. There are even niche markets of deer, goats, ostriches and llamas.

Pedersen's message to subsidy-rich farmers in the Northern Hem-isphere if they lose their supports: "Agriculture will become a net contributor to their economies, farming will become more vibrant and farmers will be doing a real job again. Now, they're peasants."

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