Sheep and beef profit levels for 1999/2000 exceeded farmer expectations

7 August 2000

Seasonally this year is being described as the best for 20 years almost nationwide for sheep and beef farmers, with a mild June assisting pasture production and stock weight gain, according to the Ministry of Agriculture and Forestry's Sheep and Beef Monitoring Reportreleased today.

Profitability levels for 1999/2000 exceeded earlier farmer expectations, with the best farms achieving a 10 percent return or better on total farm capital.

Farmers appreciate that the current low NZ dollar is greatly assisting export receipts. In contrast to bankers, however, they do not think the NZ Dollar will appreciate much in the medium term.

The trend is for significantly increased cash farm surpluses. The reasons were the excellent growing season and the weak New Zealand dollar, rather than a large upward movement in overseas market returns. Beef prices are up approximately 50 cents/kg in 1999/2000 compared to the previous year.

Anticipating better farm gate production and returns, farmers spent more on repairs, maintenance and fertiliser, and reduced their bank overdrafts. More capital items such as ATVs and cars were purchased.

The gap between the best and the worst farms' financial performance continued to widen. The top 10-15 percent of farmers are leading the rest and are generally keen to expand their farming operations, often by leasing additional land. Successful farmers are proactive about seeking advice to increase the quality and quantity of farm outputs.

Farm monitoring is a process whereby MAF monitors the production, finance, trends, issues, and sector concerns on New Zealand farms. The expectations and intentions of farmers and those servicing the sector, are analysed and presented as a model farm. The report highlights the 1999/2000 season and forecasts the 2000/2001 season. The views reflect those of industry, and not necessarily those of MAF.

This year there are nine monitoring reports. Five are sector reports (deer, beef and sheep, dairying, arable and horticulture). The same information is packaged in four regional reports.

The sheep and beef report details monitored sheep and beef farms in Northland, Central North Island hill country, Gisborne hill country, Hawkes Bay (summer dry, summer moist), Canterbury/Marlborough hill country, South Island Merino, Otago dry hill, Southland/South Otago hill country, Waikato/Bay of Plenty intensive, Manawatu/Rangitikei intensive, Canterbury/Marlborough breeding and finishing, and Southland/South Otago intensive.

In most parts (except parts of Waikato) rain fell when it was needed through the summer. Many farmers said they could have carried more stock. Store stock prices reached speculative levels, a lot of hay and silage was made, and the national average lamb weight is predicted to reach a record 16.5kg.

There was a trend towards carrying more finishing stock, than breeding stock. In turn this created an opportunity for the dairy industry to supply bull calves to the sheep and beef sector.

Farmers were increasingly using new mixes of sheep breeds, with east fresian and finn being popular. Composite rams were being also used more. A stabilised quarterbred east fresian and finn sheep flock was also increasingly used.

More flystrike and fungal disease problems caused concern, as was the labour required in controlling outbreaks. The 1999/2000 season saw significant facial eczema, and in Southland, Salmonella Brandenberg was severe on affected properties.

Farmers are annoyed at government's changes to ACC and the reinstatement of the Employee Relations Bill, which they see as a step backwards. Concern is being expressed within industry that the Bill may lead to more frequent strikes at export meat plants, resulting in a permanent loss of major export contracts for chilled meat products.

Farmers are surprised that scientists cannot provide any evidence that organic foods are nutritionally different. They say that "New Zealand, by European organic standards, is very nearly organic anyway". Many may feel that MAF should be countering the "green" lobby with sound science.

Farmers see farming as the one bright spot in an otherwise lacklustre economy, and believe New Zealand should build on its strengths and competitive advantage in the primary production sector.

Farmers see the acute lack of young people willing to enter farming as a concern. Farm training institutes are struggling, and agricultural student numbers at universities are well down. This is considered by farmers to be short-sighted of young people, as there are, and will be, more well paid career opportunities managing large farms.

MAF Farm Monitoring Reports can be accessed from the MAF website.  

For further information contact:

Chris Ward, Senior policy Analyst, Domestic Policy, MAF. Telephone: 04-474-4168

To purchase reports contact:

Tamara Finlay, MAF Information Bureau, Telephone: 04-474-4100 Ext: 8436

Contact MPI

for general enquiries phone

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