Prices and confidence in sheep and beef farming on slide

21 December 2016

By Gerard Huching and Jill Galloway

Sheep and beef prices have taken a tumble in November as farmers lament the future of the sector.

Total exports for all goods in November 2016 were $3.9 billion, while imports were worth $4.6b, Statistics New Zealand said in its latest report.

The monthly trade balance was a deficit of $705 million (18 per cent of exports). For the year ended November 2016, the annual trade deficit was $3.2b.

The latest UMR survey commissioned by Beef+Lamb NZ shows confidence has dropped by 11 per cent to 32 per cent since the last quarter.

I am not at all confident about the state of the world, of which we do remain part, what with Brexit, Trump, state of Middle East, and the rise of simple-minded populism all around.

"What is there to be optimistic about?" Bulls farmer Denis Hocking said.

Statistics NZ said beef and lamb exports fell in November, as the amount of meat sold dropped heavily compared with last year's record season.

Meat and edible offal exports fell $158m (31 per cent) from November 2015, contributing to a $219m (5.4 per cent) fall in overall exports.

Beef exports fell 41 per cent in value and 31 per cent in quantity, and lamb exports fell 27 per cent in value and 23 per cent in quantity.

Beef+Lamb NZ chief executive Sam McIvor said the picture was not totally clear cut. In the north of the country, where beef predominated, farmers were more optimistic than those in the south, who were more predominantly sheep farmers.

The poor prices could be explained by the fact farmers were not sending stock to the works.

It's been a good winter and spring but the dry matter's not up, so the stock is not coming up to weight. Farmers are holding on until later in the season," McIvor said.

Hocking said he had sold all his lambs at Feilding's store market.

"My average price this year is $68 compared to $80 last year, $84 in 2014, $83 in 2013 and $67 in 2012."

He said this year his calves were looking good.

"So I hope the market holds through to the weaner fairs, but there is some warning about possible easing with North and South America both expected to lift production and exports.  I am not confident that market will remain quite as strong as at present."

Hocking said farm forestry had ensured he had made a profit in all four years as the market for logs remained healthy.

Federated Farmers Manawatu/Rangitikei meat and fibre sheep and beef chairman, Richard Morrison, said in the region there was a good mix of beef and sheep farmers and the feeling was a mixed bag.

"There is certainly disappointment in the values of sheepmeat and wool, and the shine is starting to come of beef values as well."

But he said farmers were "a fickle bunch" and most had had a good run leading into Christmas.

"The hectic job schedule is getting ticked off and feed levels are very good. The 'grass market' has put upward pressure on prices received at the saleyards. This demonstrates cautious optimism and may reflect the good mood of farmers."

Morrison said despite the poor returns from sheep, which would  certainly affect the bottom line this year, farmers were just getting on with the job.

"There is not a lot of complaining, just a realisation that the money belt will have to be tightened this year. We are grateful that at least the beef enterprise has been delivering good returns."

Statistics NZ said beef exports to the top beef destination, the United States, fell by about half when compared to November last year.

"When compared to the same month of the previous year, the value of beef exports to the US have fallen in nearly every month since October 2015, only rising once in April 2016," senior manager Jason Attewell said.

- Stuff -

Last updated , December 21 2016