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Concern that meat prices will crumble

Wairarapa farmers are worried about meat prices falling through the floor this summer.

Beef and Lamb New Zealand’s Lamb Crop 2022 report showed a stark contrast between on-farm performance and farmer sentiment.

Beef and Lamb chief economist Andrew Burtt said the number of lambs born this year was positive, considering the challenges faced by farmers throughout the year.

“Despite variable climatic conditions nationwide, sheep farmers have again shown their ability to perform consistently.”

“This is a continuation of the improving productivity and performance of sheep and beef farms as farmers operate under demanding conditions, including drought for some and a wet spring for others.”

He said an interesting factor was the reduction in the number of hoggets mated, particularly in the southern South Island, as farmers were constrained by feed conditions and did not want to put at risk the performance of their whole flock both short and long-term.

Famers told the Times-Age that the price of lamb had dropped by about $50 per head since October.

Burtt said Beef and Lamb’s report showed the performance of sheep and beef farmers remains high, but the sentiment was low.

Wairarapa Federated Farmers meat and wool chair Mike Butterick said there was a large uncertainty in the market about where it was going to “bottom out”.

He said it had big impact on people’s decisions as to when they sold and when they bought animals.

“There are a lot of factors at play at the moment; China is one, they take close to 80 per cent of our mutton, and they’re going into lockdown.”

Butterick said droughts in the United States had also caused issues for the international meat market.

Beef and Lamb’s economic service estimated the number of lambs tailed in spring 2022 decreased by 2.6 per cent, or 588,000 head, on the previous spring, reached 22 million head.

“The number of lambs processed in the 2022 to 23 season is forecast to decrease 1.6 per cent to 17.5 million head, while the average carcase weight may be slightly up in 2021 to 2022.”

It said a small decline in breeding ewe numbers, down 1.4 per cent, 22 million lambs tailed in spring 2022 compared with an average of 23.9 million head over the previous 10 years.

While meat prices have dropped, fertiliser prices have soared.

The World Bank said Fertilizer prices had risen nearly 30 per cent between January and May this year, after last year’s 80 per cent surge.

“Soaring prices are driven by a confluence of factors, including surging input costs, supply disruptions caused by sanctions [in Belarus and Russia], and export restrictions [in China].

“Urea prices have surpassed their 2008 peaks, while phosphates and potash prices are inching closer to 2008 levels. Concerns around fertilizer affordability and availability have been amplified by the war in Ukraine.”

Beef and Lamb said its survey found that farmers reported variable lamb growth rates with a wet, slow start to spring for most of the North Island and feed supply being tight for some farms.

It said labour shortages for meat processors were an issue for the red meat sector and a concern for farmers as they entered summer.

Butterick said a flow-on effect was that there would be less money circulating in communities.

“What this all points to is that there are going to be some pretty tough times ahead.”

The survey showed the sector was not yet seeing the impact on stock numbers caused by the significant number of sheep and beef farms sold into forestry, particularly carbon-only farming.

“This is because there is a significant lag between farm sales and the planting of trees. However, reduced stock numbers are expected soon.”

Beef and Lamb chief executive Sam McIvor said forestry conversion was a major issue negatively affecting farmers.

“Information about farmer sentiment was also gathered as part of this survey, and it’s clear that confidence in the future of the sector is very low for some.

“Farmers are feeling it from all sides at the moment and are rightly concerned about the future.”

He said the report showed some farmers indicated they were considering exiting the sector as a result of these concerns, which could also impact livestock numbers in the future and have flow-on impacts on employees, businesses, and communities in the regions.

McIvor said Beef and Lamb was again calling for urgent action by the government on the emissions trading scheme, which incentivised wholesale land use change in carbon farming.

Butterick said, however, that not all was doom and gloom for the rural sector.

“We’re fortunate despite a very challenging spring … generally across the country there is feed, which will help us smooth out some of those speedbumps.”

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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