Farmers respond to poor sheep returns

Farmers respond to poor sheep returns

Comment by www.agridata.co.nz

Market signals are being responded to behind the farm gate.

Poor lamb prices and sheepmeat marketing is taking its toll on the producers in this industry, and some have had enough.

New data out this week from www.agridata.co.nz suggests that we may be seeing the start of a farmer-led response to this chronic problem with destocking, and re-allocation of farm activity away from sheep.

The March figures showed a big increase in the mutton kill for both the North and South Islands and this has continued in April with nearly 20% more ewes killed this year, than last. This relates to more than half a million extra ewes have been killed this year.

Our data of prime ewes sales shows that, in the benchmark saleyards we monitor in both islands, the increase in ewe sales over Feb-May period is even more pronounced.

If this trend continues, sheep production next season will be considerably lower than this one, hastening the adjustment process that has seen the national sheep flock decline from 70 million in 1982 to less than 40 million today.

Farmers are reacting fast to low returns. They are hard to take when the dry weather complicates management, and much higher returns are available from dairy and beef.

Ironically, the lamb processing companies have invested in new, updated capacity, some less that a year old. But these actions have not been followed with successful marketing, and returns have been woeful at the farm gate. In fact, for the first time in years, co-operative PPCS has not paid a bonus to early season producers. It is telling that farmers have barely grumbled publicly. In fact, it may be they are doing so by their actions.

The sheep industry needs to change. It looks like it is the lamb producers who are initiating a restructure, by quitting their breeding ewes this season.

The processing and marketing companies, who prided themselves on their leadership position in this industry, may now have to scramble to react to producer leadership on this change.

www.agridata.co.nz

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