Stock farms on the brink

By Carmen Hall

1 comment

Last year Rick Powdrell received $127 a head for his lambs. The current return has nose-dived to $85.

The Bay of Plenty Federated Farmers meat and fibre chairman said inconsistent returns had created uncertainty in the industry and only time would tell if that scenario was repeated next season as sheep numbers declined.

Stock had taken a hit due to the drought and the effects would be felt well into the future.

"The drought will factor into lambing percentages as ewes won't be in as good condition. When you get fewer lambs the meatworks haven't got the input, so it compounds and there is some debate at the moment if there will be a procurement war so the prices go up," he said.

A Rabobank rural confidence survey showed 50 per cent of beef and sheep farmers thought their businesses were "just viable" or "unviable".

The report said they lagged considerably behind their dairy counterparts in terms of confidence, investment intentions and self-assessed viability.

The bank's New Zealand chief executive, Ben Russell, said the survey results accurately reflected the mood of sheep and beef farmers, given the very tough business conditions they had faced over the past year.

"Sheep and beef farmers are understandably despondent that, after a more positive couple of years, on-farm returns have again fallen sharply," he said.

Sheep numbers were also decreasing as farmers opted to reduce flocks and diversify into other areas, including dairy, that had stronger on-farm returns.

Good farmers kept themselves going by productivity gain but the drought, lower returns and higher costs had impacted on sheep farmers, Mr Powdrell said.

"The key concept when looking at sheep and beef farming is over many years, not just 2012, the returns have not been good. It would be like me saying to you: Do you think you could survive if you were getting 40 per cent less income? This is why many farmers are saying their businesses are unviable."

Mr Powdrell runs 2000 ewes on his property but used to have more than 3000 and is a firm believer the industry will sort itself out. But he queries the amount of debt being carried by farmers today.

"Each generation that is coming through is more indebted, as we are not getting the good years. My father made good returns and could reduce his debt.

"For instance, in 1951 during the wool boom, it was worth $51 a kilo compared to $3 a kilo on the marketplace. Can you imagine us getting that today?"

Results at a glance

  • Half of sheep and beef farmers are concerned about their business viability.

  • Dairy farmers are the most optimistic of the sectors, driving some improvement in overall rural confidence.

  • One in three farmers on the North Island says their farm is severely impacted by drought. 

- Bay of Plenty Times

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