This paper outlines the evolution of recent agricultural policy in New Zealand, emphasizing the nature and magnitudes of assistance and economic and financial performance in the 1970s and 1980s. Changes in financial conditions which have affected farmers and altered the productivity and efficiency of the agricultural sector are described. Financial stress which has risen appreciably on New Zealand sheep and beef farms in the post deregulation period since 1984 is examined. This shows the predominant influence of debt on farm household stress, as costs of servicing debt encroach on household expenditures when net farm income falls.