Dairy
The season winds down in a spell of good autumn weather, as farmers try and squeeze the last drops out of this year’s high prices. Fonterra reports cheese is to be added to the other six products offered in their globaltrade auction process, where they now sell 25% of their total production.
After their joint farming venture with Nestle in Chile failed, Fonterra is expanding it’s Chinese farm operations with plans for up to 20 units to help satisfy the Asian demand for milk. They also signaled that the giant Edendale plant is nearing capacity, and another plant is needed, reflecting that the huge growth of dairying in the south has not reached it’s potential yet.
The price of milk is still an issue with consumer groups, although statistics show that values in real terms were higher in 1994 and 2002.But volatility is predicted in all commodity prices and some commentators are suggesting prices have peaked, as has been reflected in the latest auction price.
Sheep
Lamb markets firmed further this week, with price levels in the UK affecting volumes sold, but other European markets taking up that surplus even at these record levels. Smaller yardings of prime lambs at saleyards are firming in price in both islands, as the local trade values increase to $6.80 per kg. Good volumes of store lambs have appeared as autumn cools grass growth, but prices have hit yearly highs, as finishers target late winter, early spring shortages of export lamb.
Many sheep farmers have at last had a profitable year and are repaying debt, and refilling nutrient deficits in their soils with overdue fertiliser. A new livestock catastrophe insurance was offered to sheep farmers as a result of the major spring losses suffered by some last year. The trigger for a claim would be a 15% loss including immature stock, and may attract younger indebted farmers not so immune to risk pressures.
Based on the upward trend of these charts lambs upward spiral may not be finished yet, although processors are warning store lamb buyers of consumer resistance to these high prices.
Beef
The stronger currency eased beef schedules off recent highs but fundamental world shortages and high grain prices underpin the market, and make prospects good for the medium term. Calf sales have strengthened considerably from early sales and now seem to better reflect the optimism in the beef sector.
Saleyard prime steer prices are 40% up on the same stage last year but local consumers will determine how much more they will be prepared to pay, come the late winter early spring period. These charts suggest that maybe the high prices maybe peaking but the currencies ride will have a big influence on that.
Wool
Auction prices eased as the stronger currency put exporters under extra pressure, as they adjusted to this spectacular rise in values. The big volumes of coarse crossbred wools are now over twice the price than they were a year ago, and with the record prices for lamb have revitalized the sheep industry.
A small volume of mid micron wool was offered at the sale and indicator prices rose for these types, to a record 976 cents per kg.Wool analysts suggest that a correction will come soon, and the recent rapid rise in the currency will hasten this.
Deer
The schedule prices movement of the last month has stalled, but has encouraged some to look at early killing of dry hinds identified at weaning. Sales of weaners in the south are similar to last year in the $4.50-$5/kg LWT range, behind the few heavier auctioned elk cross animals, that have sold a dollar per kg dearer in Canterbury.
The velvet season washes up with very little stock on hand and prices stable on last year, with demand from China expanding into traditional Korean grades and helping diversify the market.
30 Comments
Makes for good reading doesn't it. A couple of years of high sheep/wool prices might even make the dairy boys a bit envious and make a few recent conversions in marginal places look a little silly. But then again nothing seems slow down NZ's march to being a full scale floating dairy farm.
Dont buy into the doom and dispear that prevails on this site. There is money literally pouring into farmers bank accounts at present, which as we all know is the traditional driver of NZ economic recoveries. The really good news is its caused by genuine shortages of what we are produceing set against increasing demand, not by an artificially low dollar or disease outbreak somewhere. A golden era in NZ agriculture is underway!
No argument from me that agriculture is still the back-bone of the NZ economy . But how does a commodity boom benefit us , when the wastrals in parliament seem to be hell-bent on splurging it all on Michael Cullen's seriously dopey policies ?
.......... Clark and Cullen wasted 9 years of a golden opportunity to build the economy , as they embarked upon the biggest build-up of the public service and of the welfare state in the nation's history .
The government now takes in 45 % of the GDP of the productive sector , and distributes that through its many bureaucratic channels to 50 % of the populence .
...... The Nat's are into their third year of honouring Labour's policies ! .......... since 1999 , we've endured 12 frigging wasted years !
Gummy I hear what you are saying re the pollies. However, sheep shagger is correct - many farmers are having a booming year - in spite of the pollies. There are some wonderful tech driven innovations in agriculture currently that will see farmers investing in, to use on farm. Not only do some of them provide good management tools but also will benefit the environment via timely and appropriate applications of effluent disposal on dairy farms.
Walter should be happy as they are the result of kiwi innovation, providing employment to locals and yet can be sold to the world.
What do you think the chances are of a hard hitting budget next April if National gets back in?
If the Nats paint themselves into a corner , as they did in 2008 , then there'll be no hard hitting budgets .......... Or , at least , a decent re-weighting of the economy towards production and innovation .
....... Don Brash was true to National's roots of encouraging thrift and enterprise ....... JK isn't . He's a populist , sadly .
I would have said Brash was ACT to the core, despite the party he's nominally a member of.... So your words paint a picture of either a 5th columist, or National is way more right wing than is seen.....
In terms of hard hitting its funny how the rabid right always seem to think hard hitting doesnt involve being hit themselves, yet with the most disposable income are the ones that can be taxed without impacting essentials/nneds.....
So called enterprise, this seems to consist of investing in hedge funds and property mostly....that isnt enterprise....thrift, given expensive top end houses are selling like hot cakes I cant see that either....
In terms of painting themselves into a corner, I guess you mean winning a mandate off the voter. Note this legitimises the actions the Govn agrees to take on behalf of the voter for the next 3 years. Funny how again either the rabid right (or indeed the loony left) seem to think that after winning an election by convincing centralist/middle swing voters to support them its A OK to peal off to the right (or left) and do what ever they want....they can of course, but that turns them into a 2 or 3 term opposition party next election....
Its known as breaking TRUST.
regards
Why not sheepshagger....what's wrong with balancing out the govt bullshit .....and sprooking by Bollard that steals income from the folk who saved and didn't splurge. Are you telling us you believe the twaddle...that if you go along with a smile on your dial the economy will morph into a fabulous thing .....That's what I call Kindy economics sheepshagger....it BS fit for kiddies.
The farmers I work with are busy paying down debt and repairing fences gates and getting works done that had to be left for twenty years. They know bloody well these are good years that are highly likely to turn to dust at the flick of a switch.
True Gummy , Although English will be forced to pull the reigns in by what seems to be a never ending seris of financial (and natural) disasters. Its unfortuate that its taken them to be backed into a corner to face up to reality.
That said, it is still good news that extra money is pouring in and should do for the foreseeable future. That it wont be squandered is like you suggest another story....
"That said, it is still good news that extra money is pouring in and should do for the foreseeable future."
You sound like you have vested interests in selling something.
If you could quantify what timeframe you mean by "foreseeable future" we would be able to come back at that point and see if you were right.
Heys chaps, agriculture needs younger farmers like Sheep Shagger who actually believe in the industry. They are the future and as he has been farming for a wee bit he will be well aware of the volitility of farming and he seems to have a handle on the political situation. Nothing like a bit of positive attitude.
Yes Wolly, alot of farmers are paying down debt and doing r&m that they haven't being able to do for a while - thats positive. Don't be fooled, there are some farmers out there with very good cash positions too. We don't hear about them - just all the doom and gloom.
A year can be a long time in farming. A telling point for dairy will be the 2011/12 advance payment announcement Fonterra usually makes in May.
Foreseeable Future for farming....my guess we are good for a year or two. Then as our oil requirements dont balance oil productivity watch us squeal. I have spent some time travelling this year, and realise how inefficient our farming model is considering what all the experts are telling us of what is to come. While everyone else is upscaling borrowing for machinery that is oil dependent I am downscaling trying to become oil efficient.
I have a question to dairy farmers. As their goods have to be transported daily many miles to market, are hard questions being asked of Fonterra and other dairy companies as to their long term energy plan?
As Fonterrible can land milk in an obscure part of the Philippines ( SM Mall , ilo ilo ) , and the locals can purchase it cheaper than I could buy the exact same product at the Countdown supermarket at Northwood , Christchurch ......... then I reckon that Fonterrible don't have an energy problem .
Cheers CO above. Like you im struggling to find Wolly's point. Surely paying down debt, repairing fences, putting on fert etc is a good thing?
As to "foreseeable future" I think 3 to 5 years out look great for sheep and beef.
On the supply side there is reduced numbers in all the major countries .For example beef numbers in the US are at 53 year lows and they are continuing to liquidate, Argentina's exports have dropped 50%, Brazils 2% rise in production has failed to keep pace with domestic demand. Aussie sheep numbers are at there lowest since 1887, NZs mutton kill is up 30% year on year...... And obviously the only way to turn this around is to retain more females for breeding further reduceing supply. A beef heifer retained this autumn will not produce killable offspring until mid 2014. I havent even factored in the riseing cost of corn, or the rise and rise of wool.
On the demand side, we are seeing a big lift in product going into Asia, the middle east and Russia meaning we are no longer at the behest of the UK supermarkets and US beef traders.
Its just very hard to be negative when the fundamentals look so bloody good!
Agree Sheepshagger,
Ewe number in Auzzie will pick up next year. Lots of replacement been kept all over the eastern seaboard. There has been a drought in WA but because the prices have been good most destocking has resulting in ewes being trucked to SA (which is the reverse of what usually happens) so they havent been killed. Lots a lots of whethers have been kept as well as station country has had an unbelievable 12 months of rain. There is enough saltbush and scrub grown that it wont matter if it doesnt rain for the next 2 - 3 years in station country. Wool clip expected to be up for the first time in about 20 years.
But these numbers are still small fry compared to with where numbers were 20 years ago so shouldn't increase supply enough to decrease prices. Have shorn in Norway, england, ireland and aussie over the last 10 years and all of those countrys numbers have gone down big time. Therefore if you stay in the sheep game your onto a winner i reckon !
The NZ locals are being rorted Gummy. Its shocking. And bad for us as a nation. Its a shame all our wonderful produce is so expensive here, the supermarkets have a lot to answer for. As I went through the checkout yesterday I marvelled at my stupidity for not having gone to the fruit and veg shop instead
Perhaps things will change as energy becomes more of a problem, we will all have to shop more local. But our government needs to help it along with things like freeing up rules so dairy farmers can supply the local market, and meat farmers can do the same.
I agree with you Belle. Just ordered 32 more fruit trees + 20 blueberry bushes (trialling them, will get 5 times more if they do well!), preparing a big veggie garden for next spring, and hubby wants to go see a dairy farmer next door to get our milk from (30l/week!!). We'll also get a few sheep/cows at some point. Hoping to be less and less reliant on supermarkets for food asap (big family to feed!).
There is some serious money being made out there at the moment. Ive got a mate who milks a bit over 100 cows and does 450+ per cow by himself with no labour and all grass on a debt free farm. Also finishes a few steers as well. Imagine if there were more farms around like that. Then you would see the money pouring back into the economy rather than pouring overseas to the bankers.
And I can't complain either, have had a very nice year and this months top-up which arrives tommorrow will be quite pleasent. Going to be expensive buying ewes though as am not milking cows next year - but not to worried about that yet.
So yes I am positive too - it's just hard to get positive about the rest of the economy and the state of NZ as a whole.
Cheers CO, you seem to have my back here!
For Colins peace of mind, I assure him that I am not a vested interest in selling him anything more sinister than a lamb chop.
Surely this site is at its best when contributors are open to others views and offer rebutal where appropriate. Just shoting the messenger gets abit tiresome. I happen to be very optimistic about prospects, Colin seems to be of the contrary view. Id be interested to hear his rationale.
Your lamb chops are making it to be best of the best in the world SS. Son, who was working at skifield in St Moritz Switzerland, said he saw NZ lamb chops on the menu of the restaurant favoured by the rich and famous that go there.
Keep up the positivity. I am a big believer in 'The difference between theory and practice in practice is greater than the difference between theory and practice in theory.'
Getting academics to accept this can be some what more challenging. :-)
I've noticed our lamb is reasonably priced in the UK too. Sheep shagger could answer your question better than me as I don't know Elley. As farmers we are price takers not price makers :-)
Make contact with some of your local sheep farmers - sometimes they will sell you a sheep or two for home consumption. They may even show you how to kill it and dress it out. They can sell you a live sheep but my understanding is that they can't sell you fresh meat direct from the farm. If you can do a deal with the dairy farmer it will be much easier than buying and keeping cows for milk - unless you have a lot of land.
We keep the MOTHs family in beef. As there are only two of us in the house we go shares with his sister. She just pays half the cost of the meat processing costs. In turn she shares it with her adult daughter and partner. The partner is a born and bred Aucklander. He cannot believe how much meat (ie kilos of meat) they are getting from their share of the beast and how cheap it is. You could organise with a local farmer to buy a cattle beast and organise for it to be home killed. Or buy one from the saleyards with that intention. But you will need a decent sized freezer. :-)
It may be worth it to see if any of your friends are like minded as that way your meat will remain fresher - it can take a while to eat through a whole beast, plus sheep, plus pig etc.
Good luck with your blueberries! They are my favourite berry.
I bought your book Fresh Start the other day. There are some yummy recipes in there :-) My intention is to use it for elderly family members as they don't tolerate food like they used to and their diet requirements are not much different to young children. Is the latest addition to your family still due or have they arrived? You are an inspirational young woman!
CO,Elley, its my understanding that NZ lamb is used in UK supermarkets as a loss leader as they have worked out that purchasers of lamb spend proportionately more on high margin accompaniments. Not sure if this is the French tactic as well?
Interestingly a guy from Silver fern farms told me during the week that their range of branded lamb they're marketing in NZ supermarkets and advertising on the telly is going gang busters and they're having trouble supplying. This dispite it being at a significant premium per kg over the standard meatpacks. Seems even in recession hit NZ there are consumers that are prepared to pay a premium for a percieved higher quality brand.
Walter, your comments about the significant destruction of weath worldwide seems abit off the mark. Certainly in the west that would probably be true but certainly not in the emerging economies which have been significant drivers of our lift in product prices.
I'm not sure about the French supermarket tactic regarding lamb prices. I can't see how they could not be selling at a loss to be honest, to make it so cheap. Unless of course the supermarkets here really take advantage of local customers of course. So anyway, we still buy some but not as often as when it was just the two of us. Had some lamb racks on the BBQ the other day, yummmm.
Hi CO, thanks for all this info. Friends of ours have moved from Chch to our village a couple of years before us and have done what you say re-getting some beef cows & sheep and sharing with other people in their family as just one animal gives so much meat. I think they kept one of each for meat and grazed the other for a number of months before re-selling them when they were "ready". The price per kilo is unbeatable and they've told us the meat is so much better too (our local butcher is great, comes on your paddock and shoots the (poor) unsuspecting animals so at least there is no stress for them).
So we are getting advice from them and as we have 4ha like they do, we intend to do this at some point as well (and yes, a pig too). But right now, work and the children are keeping us busy enough so we'll probably wait for a couple more years. I am not so keen on a cow milk because (I think) it is a lot more work than just grazing a few animals. But I'd be quite happy to buy direct from a farmer and pay him than the supermarket.
Yeah, I love blueberries. If eating them could turn me into a Smurfette, I'd be one (do you have this cartoon here?? I'd be the dark-haired one unfortunately, ie the nasty one!).
You really shouldn't have bought my book, you should have asked me! I've got a few boxes left of each one (except the last one because HarperCollins owns the stock for that one) and I'm more than happy to give them away (I asked hubby to burn them to free up space in the garage the last time he did a fire but he flatly refused so you'd do me a favour). LOL at using a preschooler cookbook to feed elderly people, but I guess it's not a bad idea! Anyway, if you are interested, let me know (if you have a sweet tooth, the French desserts one is a winner, just drop me an email it's on my website).
Our (surprise) baby is due at the end of August... Took me a little while to get used to the idea as 4 seemed like a nice number already but I'm excited now (still sending hubby off to the doc after the birth though, not taking anymore chances!!). Hmmm, that was a bit off topic :)
SAme in the UK and its the same for wine....its actually cheaper after its been shipped 1/2 way around the world....crazy but true.....As a welshman welsh lamb isnt a patch on NZ lamb either....way more fatty...I think NZ lamb is about the best in the world...
regards
An observation Walter - as a farmer I am a price taker, not a price maker. One reality I have found over the years - when dairy payout goes up most of our costs go up. When payout goes down, costs usually stay up. One item that hasn't really increased a lot is tractors. We bought a new tractor 17 years ago (still got it). Paid around $88k. Today a comparable tractor is around $99k. If one looks at animal health costs over the same time the costs have gone off the chart. Fertiliser costs can vary from season to season depending on the world market demand.
Where there are direct government subsidies such as the EU CAP subsidies, food prices don't seem to go up the same. So perhaps the question that needs to be asked is should the govt subsidise the cost of food to make it cheaper, or should it be left to market forces.
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