Wools of New Zealand and PGG Wrightson team up to boost wool supply chain efficiency
Wool farmers are hoping that efforts by two leading companies to develop a more efficient supply chain would eventually boost farmgate returns.
However, after several years of low returns, most farmers are catching up on deferred expenditure and managing ongoing debt repayments and remain wary of price fluctuations.
Federated Farmers meat and wool chair Richard Dawkins told Rural News that there is a sense of renewed confidence and cautious optimism among the Feds meat and wool council.
He says that is reflected in their recent Farm Confidence Survey, which recorded a net positive sentiment from farmers across the country.
"That said, not all responses were optimistic," says Dawkins.
"Many farm businesses are still feeling the cumulative pressure of on-farm inflation and several years of low returns. As a result, there's a need to catch up on deferred expenditure and manage ongoing debt repayments.
"So, while finances and confidence are improving, financial resilience is still being rebuilt."
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Lamb and beef prices continued their upward trend, climbing 0.5% and 0.8% respectively so far this month, according to ASB senior economist Chris Tennent-Brown.
He notes that compared to a year earlier, lamb prices have surged by approximately 42%, while beef price are up 31%.
Bobby calves have been helpful in supporting the shortfall of lambs for processors, he says.
"However, lamb prices are still lifting to an average of $9.90/kg in the North Island and mainly $9.70-$9.90/kg in the South Island with some going up to a $10/kg baseline," he says.
Westpac industry economist Paul Clark believes there is more upside to lamb prices, but gains may be limited given where inflation-adjusted prices are relative to long-term averages.
Clark says that the US has been a growing export market for New Zealand. However, US tariff policy could also impact demand for lamb over the coming year.
"That said, constrained production in key exporting countries, notably New Zealand, Australia and the UK, should help support prices."
With beef prices, lower global production is expected to push beef export prices higher in 2025, with gains set to moderate in 2026 as output levels tick higher. "Much of that has to do with constrained US production, ongoing growth in domestic demand for beef within the US and its reliance on imports," says Clark.
The stronger meat schedules are helping lift farmer sentiment.
Dawkins says coupled with some significant policy wins morale is clearly on the rise.
"However, we must remain mindful of those still carrying the weight of recent tough years, and also of our colleagues in the arable sector, who are currently facing real challenges."
Early Days?
Asked if sheep and beef farmers are out of the woods, Federated Farmers meat and wool chair Richard Dawkins says it's still early days.
"While there is some celebration at the higher pricing, that is coupled with cautious optimism," he says.
"While market forecasts suggest current pricing levels may hold for a season or two, farming is a cyclical industry and volatility is always part of the landscape.
"The focus now should be on making smart, forward-looking investment decisions that strengthen on-farm resilience."
