Beef + Lamb New Zealand’s (B+LNZ) Mid-Season Update 2023–24 confirms that times are tough, and farmers will have to continue to dig deep to stem what looks like widespread cash losses in the sheep and beef sector for the 23/24 financial year.
The outlook for 2023–24 has worsened significantly since our forecasts in October, because there has been no recovery in China, and Australian exports of red meat have been bigger than originally forecast.
An excellent lamb crop last spring has meant there are more lambs to sell, but this cannot compensate for lower per head prices and unavoidably high costs. Farm profits* are forecast to be down 54 percent to an average of $62,600 per farm.
This is a 67 percent fall in farm profit from the 2021–22 year to profit levels not seen since the 80s, except for during the Global Financial Crisis.
China’s economic recovery remains slow, resulting in decreased demand and lower farm-gate prices, especially for lamb and mutton.
The increased supply from Australia into international meat markets is also contributing to a global reduction in prices. Both of these dynamics are not expected to change much before the end of the season.
As a result, the forecast for lamb and mutton prices for the season has been revised downwards. The annual weighted average all classes lamb price for 2023–24 is estimated at 651 c/kgCW1, down 12 percent on 2022-23 and 13 percent lower than the five-year average.
The annual weighted average all classes mutton price for 2023–24 is estimated at 241 c/kgCW, down 34 percent on 2022–23 and 49 percent lower than the five-year average.
New Zealand’s export receipts for lamb and mutton are forecast to be down 4.8 percent and nearly 20 percent respectively on last year.
There are however some positive trends.
Beef has held up much better, driven by significant demand out of the US as it rebuilds its herd post-drought. All Beef is forecast to average $5.15 per kgCW for the season, which is 2.9 percent down on last year, but 2 percent higher than the five-year average.
Demand for lamb in Europe and the US has also been strong and this is expected to continue for the rest of the season.
Certain farm classes, such as High Country, Hard Hill country, and South Island Hill Country, are hardest hit with profitability due to their heavier reliance on sheep revenue. The East Coast region, still recovering from Cyclone Gabrielle and ongoing wet weather setbacks in 2023, is projected to have the lowest regional profitability.
Sam McIvor, B+LNZ chief executive, says, “Input costs remain stubbornly high, we know farmers are feeling it, many have already worked hard on cutting costs and my conversations indicate they’re leaving no stone unturned to find additional savings. This is especially true for farmers with relatively high debt levels.”
“They’re also looking to maximise income and taking stock to heavier weights and where feed allows, this is commonplace.”
Interest rates are a significant issue and relief from a fall in interest rates this season is uncertain, so the sector will need to draw on its traditional ability to weather cyclical tough times and on its tenacity.
Farmers should be talking to their accountants and bank managers about tax planning and cash flow management.
“I would expect bankers will be working to support farmers during this tough period, as the sector’s longer-term prospects are strong and it will recover,” adds McIvor.
Demand in the medium term for New Zealand’s free range, grassfed, antibiotic free, hormone free, low emissions red meat is absolutely positive but in the short-term particularly for sheep meat it’s very challenging.
Driving productivity, intensely analysing cost of production, learning from each other, and utilising the right external advice will all be critical inputs into successfully navigating these tough times.
“B+LNZ is focused on supporting farmers to drive productivity and profitability, providing regional opportunities to learn from each other and external experts, and also has some great web-based resources for farmers, such as podcasts and recordings of the recent Sow, Grow, Thrive webinars, to help them with practical ideas to enhance profitability.”
For more information, refer to the complete Mid-Season Update 2023–24 Summary (PDF,
256 KB) and the full Mid-Season Update 2023–24 (PDF, 2.7 MB) available on the B+LNZ website.
*Farm profit before tax includes gross farm revenue, less working expenses, standing charges and interest, rent and depreciation. Farm Profit before Tax is used to meet tax, personal drawings, principal repayments, capital expenditure and development of the farm.
For media queries, email media@beeflambnz.com or call 027 235 9806.
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In these tough times, B+LNZ has a variety of resources that farmers may find helpful:
- B+LNZ's Sow, Grow, Thrive webinar series which has some gems from accountants and farm consultants.
- Use the B+LNZ profitability calculator – take your annual accounts (or estimates if comparing a more recent season) and benchmark your profitability with other farms in your region and farm class. To dig into more Farm Class and regional data, B+LNZ produces benchmarking reports that detail physical and financial figures.
- Podcast with George Collier: "Managing cash and feed to get through tough financial times".
- Podcast with Tom Fraser podcast: Tactics tight times.
- Genetics: Ram selection tools and Bull selection.
- Feed budgeting and management.
- Sheep performance – Making every mating count (PDF, 2.1MB).
- Lamb growth – 400 Plus Guide (PDF, 1.389KB).
- Beef performance – reproduction and growth. Read more in the Guide to New Zealand Cattle Farming (PDF 6,6MB).