Sheep and beef optimism

The value of New Zealand beef and veal exports is expected to increase by 5.5% in the 2014-15...
The value of New Zealand beef and veal exports is expected to increase by 5.5% in the 2014-15 season. Photo by Stephen Jaquiery.
Sheep and beef farming profitability is set to improve in the 2014-15 season on the back of favourable climatic conditions, expected higher product prices and a more export-friendly exchange rate.

The new season outlook, released by Beef and Lamb New Zealand's economic service yesterday, predicted the average sheep and beef farm profit before tax would increase 8% on last season, to $110,800.

A 6.3% lift in sheep revenue was largely responsible for the increase, while total farm expenditure should only rise by an average of 2.3%, executive director Rob Davison said.

Farm-gate prices for lamb and mutton were forecast to average $103 and $79 per head respectively, up $3 on 2013-14 provisional prices.

While total sheep numbers were back on last season, the number of lambs estimated to be tailed this spring was similar to last spring, at 25.6 million head, reflecting kind climatic conditions, Mr Davison said.

However, export mutton processing was forecast to drop by 21% over the coming year, a correction on last year when dry conditions in the north and dairy expansion in the south resulted in larger numbers of ewes processed than usual.

The South Island lamb crop was estimated to decrease by 2.3%, driven by a decrease in the number of breeding ewes due to land-use change to dairy.

Bull, steer and heifer farm-gate prices per kg were forecast to increase 8.5%.

Overall, the value of beef and veal meat exports was expected to increase by 5.5% on last season.

That reflected total volumes dropping 3.6%, while average values increased 9.4%, on the back of expected higher international prices and a more favourable exchange rate.

Total wool production for 2014-15, estimated at 156,300 tonnes greasy, was down 4.7% on last season.

The outlook for the new season was for prices for all wool types to decrease due to softer demand, the report said.

In Otago-Southland, gross farm revenue was expected to increase 3.7% to $440,800.

Sheep revenue was expected to increase 6.6% to $299,3000, wool revenue decrease 9% to $61,400 and the cattle account increase 4.8% to $41,200.

Dairy support activities continued to place pressure on traditional sheep and beef farming practices in the region.

Dairy grazing income on traditional sheep and beef farms was expected to increase 13% to $11,200.

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