Sheep, beef farm profits fall; farmers expect more

Sheep and beef farm profits fall; farmers expect more of the same

MAF media release
3 August 2010

Sheep and beef farmer profits have fallen in 2009/10, despite a record lambing percentage in spring 2009, a MAF report shows.

The annual Sheep and Beef Farm Monitoring Report shows mild lambing conditions across the whole country resulted in record lambing percentages for the 2009/10 season,

But MAF Christchurch Regional Team Leader John Greer says drought in Northland, Central Otago, North Otago and South Canterbury saw reduced production and early sales of stock.

“Unfortunately lower lamb schedule prices, generally attributed to the high New Zealand dollar, caused average lamb price to fall $8.43 compared with 2008/09 and this more than offset the record lambing.”

MAF’s national sheep and beef model shows that farm surplus for reinvestment fell 37 percent to only $19,300 and cash surplus fell to a very modest $6900.

Profit in the coming year is expected to be similar to the 2009/10 season, with a slight increase in the lamb price expected. Cattle income is predicted to fall slightly in 2010/11 as farmers recover from the 2009 drought.

Farmers are budgeting for a very low cash surplus of $4400 in 2010/11, despite an increase in dairy grazing in many regions, an expected increase in wool weights and prices and a continued effort by farmers to reduce spending in many areas.

Mr Greer says the figures highlight the ongoing challenges faced by the commodity-driven model in the sheep and beef sectors.

“Farmers have worked hard over the 2009/10 season to hold spending increases to $2.74 per stock unit, with lower interest costs offsetting the modest rise, but the disciplined spending and productivity improvements have been undone by factors such as exchange rate, climatic, and commodity price fluctuations.

“What farmers told us through the farm monitoring survey about the performance of the sector, further emphasises the need for a sector strategy, and the action plan that flows from it, so that long-term profitability can be restored to the sector.”

The Ministry of Agriculture and Forestry’s farm monitoring reports are compiled each year based on feedback from sheep and beef farmers, and industry representatives. The latest models were prepared in July 2010.

A copy of the reports can be found on the MAF website: http://www.maf.govt.nz/mafnet/rural-nz/statistics-and-forecasts/farm-monitoring/

ENDS

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