Sheep and beef profitability underlines new horizon

Following declining profit for the sheep and beef sector, a new horizon for the sheep and beef sector hinges on the meat sector strategy and a positive follow-on from the wool industry taskforce, to create a viable future.

“These are ugly numbers for sheep and beef profitability and further underlines need for drastic action,” says Bruce Wills, Federated Farmers Meat & Fibre chairperson.

“Despite high prices and big demand offshore, the average farm-gate price for lamb fell $8.43 from last season. Somehow between leaving our farms and being sold in our overseas markets, we’ve lost out on the benefits from the record lambing percentages we had last season.

“We have again put one foot forward in terms of production but taken a larger step backwards in terms of profitability. We picked this up strongly in the Federated Farmers Farm Confidence survey, which found that sheep and beef farmers are pessimistic about the next 12-months.

“It’s hardly surprising when you see on-farm profitability heading south at a time when compliance costs are upon us, from ACC levies and of course, the Emissions Trading Scheme.

“The cash operating surplus in the Ministry of Agriculture and Forestry’s national sheep and beef model fell 12 percent in 2009/10. When the ETS alone will obliterate12 percent of the profit off an 18-kilogram lamb over the coming year, it underscores the knife-edge we’re on.

“Beef farmers also face additional costs for the National Animal Tracing and Identification (NAIT) scheme in the next year. I can’t mask how tough it is out there.

“So it’s hardly surprising that sheep and beef farmers are building revenue in other ways, including dairy support. Some farmers are undoubtedly examining carbon forestry but frankly, that contains cash flow implications and other fishhooks too.

“Instead we collectively need to radically rethink the way we produce, market and distribute our meat and wool products. Federated Farmers is champing at the bit to contribute to the Beef+Lamb NZ and Meat Industry Association (MIA) led Meat Industry Strategy initiative.

“I think Beef+Lamb and the MIA are doing absolutely the right thing and we recognise the need to work together for our common good. In saying that there must be no sacred cows and change is needed right through the value chain from the farm gate to the end consumer’s fridge.

“Yet wool still represents around one eighth of a sheep farmer’s income and remains the ace and not the albatross some think. We need radical thinking about using wool fibres in new, novel and unexpected ways. We’ve got to build off what we do in textiles and floor coverings but into new markets,” Mr Wills concluded.