Bumper year for sheep, beef
Sheep and beef farm profits are expected to be their highest for a decade this year, at an average of almost $134,000 a farm before tax.
The average farm profit would be up 17 per cent on last year.
Farmers are enjoying a bumper year, with excellent pasture growth around most of the country, and high seasonal weights for lamb and beef.
‘‘Rarely do we see such good pastoral conditions and international prices at the same time,’’ Beef + Lamb Economic Service director Rob Davison said, in the mid-season update.
The profit rise reflected the better price outlook for meat and wool compared with recent years.
This year’s expected profit is a huge turnaround from just four years ago, when the average farm made an average of $10,000.
In inflation-adjusted terms, this year’s profits would be the best since the 2001-02 year, which in today’s dollars was equal to $156,000 a farm.
Profits a decade ago reflected an extremely low exchange rate of just US43 cents to the kiwi.
This year’s profit, in contrast, reflected strong international commodity prices, which have outpaced the high exchange rate, close to US84C yesterday. The Beef + Lamb estimates assume an average exchange rate of US79C this year.
Total gross revenue was expected to rise 8 per cent to an average of $468,300 a year.
Sheep and beef prices, including wool, have risen about 9 per cent on world markets in the past year, including a fallback of more than 4 per cent in just the past week, according to an ASB Bank survey of world prices.
Lamb prices are expected to hold up, though a strong rise in the kiwi against the euro, up 7 per cent, and the British pound, up 3 per cent, would soften the price in New Zealand, Davison said.