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

 

Bad Day For Rope: Donaghys Job Losses Another Blow To Dunedin

The loss of 30 jobs from Donaghys rope and twine factory is yet another blow to the people and economy of Dunedin, says Dunedin South Labour MP Clare Curran. More>>

ALSO:

Oil: 2014 New Zealand Petroleum Summit

Simon Bridges: Our abundance of energy and minerals resources provides us with unique opportunities to build the New Zealand economy.

Over the past three years the Government has made significant changes to how the sector is regulated. More>>

ALSO:

WWF Report: Solutions In Reach; World Biodiversity Suffers Major Decline

Global wildlife populations have declined by more than half in just 40 years as measured in WWF's Living Planet Report 2014. Wildlife's continued decline highlights the need for sustainable solutions to heal the planet... More>>

ALSO:

Scoop Business: NZ Dollar Catches Breath After "Goldilocks" Slump

The New Zealand dollar edged up following its dramatic slump yesterday after the Reserve Bank confirmed speculation it intervened in the currency market last month and PM John Key suggested a “Goldilocks” level far lower than at present. More>>

ALSO:

Biosecurity: Kiwifruit Claim To Hold Officials Accountable For Psa

Kiwifruit growers have joined forces to hold Biosecurity NZ accountable in the courts for its negligence in allowing 2010’s Psa outbreak that devastated New Zealand’s kiwifruit industry and exports. Foundation claimants representing well ... More>>

ALSO:

Poison: Anglers Advised Not To Eat Trout In 1080 Areas

With the fishing season opening in just a few days (1 October 2014), anglers are being warned by the Department of Conservation(DOC) not to eat trout from pristine backcountry waters and their downstream catchments, where the department is conducting 1080 poisoning operations. More>>.

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news