Tag Archives: lambs

Nearly two million more lambs, but still third smallest lamb crop

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Nearly two million more lambs have been tailed this spring, according to the latest figures, which also forecast 8.4 percent more available for processing this season. 

Lamb Crop 2012, the latest report from Beef + Lamb New Zealand’s Economic Service, shows that an estimated 26.9 million lambs were tailed, 1.9 million more than last year.

Even then, this will be the third smallest lamb crop since the early 1950s. Only the previous two years were lower.

This year’s increase was due to slightly more ewes mated (+0.6 percent) and the sheep being in good condition thanks to favourable feed conditions before mating. There was also an increase in the number of lambs born from hoggets, according to Economic Service executive director, Rob Davison.

“The average lambing percentage across the country was 123 lambs born per hundred ewes – up from 119 in 2011.”

Davison said this result confirmed the pregnancy scanning results from earlier in the year, signalled in September’s New Season Outlook 2012-13.

“There were pockets of unfavourable weather in some areas during lambing, but farm management practices ensured good lamb survival,” Davison said.

In the North Island, there was a small increase (1.2 percent) in the number of breeding ewes compared with last spring and good lambing weather, combined with stock in good condition, drove the lambing percentage up from 118 percent to 123 percent.

In the South Island, ewe numbers were the same as last season, but the number of lambs born was higher. The lambing percentage increased from 121 percent to 123 percent and the weather was a lot better than the year before.

“Significantly there was a sharp increase in the number of lambs from hoggets because more were mated due to favourable feed conditions. Also evident, was a structural change to a younger flock, with more than usual older and poorer performing ewes culled before mating.”

The B+LNZ Economic Service forecasts that there will be 20.5 million lambs available for processing in the 2012-13 season – up an estimated 8.4 per cent. This contrasts with last season’s 18.9 million, which was the lowest since 1960-61.

The increase will be partially offset by an expected 2.1 percent decrease in average carcase weight to 18.3 kg. This follows a return to more normal climatic conditions after good growing conditions last season saw lambs reach a record 18.7 kg.

Other key points from the report are:

  • North Island export lamb slaughter estimated to increase 12 per cent to 9.9 million, an increase of 1.1 million lambs
  • South Island export lamb slaughter estimated to go up 5.3 per cent to 10.6 million, an increase of 500,000 lambs
  • While there will be more lambs, there has been a sharp correction in lamb prices – $5-6 per kg early in the season, compared to over $8 per kg in 2011.

Sheep and beef income down, while deer is stable

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Sheep and beef farmers can expect their income to be down six percent this season (2012/2013), compared to last year, while deer farmers are experiencing their third season of relatively stable prices, according to new figures issues by the Ministry of Primary Industries (MPI).

The 2012/2013 season is expected to be more subdued for pastoral farm businesses as product prices come off recent highs, MPI says.

The government departed has released the 2012 pastoral farm analyses as part of its annual Farm Monitoring Report series. The reports provide models and overviews of the financial performance of typical dairy, sheep and beef and deer farms, based on information gathered from a sample of farmers and industry stakeholders.

On sheep farms, lambing was up nearly 10 percent on last season. Improved prices for sheepmeat, beef and wool, combined with the higher productivity in 2011/2012, lifted net cash income for the sheep and beef farm model by 18 percent to $543,000.

For 2012/2013, sheep and beef income is expected to be down six percent due to lower returns for lambs and wool and farmers are cautious. However, while the profit before tax is forecast to fall around 15 percent, at $181,300 it is still the second-highest profit for the national sheep and beef farm model since 2000. Note that the 2011/2012 actual result was $213,841 profit before tax, which was an improvement of 44 percent on the previous season.

Deer farmers, meanwhile, experienced their third season of relative stability in product prices and good on-farm productivity in 2011/2012, which has enabled some capital expenditure and debt repayment and boosted confidence in their sector. Similar results are forecast for 2012/2013.

National dairy production was up nearly 10 percent on 2011/2012. However, this was offset by a declining payout so the farm income was similar to the previous year. In 2012/2013, however, total income from milksolids is expected to fall 20 percent for the national dairy farm model, resulting in a 57 percent drop in profit before tax.

MPI analysts have also noted some key developments for the pastoral sector, including the beginning of mandatory tagging of cattle under the National Animal Identification and Tracing (NAIT) programme, land-use change and succession for sheep and beef farmers, together with the need to reduce environmental impacts such as nutrient runoff into waterways and the Trading among farmers proposal for dairy farmers.

 

Season just ended could produce messy results, says Barber

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The season just ended could produce messy results, according to meat industry commentator Allan Barber.

The two largest processors and exporters, Silver Fern Farms and Alliance, have captured the headlines in the last couple of weeks.

Hot on the heels of its announced intention to close its sheepmeat chain at Mataura, Alliance has come out with an offer to suppliers of $20 in November per lamb contracted before the end of October.

From the other cooperative camp Keith Cooper, chief executive of Silver Fern Farms, last week sent an email out to suppliers which highlighted the disappointing financial result for the year ended 30 September because of the exchange rate and declining sheepmeat values in January and February not being reflected in procurement prices.

The final results will be declared in about two months when the market will be able to see just how disappointing the performance of the two companies actually was. Rumours of multi-million dollar losses have been prevalent, but rumour is just what they are until we see the actual figures. There is no doubt the problem has been almost entirely with sheepmeat in spite of the exchange rate, because exporters have been far more successful at reining in beef procurement costs.

It doesn’t take an Einstein to work out that the shortage of lambs for Mataura and the procurement competition are just two aspects of the same problem. The lowest national lamb kill for 51 years at 18.6 million, 15 percent down on the five year average will have made it very difficult for any company to get sufficient capacity utilisation to come close to making a profit. With Alliance’s largest sheep plant outside Invercargill, Mataura just over 50 km up the road was always under threat from declining volumes.

Blue Sky Meats, which balances in March, presaged the 2011/12 season’s problems in its declared annual result – a pre-tax loss of $604,000 and no dividend paid. The company termed this the most disappointing result in its history and drew attention to the excessive prices paid for stock through the turn of the year, both because of the high dollar and the drought in Southland.

It will be interesting to see how successful Alliance will be in securing committed lambs from suppliers stimulated by the $20 cash advance. Keith Cooper’s reaction was to say Silver Fern Farms had tried it six years ago with no success because some suppliers were affronted by the implication they were short of cash and didn’t want to close out their slaughter options. He prefers to rely on the company’s suite of supply plans rather than to repeat the cash in advance offer.

In his email to suppliers, Cooper sounds quite bullish about the new season’s prospects with a ‘fully configured operating platform’ and some exciting new marketing initiatives, even being bold enough to state that realistic livestock values are being established. If that is the case, it will either be because there’s enough livestock around to satisfy all processors or he is confident Silver Fern Farm’s overhead structure is competitive enough to guarantee filling their requirements.

Either way that is a big call in spite of the gains Silver Fern Farms has made in recent years, notably the closure of the Belfast sheep chain, improvements to its Finegand sheep processing and the rebuild of Te Aroha in the heart of the dairy farming Waikato/Bay of Plenty region. There are expected to be another 1.5 million lambs, but not enough to change processing dynamics much, while the market is another factor.

The meat industry is unique in that it has to compete at both ends of its supply chain. While livestock procurement has the most obvious impact on company profitability, demand from the market is also critical. Last season’s disappointments and losses have been as much about carrying too much inventory which the market couldn’t digest as the cost of the livestock to produce it.

When companies fail to manage both ends of the chain properly, things get messy. Just how messy they were last season will become clearer at the beginning of December when Alliance and Silver Fern Farms publish their results.