Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Three challenging numbers

Three challenging numbers

by Conor English, CEO, Federated Farmers of New Zealand

There has been a lot of discussion recently about New Zealand’s meat industry. We all want more profitable and sustainable farming. Meat farmers have been concerned that their gross incomes are a bit lower than dairy farmers on similar sized farms. For meat, three numbers make bridging that gap challenging.

Firstly, the weighted average kg/ha production for meat farmers across all land classes and regions for 2011/2012 was around 187kg/ha (lamb – 90.77, beef - 66.43 and wool-30.16). Now this is a very rough number as farms vary significantly from the high country to the coastal flats.

According to DairyNZ, the average Kg of MS per effective hectare for the 2012/13 season was 988 Kg MS/ha. Despite issues with assumptions made to get these numbers, such as supplementary feed and how run offs are counted, the basic maths indicate that dairy farmers produce a reasonable amount more weight of product per hectare.

Secondly, again roughly speaking, both meat and milk receive around $6.00 per kg on average over the years.

So to make up the difference, either the meat farmer needs to produce significantly more Kgs per HA than they currently do, receive significantly more times the price per Kg, or a combination of both.

The third number is the capital invested. There will be meat farmers achieving higher returns on capital than some dairy farmers. However, generally dairy farmers do invest more capital both on and off farm than meat farmers, so their gross income is therefore likely to be proportionately more.

Recently, I explained that it is unrealistic to expect a return from an asset you don’t own. I can't receive rent from the neighbouring house if someone else has invested in it and not me.

So there is an issue about how much and where capital is invested. This is true for both dairy and meat farmers.

Some suggest over capacity is a significant issue. The printing industry has the same issue and the market has dealt with it.

To make any progress it is going to take more than incremental thinking. Until meat farmers produce or invest more per hectare, or meat companies are able to extract far more significant returns from the market place, the relative gross income gap between meat and dairy farmers will likely continue. This is a similar situation to the gap in income between dairy and kiwifruit farms.

Some great progress has actually been made by farmers and meat companies alike. However we need to keep at it.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Fruit & Veg Crackdown: Auckland Fruit Fly Find Under Investigation

The Ministry for Primary Industries (MPI) is investigating a find of a single male Queensland fruit fly in a surveillance trap in the Auckland suburb of Grey Lynn... MPI has placed legal controls on the movement of fruit and some vegetables outside of a defined circular area which extends 1.5km from where the fly was trapped in Grey Lynn. More>>

ALSO:

Scoop Business: Westpac NZ Reaches $2.97M Swaps Settlement

Westpac Banking Corp’s New Zealand unit has agreed to pay $2.97 million in a settlement with the Commerce Commission over the way the bank sold interest rate swaps to farmers between 2005 and 2012. More>>

ALSO:

Going Dutch: Fonterra Kicks Off $144M Partnership With Dutch Cheese Maker

Fonterra Co-operative Group, the world’s largest dairy exporter, has commissioned a new dairy ingredients plant in Heerenveen, in the north of the Netherlands, its first wholly-owned and operated ingredients plant in Europe. More>>

ALSO:

Scoop Business: NZ Retail Sales Beat Estimates

New Zealand retail sales rose more than expected in the fourth quarter, led by vehicle-related transactions, food and beverages, adding to evidence that cheap credit and a growing jobs market are encouraging consumers to spend. More>>

ALSO:

Delivery Cuts Go Ahead: 'Government Money Grab' From NZ Post

"It's a money grab by the Government as the shareholder of New Zealand Post" says Postal Workers Union advocate Graeme Clarke about the changes announced by NZ Post. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news