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

 

NZ sheep & beef farm profits forecast to slip

NZ sheep & beef farm profits forecast to slip as expenses rise

By Tina Morrison

Sept. 14 (BusinessDesk) - New Zealand sheep and beef farm profits are expected to decline in the coming year as higher spending outweighs a lift in revenue from the products they sell.

The average farm is expected to earn a pre-tax profit of $129,700 in the June 2019 year, down 2.8 percent from a pre-tax profit of $133,500 in the 2017/18 year, according to industry group Beef+Lamb New Zealand.

Beef+Lamb forecasts farm revenue will lift 0.7 percent to $545,900 in the coming year, driven by increased revenue from sheep. It expects sheep revenue, which contributes 48 percent of farm revenue, will lift 1.2 percent to $263,600 driven by strong farmgate prices. Wool revenue is expected to increase 5.3 percent to $37,600 as a lift in prices offsets a decline in volumes. Cattle revenue is seen dropping 3.7 percent to $142,500 due to softer average beef cattle sale prices, the organisation says in its New Season Outlook published today.

On the other side of the ledger, average farm expenditure is expected to rise 1.8 percent to $416,200. Beef+Lamb said spending was expected to rise in all parts of farm businesses except for repairs and maintenance, interest costs and feed and grazing. Prices for inputs used on sheep and beef farms are expected to increase 3.2 percent, following a 2 percent increase last year. Spending on fertiliser, lime and seeds is expected to rise 1.9 percent as an increase in volume offsets a slight decrease in on-ground prices.

The organisation forecasts beef, lamb, and mutton prices to remain firm at historically high levels, helped by the weaker New Zealand dollar and strong export demand.

“We forecast slight increases in farm-gate prices for lamb and mutton in 2018/19, as prices are expected to remain relatively steady in New Zealand’s main export markets and benefit from an expected easing of the New Zealand dollar,” said Beef+Lamb chief economist Andrew Burtt. “This follows the exceptionally strong average farm-gate prices for lamb, mutton, and beef in the 2017/18 season.”

Burtt said the value of the New Zealand dollar has a large bearing on the sector’s outlook.

“The New Zealand dollar is expected to ease as the economies of our major trading partners strengthen in 2018/19 – principally against the US dollar in which over 70 percent of red meat exports are traded,” he said.

The forecasts assume the New Zealand dollar will be worth an average 67 US cents over the 2018/19 season, down from 70 US cents last season. It was at 65.70 US cents earlier today.

Lamb meat exports are expected to earn a total of $3.11 billion in the coming year, after breaking the $3 billion mark for the first time last season. Beef exports are forecast to drop 4 percent to $3.42 billion as volumes and values weaken, Beef+Lamb said.

Meat is the country's second-largest export commodity behind dairy products.

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Department Of Conservation: Beech Mast On The Cards After Warm Summer

Climate modelling shows this year’s hot March has increased the chance of beech forest seeding next summer in parts of New Zealand, which could be bad news for native wildlife. The Department of Conservation (DOC) uses data from NIWA’s virtual climate ... More>>

Government: Delivering Lower Card Fees To Business

Commerce and Consumer Affairs Minister David Clark has today announced the Government’s next steps to reduce merchant service fees, that banks charge businesses when customers use a credit or debit card to pay, which is estimated to save New Zealand businesses ... More>>

SEEK NZ Employment Report: April 2021

OVERVIEW OF APRIL 2021: STATE OF THE NATION: April, for the second consecutive month, saw the highest number of jobs ever advertised on seek.co.nz. Applications per job ad fell 9% month-on-month (m/m). SEEK job ads were up by 12% m/m. SEEK job ads were ... More>>

Geo40: Global Plans To Recover Low-Carbon Lithium At Scale Accelerated By Investment Of Up To $7.5m By Pacific Channel

New Zealand’s leading sustainable, mineral-recovery company, Geo40 Limited has secured up to $7.5m in equity investment from New Zealand deep-tech specialist Venture Capital firm Pacific Channel to fast-track plans to develop its nascent lithium-from-geothermal-fluid ... More>>

Stats: Lower Job Security Linked To Lower Life Satisfaction

People who feel their employment is insecure are more likely than other employed people to rate their overall life satisfaction poorly, Stats NZ said today. New survey data from the March 2021 quarter shows that 26 percent of employed people who thought ... More>>

The Conversation: The Outlook For Coral Reefs Remains Grim Unless We Cut Emissions Fast — New Research

A study of 183 coral reefs worldwide quantified the impacts of ocean warming and acidification on reef growth rates. Even under the lowest emissions scenarios, the future of reefs is not bright. More>>