How They See It Down on the Farm

31 July 1997

The mid-year MAF Farm Monitoring Reports on farmer, grower and consultant perceptions have been released.

Farmers are having to cope with great volatility in market prices and conditions, and one of their challenges is in developing financial buffers to cope with this.

Some of the more general trends to emerge from the four regional reports are:

Climate and Production

Generally most farms entered last winter with good reserves of pasture on hand. The late winter/early spring was quite wet and production, particularly growth rates of cattle, suffered. The late spring was very dry, leading to slow pasture grown rates (up to 30% less than normal on dairy farms) but this helped maintain pasture quality into the summer.

  • On dairy farms production was up 4%
  • There was little early conserved feed
  • Lamb growth rates were good

Summer/Autumn was exceptional - many farms (both dairy and sheep) had their best season.

  • Lamb weights a record 1-2 kgs up on the previous year.
  • Dairy production up 4%.
  • High lambing percentage and another good year predicted next spring.
  • Wool not up in total, but slipe wool production up.

Arable crop production also a record - even if drying costs higher.

Forcacst 1997/98

Farmers are expecting excellent lambing percentages, and good cow condition indicates that production prospects are good

Financial Trends

Sheep & Beef

Gross farm revenue up 15% over 1995/96.

Major factor - sheep revenue up 34%, due to price and weight and increased lambing percentages.

  • lamb prices up to $42
  • ewe prices $37
  • cattle income up because of better weaner and store cattle prices
  • wool down 10% because of low prices
  • Cash farm expenditure up 11%
  • Cash farm surplus up 20%
  • Off farm income continues to grow in importance particularly on finishing farms closer to town

National Outlook for 1997/98

  • Similar level of income
  • less for sheep by about $2-$3/head
  • similar income from wool
  • expectations are up for beef are up 9%

Dairying

  • Gross form revenue up by 3%
  • Production is up is up 15%
  • Milk fat price is down 10%
  • Company payout down 10%
  • Farm expenditure continues to increase by about 8% - mainly vehicles and repairs and maintenance
  • Grazing costs are easing

The cash farm surplus is down 3% Interest paid in higher - higher overdraft.

1997/98

Production back off the peak and declining payout is putting more pressure on dairy farmers.

  • Milk incomes down 8%
  • Farmers will try to cut expenditure to match income especially feed, fertiliser, repairs and maintenance.

Deer

  • Venison has been doing extremely well with the schedule peaking at over $9/kg for the chilled early spring trade before slipping to $5.50 - $6.00. This reflects supply conditions.
  • The national kill is at the lowest level since 1991 at`283,000 carried forward to $373,000 last year (-24%). This is making marketers efforts very difficult.
  • Some have estimated the kill rising to $450,000 in 1999 and $600,000 in 2000. The impact of these levels on prices will be a challenge.

Velvet

  • The price fell 28% from $129 to $92 A/B grades
  • Average price fell 28% $78 from $108
  • 30% of last year's product is unsold, due in part to the slowing of Korea's economy.
  • Live sales - slightly less than last year.

Trends and Issues

Dairying

  • Conversion of properties in retreat.
  • Tight financial situation leading to worrying overdrafts and some pessimism.
  • Dairy farmers are looking closely at costs and inputs
  • Value of cows fallen - cows fetching $900 in December are now worth only $650. This is a real issue for sharemilkers
  • High number of farms on the market - low sales - prices down 10%
  • Continuing problems with skilled labour availability

Sheep and Beef

Farmer morale up significantly over last six months because:

  • Lamb prices are booming
  • Good weather, particularly in autumn
  • Beef prices are picking up.

Wool is the only depressing issue - increasingly seen as a by product

Property

Few sales are occurring, with forestry interest relatively inactive.

Indicators

Of the classic indicators, fertiliser investment is up 10%, repairs and maintenance expenditure is also up, while capital expenditure is still low.

  

 

Last Updated: 09 September 2010

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