Sheep and beef farm returns likely to fall

Red meat export revenue is forecast to drop for the 2020-21 season from the previous year. PHOTO:...
Red meat export revenue is forecast to drop for the 2020-21 season from the previous year. PHOTO: STEPHEN JAQUIERY
Gross farm revenue for sheep and beef farmers in Otago-Southland is forecast to drop 10.6% to average $552,300 per farm for 2020-21, Beef + Lamb New Zealand’s mid-season update shows.

The largest drivers were the decreases in sheep and wool because of the significance of sheep in the region. Sheep revenue would decrease 10.6% and wool revenue 25.4%, while cattle revenue was forecast to drop 8.5%; total farm expenditure was expected to decline 1.4% to $428,500.

Nationally, total beef, veal and sheepmeat export revenue for the 2020-21 season was forecast at $7.43billion, down 13% from 2019-20.

The decline was largely driven by the unpredictable global trade environment, strength of the New Zealand dollar, a decline in volumes for export as livestock numbers were rebuilt following drought and some softening in prices.

B+LNZ was expecting some recovery from weak foord service demand but continued disruptions and increased costs across the supply chain, and a higher-risk environment would be challenges that weighed on export and farm-gate returns.

While sheep and beef farmers were expecting a more subdued season ahead, 2021 was "significantly more positive" for returns and production than expected, given the impact of drought and Covid-19.

Projected returns for 2021-21 would be above the 10-year historical average, B+LNZ chief executive Sam McIvor said in a statement.

"This is a testament to the red meat sector’s agility and deep market understanding. There has been an incredible amount of work done behind the scenes to pivot and reposition products into different markets and channels," he said.

For 2020-21, total lamb exports were forecast at $2.9billion, down 14% and the 2020 lamb crop — estimated to be 22.9million head — was forecast to have been 1.2% lower than in 2019. Mutton export receipts were forecast to drop 7.1%, driven by declining average export values and a 2.9% decline in mutton production.

Export revenue from beef and veal was forecast to be $3.7billion, down 14% on 2019-20 and exports were forecast to decline 2.6% to 453,000 tonnes shipped weight.

Changes in consumer attitudes and behaviour following the global pandemic, and the shift towards sustainable consumption and production patterns, could affect global trade dynamics in the medium term.

"New Zealand’s reputation as a producer of high quality natural red meat, accompanied by our robust food safety framework, positions our red meat well to capitalise on these shifting consumer attitudes," Mr McIvor said.

Chinese demand for meat protein was expected to continue, as African Swine Fever restricted pork supplies.

Meat consumption was forecast to increase in emerging markets as household incomes lifted and there was growing demand for high quality proteins from consumers in those countries.

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