Farmer morale high after record sheep and beef prices

18 July 2000

Farmer morale is very high after a season of record prices for sheep and beef. Profitability levels for 2000/2001 exceeded earlier farmer expectations, with the best farms achieving 10 percent return or better on opening total farm capital.

Lamb returns were up approximately $14/hd and cattle to the works were up about $100/hd.

This is according to the Ministry of Agriculture and Forestry Sheep & Beef Farm Monitoring Report released today.

Farm monitoring is a process whereby MAF monitors the production, finance, trends, issues and sectors concerns in New Zealand farms. The expectations of farmers and those servicing the sector are analysed and presented as a model farm. The report highlights the 2000/2001 seasons and forecasts the 2001/2002 season. The views reflect those of the sector, and not necessarily those of MAF.

There are nine farm monitoring reports this year. Five of these are sector specific (deer, sheep and beef, dairying, arable, and horticulture). Four are regional (South, Central South, North and North Central).

Seasonally 2000/2001 was marked by a late summer/autumn drought in nearly all of the South Island, except the West Coast, and in southern parts of Taranaki and Wairarapa.

A widespread late drought affected most of the South Island and southern parts of the North Island. This cause significant de-stocking, especially in Marlborough, Canterbury and North Otago. Winter feed supplies for remaining stock was limited and expensive.

Farmers hit by the drought will have to restock, and this will lead to lower stock kill in the next financial year.

Monitored farms show a sharp improvement in profitability over recent years. The mix of farms used in the survey has changed and direct comparisons are impossible. However, the trend is for significantly increased cash farm surpluses. Many of the model farms became bigger over the last five years, and cash farm surpluses per hectare are also up. Most farm values have increased significantly over the year.

Farmers report increasingly using new combinations of sheep breeds, with East Friesian and Finn being popular. Composite rams are also being used more.

Much lower rabbit populations have led to sharply improved production figures, particularly on Merino farms. Other dry hill farms have also benefited.

Farmers anticipating the much better farm gate production and returns spent more on repairs, maintenance and fertiliser. They also reduced bank overdrafts and term debts. More capital items such as ATVs, tractors and cars were purchased.

MAF Farm Monitoring Reports can be found on the MAF website at www.maf.govt.nz

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