Outlook less dire than feared

Bruce Wills
Bruce Wills
While he acknowledges the 2012-13 season will be tough for farmers, Federated Farmers national president Bruce Wills believes it will not be as dire as some speculations.

While there had been a slew of farm confidence results and projected falls in income, there were "blue clouds appearing among the grey".

Five of the past six GlobalDairyTrade auctions had been up off an excellent production start to the new season.

After a "terrible start" to the season, wool prices were slowly climbing with an encouragingly high clearance rate, while beef prices were "holding up" despite the drought in the United States.

While lamb had reversed recent gains to be in the $90 range, initiatives like the McDonald's lamb range might open new export opportunities.

"This is a tough season and make no bones about it. Yet tough does not mean dire because we produce food and fibre the world needs."

Less pressure on the dollar was needed to help farming.

"There is no quick fix but winding back government spending and paying down debt would help relieve the pressure. Combine that with a focus on the quality of regulation instead of the quantity and things will look up."

Sadly, some farm businesses would probably fail as a result of lower dairy payouts and the high dollar.

"We know the high dollar robbed New Zealand of an extra billion dollars from Fonterra's recent 2011-12 results. It similarly affects all parts of the primary sectors, from what we get for sheep to fisheries," Mr Wills said.

Silver Fern Farms saw "positive signs" in Europe, having finalised its plans for Christmas chilled lamb sales and completed its overall sales plan for 2012-13.

The company had met many European customers who appeared to have regained confidence based on supply and stability of value, which was underpinning overall market sentiment from European customers, chief executive Keith Cooper said.

That early confidence was a healthy sign and would likely lead to sustained demand and relisting on food service delivery cards, something which had been lacking lately because of the price hike in 2011, sales and marketing general manager Glenn Tyrrell said.

The company continued to be optimistic on beef with a prediction of $3.60/kg during the season heading to $4.20/kg.

Venison was forecast to track up from a low of $6.70/kg to $8/kg next October and lamb was likely to bottom out at peak season post-Christmas at $4.80/kg and rebuild to $5.80/kg this time next year, Mr Cooper said.