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Questions to answer on funding for genetics

Farmers are being urged to have their say on a New Zealand Meat Board [NZMB] proposal to continue funding a “ground-breaking” beef genetics programme.

The call comes as Beef and Lamb New Zealand expect farmer profitability to fall sharply because of reduced livestock prices and continued high inflation.

NZMB said recently that it hoped to continue funding the Informing New Zealand
Beef genetics programme.

Most Wairarapa farms are sheep and beef, which could benefit from the programme.

NZMB said sheep and beef farmers should have received a joint NZMB and Beef and Lamb New Zealand mail-out with information on the NZMB online annual meeting on March 24, including the board’s proposal to keep supporting the initiative.

“Informing New Zealand Beef is working to boost the sector’s profits by $460 million over the next 25 years by giving farmers the right genetic tools to help produce great tasting beef and drive efficiency on farm,” NZMB chairman Andrew Morrison said.

He said the board had funded the programme, continuing to provide up to $1.4 million in funding from investment income as part of Industry Good Funding through the $77.8 million of financial reserves it managed on behalf of New Zealand farmers.

NZMB’s annual report said up to $900,000 could be invested this year in the Informing New Zealand Beef genetics programme.

“We’re keen to hear farmers’ views on whether we should continue to support it.”

Morrisson said the board existed to help New Zealand achieve optimal returns on beef and sheepmeat exports to international quota markets, overseeing $2.3 billion of quotas.

At the meeting, farmers will also hear from New Zealand’s special agriculture trade envoy Mel Poulton, a Tararua farmer and Nuffield Scholar.

NZMB’s annual report said the board manages the farmer livestock reserves, a “rainy day” contingency fund to help New Zealand re-enter export markets following a biosecurity incursion or disruption to quota markets.

“In the event that happens, the benefits of these reserves would be huge for farmers and for our economy,” it said.

It said the importance of the “rainy day” fund was clear because of the foot and mouth disease outbreak in Indonesia.

The fund stands at $77.8 million as of September 30, 2022.

The agenda said reserves from the fund were channelled into industry-good projects, like the Informing New Zealand Beef genetics programme.

Previously, the fund has paid major investments in sheep genetics, pastoral genomics, market development in Germany and the UK, early funding of the National Animal Identification and Tracing [NAIT] scheme, meat processing efficiency, meat product quality, and the Red Meat Profit Partnership.

What’s happening financially now?

Beef and Lamb said while the outlook for global sheepmeat and beef trade has been improving, it still expected prices to plummet.

Its mid-season update for 2022 to 2023 said that average farm profit before tax is estimated at $146,300, a 31 percent decrease from 2021 to 2022 and below the average for the past five years.

Beef and Lamb said farm profit before tax was equal to gross farm revenue minus total farm expenditure.

“Inflationary pressure is causing on-farm costs to increase sharply, eroding the benefit of what are still historically pretty good farm-gate returns,” said Beef and Lamb chief economist Andrew Burtt.

The forecast increase in global sheepmeat and beef trade was supported by “generally solid fundamentals” in key markets, with demand projected to recover while global supply levels remain tight.

Burtt said the increase in demand followed a “stark drop” in demand for sheepmeat at the start of the season before China relaxed its zero-covid policy.

“As 85 percent of New Zealand’s mutton exports are to China, this impacted export receipts, which were one-third lower compared to the same period last season.”

He said a recent case of bovine spongiform encephalopathy [BSE] in Brazil had added fuel to a tightening global beef market.

While falling prices lead to a decrease in revenue, farmers have sought to reduce costs by deferring repairs and maintenance and reducing fertiliser use, but inflation and the increasing price of farm inputs are outweighing cost-cutting initiatives, Burtt said.

“Overall expenditure has increased to an average of $531,500 per farm in 2022 to 2023.”

Beef and Lamb chief executive Sam McIvor, who is also chief executive of NZMB, said the significant financial pressures farmers have been facing were another reason the government should put brakes on its raft of environmental policy changes.

“Farmers are overwhelmed with the environment-related policy changes, on top of reduced revenues and high on-farm inflation.

“For some, they’re also now faced with having to rebuild their businesses after severe weather events like the cyclones,” said McIvor.

He said almost one-third of New Zealand’s sheep and half of New Zealand’s beef cattle are in the North Island regions that were subject to a state of emergency following the cyclones, including Wairarapa.

“When farmers are impacted in this way, it has a knock-on effect on the wider economy, including businesses that service farms like vets, trucking companies, shearers and many more.

“This is the time to get behind the sector, so farmers can navigate this financially challenging time, plan ahead, and ensure their businesses remain sustainable in every sense of the word.”

Grace Prior
Grace Prior
Grace Prior is a senior reporter at the Wairarapa Times-Age with a keen interest in environmental issues. Grace is the paper’s health reporter and regularly covers the rural sector, weather, Greater Wellington Regional Council, and coastal stories.

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