Farm Monitoring reports show highs and lows for primary sectors

The Ministry of Agriculture and Forestry’s (MAF) 2005 Farm Monitoring reports into the status of the country’s primary sectors, paint a mixed picture of the current trends in farming and the outlook for the business.

The monitoring reports look into sheep and beef farming, dairying, deer farming, arable farming, horticulture and viticulture.

In general terms, the reports find a positive outlook for sheep and beef, with gross revenue up, farmers confident lamb prices will stay up, and beef exports to Asia sharply increased, adding stability to beef schedule prices.

Land prices continue to rocket and some farmers surveyed are leveraging off the value of their property to purchase off-farm assets.

The dairy sector report says farm revenue lifted nine percent in 2004/05, due to the increased milk-solid payout. This was despite a difficult season climatically throughout the country with production down 4-10 percent in all regions. And while gross farm revenue is budgeted to drop one percent in 2005/06, overall farmer morale and confidence are high heading into the season.

The price of dairy farms also continues to increase.

The farm monitoring reports are part of an annual process where MAF Policy monitors the production and financial status of farms in terms of their cash income and expenditure. Trends, issues, and sector concerns are also monitored.

The reports are based on model farms designed to best typify average farming operations within specific regions. Information for each model is drawn from real farmers and a wide cross-section of agribusiness. The prices used are farmers’ own expectations in May/June 2005. The model data is not MAF price or production predictions.

The deer farming report paints a less positive picture, with continuing low returns and farmers divided between using low stock prices to expand their operations and others leaving the industry.

While farm revenue increased in the North Island model, reflecting an increase in venison returns, the revenue for the South Island model reached an all-time low. Velvet returns also reached an all time low.

The arable report is a mixed bag with major weather swings causing early season concerns but overall the season suiting most crops. While overall production is much higher than in the 1990s, the sector’s bottom line has remained static. The report finds farmers are budgeting for a similar result next year, from higher productivity, and slightly lower prices and small cost increases.

The horticulture sector had a tough year in 2004/05, with incomes generally falling and the sector’s confidence shaken.

Recurring themes in the report are low export prices as a result of high exchange rates, increasing costs of production and increasing volumes of competitors’ products.

Unlike key agricultural products, horticultural crops have not been buffered from the effects of the exchange rate by high commodity prices.

The sixth monitoring report investigates the state of the wine industries and finds average prices for the major varieties have fallen in 2005 from 2004. For many growers, confidence in vineyard profitability in the short term has fallen, as downward pressure becomes a reality.

The 2005 grape harvest produced a vintage of 142,000 tonnes of grapes – the second largest harvest recorded. Sauvignon blanc is the leading variety, representing 45 percent of the vintage. The industry is presently strongly focused on quality.

ENDS

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