Using the Minister of Agriculture's costing for the Emissions Trading Scheme (ETS), Federated Farmers estimates it will take the profit from 4.7 million lambs to offset the $1,475 per sheep and beef farm, of ETS costs from 1 July 2010.
"The ETS is a massive risk to on-farm profitability and this sum actually doubles what Federated Farmers had projected only two weeks ago," says Don Nicolson, Federated Farmers President.
"Given these are the Minister's own figures it doesn't seem to account for the $10 million in extra costs the processors also face. Costs that will be passed back to farmers.
"We know from Meat & Wool NZ's Sheep & Beef Mid Season Update, released in February, that the estimated before tax profit for a sheep and beef farmer this season is a mere $39,800."
"$1,475 in new costs is almost four percent of that average pre-tax profit," he said.
"Given the MAF model projects a per-lamb profit of $9.06, it will take the profit from 4.7 million lambs just for us to break even as an industry."
"That requires a massive 20 percent increase in the number of lambs produced over the year ended September 2009," said Nicholson.
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