Lambs lost to drought

Lambing percentages could be down by as much as 20 per cent in the Bay of Plenty, and exports of lamb are expected to drop by $250 million for the 2013/14 season.

Federated Farmers' Bay of Plenty provincial president Rick Powdrell says ewe pregnancy scanning results in the region show a 10 to 20 per cent drop because of the drought.

A report on the situation and outlook for primary industries also forecasts a decline in sheep numbers, with a 2.9 per cent decrease in breeding ewe numbers and a 38 per cent decrease in mated ewe hoggets.

Beef + Lamb New Zealand's chief economist, Andrew Burtt, says there could be a million fewer lambs to slaughter but farmers are predicting numbers higher than that.

"I would think there will be more than one million fewer lambs to slaughter because, in some areas, farmers have killed a lot of replacement ewe lambs and they will be retaining more lambs for their future stock," says Powdrell.

Beef + Lamb's economic service executive director, Rob Davison, says the drought will lead to tighter lamb supplies.

"This spring lamb crop is going to be down, particularly in the drought regions. There will be fewer lambs born, because ewes were in lighter condition and fewer ewe hoggets have been mated.

"A proportion of the lamb kill has come from that so both these factors mean fewer lambs, but the question is how much."

Early ewe scanning indications are variable, he says. "Some farmers are well back and some are a bit more surprised as they haven't dropped as much as they thought, and a benign spring may allow higher survival rates, which would be a positive."

Higher lamb prices could offset the lower number of lambs, Davison says.

"We think lamb prices will firm up in the coming year. It really depends on how you punt on the price, and my back-of-the-envelope calculation is going to give me a 10 per cent increase in export receipts ... but we will have a much better fix on that at the end of July."

Powdrell says lamb pricing is an interesting space to watch and he hopes meat companies will not get into a war. Last year, he received $127 per lamb compared with $85 this year.

"I'd like to think companies will not get involved in a ridiculous procurement war for the lower number of lambs and pay beyond market price.

"Hopefully, they learned from two years ago if you pay too much you end up with a big company loss. At the end of the day, the last thing farmers need is huge fluctuations in their returns."

In March, Beef + Lamb New Zealand's mid-season update estimated Bay of Plenty farmers' profit before tax for the 2012-13 season would fall by half compared to last season's, to an average of $44,300.

- Hamilton News

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