Outlook for 2016 a mixed bag

While meat returns have been mixed wool has been performing well in the background with increasing prices suggesting a good year ahead.

Last year provided a mixed bag for commodity returns and the 2016 outlook looks more of the same.

Beef was at record highs for much of 2015 but came tumbling back to sit more in line with the five year average as the bottom fell out of the American manufacturing beef market.

Beef in 2016 is expected to remain relatively strong assisted by falls in the exchange rate and rebuilds in the United States and Australian beef herds, following successive seasons of drought and high slaughter numbers.

Additional production is forecast to enter the market from South America, so it will be interesting to see if that has an impact.

Sheep meat has had a disappointing season not helped by a range of global factors and domestic kills being significantly ahead of forecast.

Relatively soft markets aren't showing signs of lifting in the near future.

I believe there is potential for us to improve some of our relationships with countries such as the United Kingdom rather than having to constantly defend ourselves by working with their farmers to boost demand for lamb.

Wool is the quiet achiever continuing to tick over and showing positive signs for the year ahead.

Lambs' wool contracts have seen good lifts and it would appear the investment being made by a number in the industry is having the desired outcome and wool is once again recognised as a natural, sustainable fibre with many uses.

The outlook can be incredibly difficult to predict with a huge number of global and domestic factors influencing it.

Focus needs to remain on strategy and it's encouraging to see companies not interested in a procurement war with a focus on contracts to fulfil commitments.

REGULATIONS WILL IMPACT THE INDUSTRY

There are a number of regulatory changes which will impact the sheep and beef industry in 2016.

The Health and Safety at Work Act 2015 will come into force on April 4.

This has a number of implications for farmers with one of the most significant relating to the person in charge of business undertaking (PCBU) having full duty of care for everyone in the workplace with the interaction on joint responsibility of multiple PCBUs.

Directors will also have greater levels of responsibility.

The Animal Welfare Amendment Act (No 2) 2015 was passed last year and regulations which accompany them are under development.

This process will intensify through this year as they go through public consultation before coming into effect by the end of 2016.

These regulations are likely to stimulate much discussion and may lead to some changes for farmers.

It is important our welfare standards remain high as they are a key part of our reputation and satisfying customers.

Water and the environment remain crucial areas which will continue to impact farmers.

RMA reform is likely to continue progressing through Parliament and rules relating to stock access to waterways may also emerge.

But the big impact for sheep and beef farmers in 2016 will be from the national policy statement on freshwater management working its way through local and regional level.

It is crucial farmers around the country engage early in their local community processes as decisions made will have a huge impact on farming well into the future.

The New Zealand Trade Agenda remains busy and incredibly important for the industry to retain its competitiveness.

The Trans-Pacific Partnership (TPP) was recently signed, although we won't see the benefits from that until it comes into force in a couple of years.

The Korea Free Trade Agreement entered into force in December and was great news for beef.

While the beginning of scoping for negotiation for the European Zone (EU) FTA is also positive for the industry's future and New Zealand as a trading nation.

KEY CHALLENGES FOR LEVY BODIES

Beef + Lamb New Zealand had a successful referendum at the end of 2015 where they received a strong mandate to continue for a further six years, allowing them to move forward with confidence.

Reviews of both the market development and research programmes are underway to ensure these funds are being well targeted on farmers' behalf to areas which will assist farmers.

Outgoing CEO Dr Scott Champion will step aside on April 1 after a fantastic contribution to both the organisation and the industry.