South America's access to both the giant markets in the US and China will pose a significant challenge to the New Zealand beef trade

Anyone who doesn't think all and sundry will increase production at these prices, is niave. It's a matter of when prices do a WMP, you can't change that, and it's not easy to prepare for the inevitable, but I wouldn't be making long term descisions based on the expectation that these prices are permanent. Though I have heard some saying exactly like they said with dairy, that prices are going to $10 lol

Less than R1 fresian bulls.

same market though.

all cattle have trimmings, Sth American beef competes more with our lean beef. Deer have a lot of poor quality cuts and from memory only about %20 prime cuts but they may have got better at that. At the end of the day we are in the Protein business. Like the dairy industry our futures are now tied to China's.

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The Chinese market is opening up to Brazil, with five more plants opening access recently which brings the total approved plants to 16.

Brazil is expected to double its export volume in 2016 to China, shipping about 200,000 tonnes. This increase would rank Brazil as the top beef exporter to China in 2016.
"Meanwhile, the possible first fresh beef shipment to the US during the first half of 2016 is likely to support an even higher growth rate for Brazilian beef exports in the second half of 2016."

http://www.thecattlesite.com/news/49504/brazils-beef-exports-to-rise-as…

http://modernfarmer.com/2014/03/tail-curling-facts-chinese-pork/

http://beef2live.com/story-world-meat-production-1960-present-0-111818

I dare say there is no realistic price point for a conversion back to beef. You cant turn a debt ridden dairy unit into a profitable beef farm. That is a simplification and you want numbers but beef just doesnt stack up against debt. NZ is in a hole of its own making. All the pollies the banksters and the dairy converters should hang their heads in shame. We now have low beef numbers on a dropping schedule. You cant magically find a million cattle to farm. And only bulls will you kill quick smart to get a return worth talking about in 18 months. If the dairy units cant survive now with constant income how would they solve the hardship involved in waiting 18 months from this august.

That would be between you and a bank I guess. Remembering the age problem facing rural NZ, 2/3rd's of farmers will retire in the next 12 years, very few children interested, in sheep and beef not so sure about dairy. Lots of old farmers around here, Crazy regulations, H&Safety and local body costs. I'm not even sure that NZ is the right place to invest in farming anymore. When it's like when I was young, the banks were so hard to get money from and you needed over %60 plus livestock money, then we will find out what farms are really worth.

I look at the dairy conversions around here and they have to drop a mile, till I would be interested. Way more than the banks will allow.

The problem is we are small producers just a rounding error for the big guy's. Brazil and the countries to the south are just touching on their potential and money is flowing into their agriculture from big funds. I read somewhere that Brazil still has a mountain of potential farm land to develop.

With our traditional market shrinking so does the demand for food we used to produce and we change to things like squash but a lot of our hill country is not so versatile and really needs low costs, especially fertiliser. Where does our sheep industry fit into this?

There must be a huge deficit in capital spending happening in much of rural NZ. I don't hear the topdressing plane very often.

It's the downside of the bright side of globalisation.

http://en.mercopress.com/2012/10/17/is-brazil-the-reservoir-of-future-a…

http://www.economist.com/node/16886442

dp

IT Guy what is your planned method of beef production? I have been watching realestate.co.nz pretty closely lately and there is certainly plenty of farmland up for sale. But the pricing if there is any is horrendous. But if you can pay cash you would do alright. Entering the beef market at this moment would probably b like buying a good dairy herd when the payout hit $8. A lot of folk are going to be lucky to clear $300 an animal after havjng farmed them for 12 months. But who knows, I am siding with Aj though and picking a slide. Backing that up by not buying my usual bunch of heifers to fatten over winter. Paying $1000 now to kill them in september for $1100 ...if I am lucky ...seems a waste of a good winter. I am sitting tight with a few lambs ewes and weaner bulls and waiting to see how it all pans out.

But we now are facing real competition, it's no longer the old boy club of years gone by, Asian countries won't play by the rules of the old empire. There will not be special access quota's for our products because we speak english.
On top of that, cheap and abundant finance has poured into developing countries and their production has soared, their costs are a lot lower than ours even in the UK, farm diesel is only .25p a litre. Unless we can correct our cost structure, which will be reflected in land prices soon, free up enough capital for young people to return to the industry, farming is going to be facing some interesting times, especially as it's what the Politicians thought we could use to leverage borrowing against unproductive assets, which lets face it has got a bit out of control.
So while traditional dairy farms on good land with low debts will be fine, large corporate farms on marginal land, carrying most of the debt will not. Land values will eventually have to reflect the lower payouts.

Yes the OCR reductions are helping and eventually you would think that this would reflect in a lower NZD that should help balance things out. However, unlike rental houses that can simply be locked up and wait for a better offer, farms are going to require maintenance, interesting re the number of farmers that are near retirement age, demographics indeed.