Lamb to lift incomes

Beef + Lamb New Zealand’s chief economist, Andrew Burt, is predicting that, on average, farm profit before tax for the 2017-18 season will be $126,300 – up 39% on the previous season. 

He says revenue from sheep, a major driver of the improved farm profit before tax, is expected to be up 22% and contribute 47% of all sheep and beef farm revenue. This rise in average farm income is also due to both lamb and beef export prices together breaking the $3 billion mark for the first time. Beef exports, says Burt, will be $3.2b while lamb exports will surpass $3b for the first time.

He says sheep and beef prices have stayed strong despite increases in the number of sheep and cattle processed so far this season. Burt says this shows that international meat markets have been strong. 

“However, improved pasture availability and tighter remaining livestock availability will support prices for the remainder of the season. Strong wool continues to perform poorly while fine wool has improved,” he says. 

“The fast start to the season has been a significant feature of the production year so far. For the December 2017 quarter, the numbers of lambs, sheep and cattle processed were all up, leaving fewer available for January to September than in the 2016-17 season.” 

Burt says the average farmgate price for lambs has been revised upwards to 661 cents/kg or $122 per head – up 15% on last season – due to the higher proportion processed earlier in the season at good prices.  The forecast at the start of the season was 555 cents/kg. 

“Total mutton receipts are also forecast to be up strongly – by 11% to $602m,” he adds. “A 24% increase in the average value per tonne to $6500 more than offsets the forecast 7.3% drop in mutton export volume.” 

Burt says tight sheepmeat export supplies from NZ and Australia are driving the strong export receipts because together the two countries account for 90% of international sheepmeat trade, excluding intra-European Union trade.