Meat export returns lift provinces

By PHILIPPA STEVENSON agricultural editor

The best financial results for sheep and beef farms in 21 years will boost provincial prosperity, says the Meat and Wool Economic Service.

Meat and wool exports rose 20 per cent to $5.7 billion in the past 12 months and are expected to remain buoyant.

Good production levels and prices, and an export-favourable exchange rate combined to deliver the improved figures.

"It was a case of all factors coming together to produce an excellent result," said director Rob Davison.

Export lamb receipts topped $2.35 billion, up 22 per cent compared with the previous season. There were 4 per cent more lamb shipments coupled with prices which rose 17 per cent, and higher returns for co-products.

Higher prices increased wool receipts by 12.1 per cent.

Beef export returns were up 19 per cent to $2.07 billion, reflecting more shipments and higher prices.

"In the coming year, we expect export earnings to remain high at $5.5 billion," Mr Davison said.

The predicted slight reduction was expected from lower production and falling prices caused by an appreciating exchange rate.

"Nevertheless, this represents a continuing good performance from the sheep and beef sector," he said.

Provisional figures in the service's new season outlook show that sheep and beef-farm profitability reached its highest level in inflation-adjusted terms for 21 years.

This was a welcome turnaround after a difficult decade recording the lowest level of sheep and beef-farm profitability in 50 years because of drought, high exchange rates and, at times, weak international prices.

Mr Davison said that for an average farm, sheep and beef-farm profit, before tax, for the next 12 months was likely to fall by 10 per cent to $80,600 because of lower production of sheepmeat and wool, as well as slightly lower product prices. Higher beef production and improved crop prices would be positive factors.

"Despite the lower profitability expected for 2001-2002, this will still be the second-highest inflation-adjusted profit achieved since 1979-1980. This will continue the improved prosperity in provincial towns that has been experienced over the last 12 months."

Record average weights have been achieved for lamb (16.65kg), mutton (23.61kg), and beef (268.1kg), despite the widespread dry conditions experienced in the South Island and the lower half of the North Island.

New season's lamb numbers were predicted to be down 3.5 per cent on the previous spring to 34.4 million - most of the drop in the South Island - meaning lambs available for slaughter would fall to 23.6 million head.

Mr Davison said that 20 years ago, 82 per cent of lamb exports were frozen carcass compared with 8 per cent in the past season.

High-value chilled lamb now made up 13 per cent of lamb shipments, and that figure was growing.

The service expected beef production to lift 10 per cent this year to a new high after herd rebuilding, and increased retention of dairy calves in the springs of 1999 and last year.

With export beef prices expected to remain high, returns could top a record $2.24 billion.

"This positive outlook for beef is expected to result in high retentions of dairy calves this spring," Mr Davison said.

"This is expected to lift beef production higher in future years and is likely to put pressure on traditional beef markets."