Lamb and wool still in de­mand over­seas

South Waikato News - - RURAL -

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

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