European farmers are surprisingly upbeat about the future of their industry despite the continent being still very much in a recession, Beef+Lamb chairman Mike Petersen says.
Speaking from Brussels, Mr Petersen said he expected to see "doom and gloom" as a result of the recession.
"I have been pleasantly surprised at the mood of the farming population over here. They are very optimistic about the future and quite optimistic about the coming season."
Petersen has been in Europe, meeting with counterparts and discussing their expectations for the coming year. He outlined his observations in a Beef+Lamb conference call.
Farmers were embracing their opportunities with those who were positive and thought about productivity making a decent profit, he said.
One of the top UK sheep farmers made a £78,000 profit off his 250ha farm after subsidy payments were factored out. This is despite UK farmers enduring their wettest summer in 114 years.
Grain harvests had been poor with yields down 15-25 per cent. It had resulted in animal feed costs rising and that feed being of lesser quality.
Lambs were slower to finish and those that had finished were at a lighter weight. It has resulted in lesser quality lambs coming through to slaughter, he said.
It would result in those farmers wintering fewer lambs, push up prices for pork and poultry and narrow the differential between those meats and beef and lamb.
"There is some hope up here that this will underpin prices for the coming season," Petersen said.
UK farmers were also facing a major issue with TB in cattle. With 10-11 per cent of herds infected farmers were struggling to control the spread of the disease.
Badgers spread the disease in the UK, but a planned cull of badger populations had been held up by protests by environmentalists.
"It's a graphic reminder for me that we cannot give up on the fight with TB at home. Once you let it go it will take off very quickly," he said.
UK farmers were also concerned that some would use the growth of these herds to restrict market access.
New Zealand sheepmeat exporters would again be unable to fulfil their quota into Europe. Shipments had dropped from a 99.8 per cent utilisation of the 227,854 tonne quota between 2007-2009 to 87.1 per cent in 2010 and 80.1 per cent in 2011.
Officials he had talked to had not expressed any concerns yet over New Zealand's inability to meet the quota, he said.
About 42 per cent of New Zealand's sheepmeat went into Europe, providing a 52 per cent of overall returns by value.
"It looks increasingly like we won't get to 80 per cent of our quota," he said.
New Zealand's low lamb crop was the main reason the quota would remain unfulfilled, he said.
While Europe was still an important market, it did not take all of New Zealand's sheepmeat cuts from the whole of the carcass.
There were other markets around the world that were prepared to pay more for other parts of the carcass.
"If Europe is not going to pay the money then our exporters will take their business elsewhere," he said.
- The Timaru Herald
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