Better times tipped

JOHN HAWKINS/Southland Times

TUCKING IN: Sheep grazing near Centre Bush, with the snow-covered Takitimu Mountains in the background.

Relevant offers

Farming

Crafar farm deal drags on Lawyer: Crafar buyers bring nothing but cash Accusations fly over kiwifruit grafting James Cameron: I fell in love with NZ SCF farm sale ends feud Australian sells out of NZ wine venture Indonesians take stake in Blue River NZ log exports may face a squeeze Fonterra tweaks plan to quash farmer jitters Milk boom continues

Sheep and beef farm profits are expected to increase more than 200 percent this season on the back of improving lamb, beef and strong wool prices and a depreciating New Zealand exchange rate, according to Meat and Wool New Zealand's New Season Outlook.

However, a Southland farming leader said the lift may not be enough to offset rising farm inputs for struggling sheep farmers who are busy playing catchup after three years of low returns.

Meat and Wool New Zealand Economic Service director Rob Davison said sheep and beef farm profit, based on a 4000 stock unit property, was expected to increase from an average of $19,400 to $53,000 this year.

However, Mr Davison said profit levels would remain below 1999-2000 to 2004-05 levels because of on-farm costs that had risen 10 percent and the impact of a summer drought.

Lamb prices were forecast to increase from an average $56 to $73 this season, based on a US75c exchange rate.

The Alliance Group had indicated farmers would receive $70 to $80 a lamb this season, with more upside to be had if the New Zealand dollar continued to fall.

Federated Farmers Southland Meat and Fibre chairman Martin Hall welcomed the lift in farm profit.

"We haven't been making any money for the past three years," he said.

"It's an improvement but at the same time we're not getting wealthy." However, he believed the extra income would be absorbed by increased fertiliser costs, interest repayments and repairs and maintenance, the latter of which had been put on hold.

"Fertiliser has doubled in price from around $20,000 to $40,000 (for the average farmer)," he said.

Strong wool prices were also forecast to increase with reduced supplies for the coming season.

However, in-market prices for fine and mid-micron wool were flat as slowing economic growth impacts on retail sales for woollen apparel in both the United States and Europe.

Mr Davison said a 75c US/NZ exchange rate should improve beef prices by 15 percent at the farm gate.

But, underpinning this upward trend was increased feed costs for grain-fed beef and strong demand from Asia and European markets for grass-fed beef.

Gross farm revenue was forecast to lift from $575 million to $4.5 billion at the farm gate.

- © Fairfax NZ News