“Bullish” but still “watchful” views

POSITIVE: The stunning multi-million success of the R2 bull sale season (pictured) in the Tairawhiti region this season was a clear indication of how well the beef industry was going and where it was headed, likewise for sheep. Beef and Lamb’s latest survey shows farmers remain bullish but watchful. File picture

SHEEP and beef farmers around New Zealand have a “bullish” view about the future but they are watchful of challenging headwinds, according to research by Beef and Lamb New Zealand (B+LNZ).

More than two thirds of sheep and beef farmers remain positive about the future of the industry.

Sixty-eight percent of sheep and beef farmers surveyed in the August 2018 quarter by B+LNZ are confident — the highest level since B+LNZ’s first launched the research in November 2010.

Sheep and beef farmers’ positive mood contrasts with gloomy headlines on business confidence elsewhere in the economy, as well as recent inaccurate claims made by the Productivity Commission about the “marginal” nature of the sector.

For example, while B+LNZ’s recently released New Season Outlook 2018-19 forecasts a slight decrease in inflation-adjusted average sheep and beef farm profit before tax to $97,800 per farm, it is still potentially the fourth highest average farm profit figure since 1990.

B+LNZ Chairman Andrew Morrison says farmers are confident on the back of strong prices and a favourable exchange rate, but there are still plenty of challenging headwinds for the sector.

“While it’s good that our sheep and beef farmers are feeling confident about their future, as an industry we know that we can’t take things like strong prices and a weak New Zealand dollar for granted,” he said.

“Beef + Lamb New Zealand’s recent New Season Outlook may forecast strong prices and the New Zealand dollar to weaken further for the season ahead, but it’s also predicting a slight fall for farm profit as the cost of inputs increase.

“This highlights that while we’re fortunate to be enjoying high prices for our beef, lamb, and mutton at the moment, we need to be mindful that these aren’t guaranteed longer term, even though there are solid indicators that global demand for New Zealand’s sheepmeat and beef will remain strong,” Mr Morrison said.

Some of the headwinds for the sheep and beef sector include the rise of alternative proteins, potential significant regulatory change, growing protectionist practices in key export markets and the uncertainty of Brexit, major droughts in other red meat producing countries, and the impact of Mycoplasma bovis.

“The sheep and beef sector is well positioned to respond to these challenges,” he says.

“We have initiatives such as the Taste Pure Nature country of origin brand which will promote New Zealand’s premium grass-fed red meat overseas.“We are partnering with central and local government to develop better regulations that work for both farmers and New Zealand’s environment, and we’re continuing to work with our farmers to help them improve their environmental performance.”

Confidence levels were broadly similar for both beef and sheep farmers, with 70 percent of beef farmers and 64 percent of sheep farmers feeling confident about the sector’s future.