The impact the strong New Zealand dollar is having on sheep
and beef farmgate receipts and profitability is highlighted
in Meat & Wool New Zealand's Mid-Season Update for
2009-10.
The NZ dollar appreciated remarkably over 2009 -- up 46%
against the United States dollar, 30% against sterling and
29% against the euro, the report said Unfortunately for the
sheep and beef sectors, the larger proportion of this
country's beef and lamb were respectively sold or traded in
US dollars or sterling.
Meat & Wool New Zealand economic service director Rob
Davison said it was estimated there would be an 8.6% fall in
total gross farm revenue to $317,600 for the average New
Zealand sheep and beef farm in 2009-10.
With on-farm input prices expected to rise 0.5% -- a welcome
relief from the 9.7 and 7.6% increases in the previous two
years -- that left per farm profit before tax at $37,400, a
significant decrease from $58,800 in 2008-09.
Offshore prices for sheep and beef products are forecast to
remain strong in 2010 despite the financial crisis and to
improve in some cases.
Overall export volumes for wool, lamb, mutton and beef were
expected to be similar to last year, but the exchange rate
factor would reduce export receipts to $5.4 billion, 12% down
on last year, Mr Davison said.
"This translates to $700 million being wiped from meat and
wool sector receipts, just because of the exchange rate. The
high NZD completely masks the price levels achieved offshore
and the productivity increases."
The report forecasts lamb export volumes for 2009-10 will be
up 3.4%, with receipts down 10% to $2.5b.
Farmgate lamb prices are expected to average $72 per head for
a 17.5 kg lamb, compared to $89 last year, down 19%.
Beef export volumes are expected to be down 4.2% with
receipts down 18% to $1.9b, with wool export volumes up 15.8%
while export receipts rise 10.9% to $631 million.
