New Season Looking Positive for Sheep And Beef Farmers

New Season Looking Positive for Sheep And Beef Farmers

New Zealand sheep and beef farmers can look forward to a positive 2014-15 season, according to analysis released by Beef + Lamb New Zealand’s (B+LNZ) Economic Service today.

B+LNZ Economic Service executive director, Rob Davison says the season’s favourable climatic conditions so far, expected higher product prices and a more export-friendly exchange rate collectively translate to improved returns for the country’s sheep and beef farmers.

New Season Outlook 2014-15 predicts the average sheep and beef farm profit before tax will increase 8.0 per cent on last season, to $110,800.

Mr Davison says a 6.3 per cent lift in sheep revenue is largely responsible for the increase, while total farm expenditure should only rise by an average of 2.3 per cent.

The international economy plays a significant role, with global growth expected to reach 3.4 per cent this year and 4.0 per cent during 2015. “While New Zealand is now in its fourth year of expansion, prospects in other developed economies are gradually improving,” Mr Davison says.

The three major currencies in which New Zealand agricultural products are mostly traded – the US dollar, Euro and British pound – are all expected to strengthen against the New Zealand dollar over the next 12 months.

Farm-gate prices for lamb and mutton are forecast to average $103 and $79 per head, respectively, up $3 on 2013-14 provisional prices.

Mr Davison says that, while total sheep numbers are back on last season, the number of lambs tailed this spring is estimated to be similar to last spring – at 25.6 million head – reflecting kind climatic conditions. “However, export lamb production is forecast to decrease by 2.6 per cent, as farmers opt to hold onto more ewe hoggets as replacement breeding stock which is a positive indicator for the sector.”

Meanwhile, export mutton processing is forecast to drop by 21 per cent over the coming year – a correction on last year, when dry conditions in the north and dairy expansion in the south saw larger numbers of ewes processed than usual.

Bull, steer and heifer farm-gate prices per kilogram are forecast to increase 8.5 per cent. Overall, the value of beef and veal meat exports is expected to increase by 5.5 per cent on last season. This reflects total volumes dropping 3.6 per cent, while average values rise 9.4 per cent, on the back of expected higher international prices and a more favourable exchange rate.

New Season Outlook 2014-15 (PDF, 1MB)

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