In a recent Mid-Season Update for 2023-24, Beef + Lamb New Zealand (B+LNZ) delivered a sobering message to farmers across the sheep and beef sector: tough times are here to stay. The report, released by B+LNZ, indicates that farmers will need to brace themselves for widespread cash losses throughout the current financial year.
One of the key factors contributing to the gloomy outlook is the lack of recovery in key markets, particularly China, coupled with higher-than-anticipated exports of red meat from Australia. These factors have led to a significant downturn in farm profits, with forecasts suggesting a staggering 54% decrease compared to previous years.
"The outlook for 2023-24 has worsened significantly since our forecasts in October," said B+LNZ Chief Executive Sam McIvor.
"China’s economic recovery remains sluggish, resulting in decreased demand and lower farm-gate prices, especially for lamb and mutton."
The report indicates that despite an excellent lamb crop last spring, the increased supply has failed to offset lower per-head prices and unavoidably high costs. Consequently, farm profits are expected to plummet to levels not seen since the 1980s, excluding the Global Financial Crisis.
McIvor acknowledged the challenges facing farmers, highlighting the need for stringent cost-cutting measures and strategic management of resources.
"Farmers are leaving no stone unturned to find additional savings," he said.
"They're also looking to maximise income by taking stock to heavier weights and, where feed allows, this is commonplace."
However, it's not all doom and gloom. Beef prices have remained relatively stable, buoyed by significant demand from the US as it rebuilds its herd post-drought. Additionally, demand for lamb in Europe and the US continues to show strength, providing a glimmer of hope for the industry.
Despite the hardships, McIvor remains optimistic about the sector's resilience.
"Interest rates are a significant issue, and relief from a fall in interest rates this season is uncertain," he said.
"But the sector has a traditional ability to weather cyclical tough times, and I would expect bankers to work to support farmers during this tough period."
Looking ahead, McIvor emphasised the importance of driving productivity and profitability, leveraging external expertise, and utilizing resources provided by B+LNZ.
"B+LNZ is focused on supporting farmers to drive productivity and profitability," he explained.
"We provide regional opportunities to learn from each other and external experts, along with web-based resources such as podcasts and recordings of recent webinars to help farmers enhance profitability."
While the road ahead may be challenging, B+LNZ remains committed to supporting farmers through these tough times. By adopting a proactive approach and leveraging available resources, the sector can navigate the current storm and emerge stronger in the long run.
For more information, refer to the complete Mid-Season Update 2023-24 Summary and the full Mid-Season Update 2023-24, available on the B+LNZ website.
