At the end of the golden weather comes a balancing act for farmers

OPINION: It is technically autumn, but most of the country is still basking in summer. We are all feeling pretty pleased about that, but sheep and beef farmers' grins are the widest.

After three years of drought on the North Island's east coast, its farmers are revelling in the greenness of their hills. And it's the same all over - except for Northland, which is experiencing a drought for the first time in more than 10 years.

And even in Northland all is not lost. Farmers from further down the island are turning up at stock sales in Wellsford and Kaikohe to buy weaner steers at prices that will help lift sagging spirits.

For dairy farmers, the joys of a green summer come mainly from less stress on their cows, although the slightly increased milk they are giving will mean a timely lift in profits in a high payout year. Fonterra reports milk flow is almost 2 per cent up on last year, despite the Northland drought, though a big contributor is the new South Island conversions.

The sheep and beef farmers are seeing the green pastures being devoured by their animals and quickly converted into meat, and enjoying the luxury of being able to choose when to sell their stock.

It's a balancing act. Primarily, they need the animals to keep their pastures from running too quickly to rough and spoiling the quality needed later in the year. Chewing down to the bottom of the green shoots keeps the grass at its most nutritious. Let it get too long and coarse and it has less goodness and is harder to digest.

As winter approaches, grass growth will slow and the lambs will have to go. The trick is to keep them long enough to make the best use of their grazing abilities and to sell them when the price is right. Wait too long and sell when there's a glut, and the difference could be thousands of dollars.

All this has not been good for the meat industry. With lambs being held back, some meatworks have severely cut working hours. Across both islands, more than half of the kill still has to appear. The companies are bracing themselves for a rush after Easter.

Those farmers who suffered from drought are still recovering. The luxuriant feed will ensure ewes go to the ram this autumn in excellent condition and, fingers crossed for a kind spring, lamb birth rates will be high.

But the east coasters don't have big flocks to draw on. Many were forced to cut deep into their mobs of replacement lambs to survive last year and now, when they have the grass to spare, tough credit restrictions by their banks are keeping them from finding new blood at the stock sales.

While a green farm may give a farmer warm fuzzies, the true test of a successful season is in the balance sheet. This season, it will be in the black, but not as much as the hills covered with contented stock would suggest.

This is because of exporters' old nemesis, the exchange rate. At present, lambs are fetching around $80, about $15 less than they would be if the dollar was back to this time last year's pegging against sterling and the euro.

Meat & Wool New Zealand is predicting sheep and beef farmers' profits in the year to June to be an average of $37,400, down from $58,800 last year. International prices are about the same, or slightly better, so the drop is all due to the exchange rate.

That profit figure is before tax, so do not expect rural towns like Taihape, Marton and Wairoa to be swimming in cash this year. In all, the country's income from sheep and beef is predicted to be down 12 per cent to $5.4 billion.

Perhaps the increased dairy income will make up for that. Fonterra isn't saying what a 2 per cent rise in milk production means in increased income. But, using a rough calculation based on a 15 per cent rise in the forecast payout, it does not seem too outlandish to suggest the value of the country's dairy exports will lift 15 per cent to $10.35b this year.

Add the summer's 2 per cent to that and the picture is even brighter. Country towns in Taranaki, Waikato and Southland will be the beneficiaries.

It's something to ponder when you're slogging along behind your lawn mower.

- © Fairfax NZ News

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