New Zealand sheep and beef farm profits forecast to increase 35 per cent

B+LNZ Economic Service Mid Season Update 2013-2014Beef + Lamb New Zealand’s latest forecast, released today, tells a positive story for farmers and the wider industry.

The organisation’s Mid Season Update predicts better pricing and strong demand for sheepmeat and beef products from key markets.

The report outlined improved product prices which are expected to drive average sheep and beef farm profit up by 35 per cent on the drought-affected level of last season. The Mid-Season Update estimates that farm profit before tax for the 2013-14 season will rise to an average of $113,700 per farm.

Andrew Burtt, B+LNZ chief economist. Picture B+LNZ.B+LNZ Economic Service chief economist Andrew Burtt says total gross farm revenue is expected to increase 9.2 percent to $460,200, reflecting a 12 percent increase in sheep revenue. Total farm expenditure is estimated to be up 2.8 percent, to $346,500, on the back of increases in repairs and maintenance expenditures. Interest expenditure dropped by 2.6 percent, thanks to a slight decrease in farm debt and lower interest rates.

This season’s forecast average lamb price is $100 per head – up 18 percent on last year, and 2.5 percent higher than the average for the previous five seasons. “Reduced lamb availability in New Zealand and Europe, combined with strong demand for lamb from Asia and the Middle East, is expected to support lamb prices,” he explains.

Approximately 25.6 million lambs were tailed in spring 2013, down 1.9 percent on the previous year. Breeding ewe numbers remain static reflecting a stabilisation of the national ewe flock.

Burtt says the country’s overall export lamb production to 30 September 2014 is expected to be down 3.5 per cent, to 362,900 tonnes carcase weight. “In 2013-14, export lamb slaughter is expected to decrease 5.3 percent, compared with a high slaughter in 2012-13 which was pushed up by widespread drought. This season’s decline in numbers is expected to be partially offset by a 1.9 per cent estimated rise in the average carcase weight, to 18.3 kg, the second highest average carcase weight.”

The season’s total export cattle production is estimated to decrease 1.1 per cent to 573,000 tonnes carcase weight, following last year’s high processing numbers, which were driven by the North Island drought.

“Internationally, the US total cattle herd is around 88 million head – the lowest January inventory since 1951. US exports are expected to drop, by about eight percent, while beef imports should increase about 1 percent,” Burtt says. “Meanwhile, total Chinese beef imports are projected to grow by more than 15 per cent in 2014. Despite this significant demand from China, the US is expected to remain New Zealand’s largest market for beef and veal exports.”

The full report is available on the B+LNZ website at: beeflambnz.com/economic-reports

Regional highlights can be found on pages 21-22 of the report.

B+LNZ supplied material.

 

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