Sheep and beef profits set to rise

Sheep revenue is expected to increase to $116,300 for 2013/14..

Northland sheep and beef farm returns are forecast to increase to an average profit before tax of $92,900 for the 2013/14 season.

The Beef + Lamb New Zealand Mid-Season Update outlines improved product prices expected to drive average Northland sheep and beef farm profits up by 29 per cent on the drought-affected level of last season.

It predicts gross revenue increases to $321,800 for 2013/14, up 12 per cent, for Northland, Waikato and Bay of Plenty sheep and beef farms averaging 3300 stock units on 340 effective hectares.

Sheep revenue is expected to increase to $116,300 for 2013/14 due to a lift in prime lamb prices and sale of prime hoggets held over balance date. Cattle revenue rises to $129,900 due to a lift in finishing stock sales and improved schedule prices.

Total farm expenditure increases to $228,900, up 6.5 per cent. Interest and fertiliser spending are the two largest expenditure items, followed by repairs and maintenance.

Fertiliser expenditure is expected to remain almost static at $33,900, due to softer fertiliser prices offset by a 6.5 per cent lift in volumes on 2012/13, which was affected by drought.

B+LNZ Economic Service chief economist Andrew Burtt says this season's forecast average lamb price is $100 per head - up 18 per cent and 2.5 per cent higher than the average for the previous five seasons.

"Reduced lamb availability in New Zealand and Europe, combined with strong demand for lamb from Asia and the Middle East, is expected to support lamb prices," Mr Burtt says.

Total export cattle production is estimated to fall 1.1 per cent to 573,000 tonnes carcase weight, following last year's high processing numbers driven by the drought.

Internationally, the US total cattle herd is around 88 million head - the lowest January inventory since 1951. US exports are expected to drop, by about 8 per cent, while beef imports should increase about 1 per cent.

Meanwhile, total Chinese beef imports are projected to grow by more than 15 per cent. Despite this, the US is expected to remain New Zealand's largest market for beef and veal.

Meaty result

*Sheep and beef farm profits expected to jump 35 per cent from last year's drought-affected season.
Profits before tax for the 2013-14 season expected to rise to an average of $113,700.
*Gross farm revenue expected to increase by 9.2 per cent over the season to $460,200.
*Lamb slaughter forecast to decrease 5.3 per cent compared with 2012-13.