Content supplied by Beef+Lamb economic service
Beef + Lamb New Zealand's Economic Service Mid-Season Update estimates that farm profit before tax for the 2012-13 season will fall 54 per cent on last season, to an average of $73,000 across New Zealand.
This is largely due to sharply lower lamb prices and a consequent 27 per cent decrease in sheep revenue.
B+LNZ Economic Service Executive Rob Davison says lamb numbers themselves were up, thanks to a 123 per cent lambing last spring and more hoggets producing lambs. However, this was not sufficient to offset the lower lamb price and impact of drought.
"The forecast average lamb price of $85 per head is down 25 per cent from last season's $113.60, which was the second highest on record. This has, understandably, flowed through to farmers' bottom lines, with the result that profit levels will effectively halve for the season ending 30 September 2013. In inflation-adjusted terms, this returns profits to levels similar to the first decade of this century."
Mr Davison says maintaining prices for lamb will be challenging.
"Europe's debt crisis is far from being solved and there is almost no growth in the region. Meanwhile, there are concerns about economic prospects for the US, given its fiscal challenges. And China's economic growth has slowed to the lowest rate in a decade, although it is still at about 8 per cent."
Cattle returns are predicted to drop 8.8 per cent, but Mr Davison says the outlook is relatively positive, thanks to the supply situation in the US.
"Three years of drought in the US has reduced the country's total cattle numbers to 89.3m head – the lowest tally since 1952. Significantly, the beef cow herd is the smallest it has been in decades and it will take years to rebuild breeding numbers."
The average gross revenue is estimated to be $409,300 – down 19 per cent from last season. Total farm expenditure is estimated to fall only 3.6 per cent, to $336,300.
The full mid-season update is here »
1 Comments
The average gross revenue is estimated to be $409,300 – down 19 per cent from last season. Total farm expenditure is estimated to fall only 3.6 per cent, to $336,300.
Do input costs rise despite best efforts to curtail material use? - would a fall in the value of the NZD/USD currency pair radically improve this revenue/cost ratio?
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.