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

 

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

The Nation: Call For Cross-Party Auckland Housing Plan

Penny Hulse calls for cross-party accord on Auckland housing because “it’s too important to score political points on”. More>>

ALSO:

Flu Season: Overcoming Vaccination Reluctance

While research shows that 40% of New Zealand businesses offer free or subsidised flu vaccinations to employees this time of year, HR professionals say persuading staff to participate is the biggest challenge. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news