A grim six months is predicted for sheep and beef farmers with the strength of the Kiwi dollar as the main culprit.
Meat & Wool New Zealand’s mid-season update for 2009/10 reveals that tough economic conditions are persisting despite positive in-market pricing.
Meat & Wool Economic Service director Rob Davison said the dollar appreciated remarkably during 2009 compared with the previous year.
He said the strength of the Kiwi dollar has been against the US dollar, British pound and Euro where the majority of New Zealand’s beef and lamb is sold.
“We expect this will continue in the first six months of 2010,” he said.
Mr Davison said the economic service estimated there would be an 8.6% drop in total gross farm revenue to $317,600 for the average sheep and beef farm for 2009/10.
However, he said on-farm input prices were expected to remain stable – a welcome relief from the 9.7% increase experienced last year and 7.6% before that.
This leaves per farm profit before tax at $37,400, a significant decrease from the average in 2008/09, of $58,800.
Meanwhile offshore prices for sheep and beef products are expected to remain strong in 2010.
Export volumes for wool, lamb, mutton and beef are similar to last year but the exchange rate factor will reduce export receipts to $5.4 billion – 12% down on last year.
“This translates to $700 million being wiped from meat and wool sector receipts, just because of the exchange rate,” Mr Davison said.
“The high New Zealand dollar completely masks the price levels achieved offshore and the productivity increases.”
Tue, 02 Feb 2010