Lamb and wool still in demand overseas
SHEEP and beef farmers have been told they can look forward to another high-earnings year as lamb and wool remain in demand in key markets.
Average farm income before tax is estimated at $106,200.
Beef + Lamb New Zealand economist Rob Davison said this would be a slight dip after a dramatic 75 per cent rise to $114,200 in income for the year ended June 30.
Mr Davison’s predictions in the farmer body’s new season outlook are based on exchange rates of US81c and 50p to the New Zealand dollar. He also gives estimates of what a shift in the US dollar rate would mean. At US91c, income would drop to $62,000, but at US71c, it would climb to $157,100.
Last year’s strong earnings came from a 43 per cent jump in lamb prices, a 62 per cent rise in other sheep meat prices and a 43 per cent leap in wool, from a 100-year low. Beef was up 18 per cent.
This was the best year, in inflation-adjusted terms, since 2001-02, Mr Davison said.
He expected prices to remain at around the same levels but for more meat to be sold. He expected a rising exchange rate would cut into extra income, leaving gross farm earnings unchanged.
Farmers are expected to spend more on their farms, particularly fertiliser, which will affect net earnings. Mr Davison said after tax was paid, farmers would reduce debt and spend on machinery and living expenses.
This year, lamb export receipts are expected to remain at $2.9 billion.
Beef is likely to ease 2.1 per cent to $2.6b with exports up 3.1 per cent but on 5 per cent-lower prices from an expected increase in the exchange rate.
Mr Davison said wool production was estimated to fall 1.3 per cent due to lower sheep numbers but with some offset from an increased clip. Wool export receipts are predicted to remain similar to the previous year at $718 million