NZ Beef and Sheep Economic Outlook Depends on Currency

NEW ZEALAND - A range of factors including currency fluctuations, a weak and volatile outlook for lamb and wool, plus the impact of drought and Facial Eczema, which was widespread in the North Island where half New Zealand’s sheep are farmed, will impact on sheep and beef farmer profitability this season.
calendar icon 1 November 2016
clock icon 2 minute read

The Beef + Lamb New Zealand New Season Outlook 2016-17 predicts beef prices to remain favourable and limited availability should ensure good returns for breeders, however competition for store stock is likely to reduce the margins for those finishing farmers, Beef + Lamb New Zealand Chief Operating Officer Cros Spooner says.

While sheepmeat prices are uncertain, farmer reports indicate that it has been a very favourable lambing with high survival.

The Outlook predicts that the average farm profit before tax on sheep and beef farms in New Zealand will fall 13 per cent to $67,000 this season.

“This outlook sets the scene for a tough year and we’ll see farmers tightly control expenditure and focus on what can be optimised behind the farm gate to make the most of the season and be best placed for the next,” Mr Spooner says.

“With the completion of lambing and calving, the season is essentially set for farmers. Depending on their location, farmers will be implementing strategies to maximise returns.”

Mr Spooner says much of the outlook depends on the value of the New Zealand dollar, which is at 71 cents against the US dollar at the moment, up 8 cents on this time last year.

“While this is good news for importing oil, TVs and consumer goods because fewer NZDs are needed to buy these items, it cuts back New Zealand’s export receipts. This particularly impacts on sheep and beef farms because around 90 per cent of production is exported, and domestic meat prices reflect the export price.”

The weakness of sterling since the Brexit referendum in June also has a negative impact because the UK normally accounts for 20 per cent of New Zealand’s lamb exports.

TheCattleSite News Desk

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