Meat farm profit fall pre­dicted

Matamata Chronicle - - News -

Beef + Lamb New Zealand’s mid­sea­son up­date for the sheep and beef sec­tor shows profit lev­els for north­ern North Is­land farms will be down this sea­son.

The up­dated re­ports marked in­creases in off­shore prices, de­spite drawn-out re­cov­er­ies from re­ces­sion in North Amer­ica and the Euro­pean Union.

While the ex­port price in­creases are be­ing mod­er­ated by the con­tin­u­ing strength of the New Zealand dol­lar, lamb, mut­ton, beef and wool prices are all up on last sea­son.

How­ever, for the North­land, Waikato and Bay of Plenty re­gions, the off­shore price in­creases are not enough to off­set in­creases in farm ex­pen­di­ture prices. The av­er­age farm profit be­fore tax is ex­pected to drop 6.3 per cent to $40,200 per farm.

Beef + Lamb NZ north­ern North Is­land di­rec­tor James Parsons said farm­ers knew it was tough this sea­son.

‘‘While rains since Christ­mas have been a huge re­lief, most farm­ers are still feel­ing the ef­fects of two droughts in a row, with av­er­age stock units per farm sitting 10.6 per cent be­low the num­bers win­tered in 2007.’’

The mid-sea­son up­date in­cludes pre­dic­tions around pric­ing, ex­port re­ceipts and the in­ter­na­tional sit­u­a­tion for each species ex­ported.

Beef + Lamb NZ eco­nomic ser­vice di­rec­tor Rob Dav­i­son said the up­date con­tained few sur­prises.

‘‘All in­di­ca­tions are that lamb prices will re­main strong and sta­ble for some time to come, thanks to tight global sup­plies. We ex­pect 19.3 mil­lion head of lamb to be ex­ported, which is a drop of 7.7 per cent com­pared to last sea­son. This sig­nif­i­cant de­crease is due to the ad­verse weather con­di­tions dur­ing spring lamb­ing. De­spite the lower vol­ume of lambs, higher prices will see ex­port re­ceipts for the sea­son to­tal around $2.6 bil­lion – much the same as last year.’’

Mr Dav­i­son said mut­ton prices were up, a con­se­quence of the global short­age of sheep­meat. Farm­ers ex­pe­ri­enced record re­turns for mut­ton in the De­cem­ber 2010 quar­ter.

‘‘The high prices were largely the re­sult of Aus­tralian ex­ports be­ing down 24 per cent in 2009-10. They are es­ti­mated to fall a fur­ther 11 per cent this year – a com­bined de­crease of 46,000 tonnes. This com­pares with New Zealand mut­ton ship­ments last year of 63,000 tonnes.’’

Lim­ited sup­plies of cat­tle from Aus­tralia and New Zealand, com­bined with ro­bust de­mand for ground beef in the US, were keep­ing im­ported lean beef prices strong.

‘‘The ex­change rate will de­ter­mine how this de­mand trans­lates through to farm-gate prices. It is pre­dicted that 2.17 mil­lion head of cat­tle will be pro­cessed this sea­son, 3.5 per cent less com­pared with 2009-10, when the slaugh­ter tally was high be­cause of drought con­di­tions in the north.’’

Wool prices are pre­dicted to im­prove 40 per cent for the year ended June 2011 – the high­est wool price since the 1989-90 sea­son. This is a re­sult of wool in­ven­to­ries be­ing run down in wool-buy­ing coun­tries in Europe and North Amer­ica when they were try­ing to re­duce debt. How­ever, the woollen goods man­u­fac­tur­ers in these coun­tries now need to pur­chase wool to fill or­ders and this is driv­ing the op­ti­mistic wool price out­look.

Mr Dav­i­son said the coun­try’s av­er­age sheep and beef farm profit be­fore tax re­flected the pos­i­tive price out­look for meat and wool.

‘‘The av­er­age profit per farm for 2010-11 is es­ti­mated to be $67,600, up 11 per cent on last year. This is the high­est farm profit since 2004-05, when the av­er­age profit per farm was $ 87,800 in in­fla­tion-ad­justed terms. ‘‘This year’s profit will be achieved as a re­sult of farm­ers keep­ing a tight rein on farm ex­pen­di­ture, which is es­ti­mated to be up 2.2 per cent on last year – less than the 3.1 per cent in­crease in prices paid for farm in­puts such as fer­tiliser and cartage.’’

Read the full Mid-Sea­son Out­look Up­date on www. beeflambnz.com

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