18 Sep 2012

Beef, lamb farmers face 34% cut in income

7:59 pm on 18 September 2012

Beef and Lamb New Zealand's Economic Service expects that an increase of nearly 900,000 lambs born this spring, each worth an average of $95, will help to offset a predicted 16% downturn in sheep farmers' returns.

The service has just released its Seasonal Outlook for 2012-2013, which predicts the average sheep and beef farm profit to be about $96,000, which is a 34% drop on last year.

Service executive director Rob Davison says it is due to a combination of the high value of the New Zealand dollar, returns for both lamb and mutton being down more than 15% and a 24% drop in wool returns.

Mr Davison says to some extent the drop is a correction on the 2011-12 profit, which was the highest in the past 10 years.

"It was a really good year last year. It is disappointing to see in a lot of ways, but it's not entirely unexpected in light of the global recession that we have out there."

The US dollar had weakened recently in exchange rates against the New Zealand dollar since the American central banker's latest boost to that country's money supply, which could be good for New Zealand's earning.

However, most New Zealand meat will be exported between November and next June, so the critical issue will be the specific exchange rates for the currencies over that period, Mr Davison says.