Farmers are being warned the meat industry they could go the same way as the wool industry if they ignore the threat of synthetic proteins.

The warning comes in the Hawke's Bay Farming Benchmarking Review by accounting and advisory firm Crowe Horwath which saids repeated failure of the wool industry to respond to the threat of synthetic fibres was a "clear and serious warning" of potential problems in the red-meat sector.

'Back in the 1950s, it's not likely many farmers anticipated the New Zealand wool boom would end so rapidly by 1966. The same mistake needn't be made with synthetic protein.'

Agri partner Sean Bennett said: "It's no longer a matter of if, but when, synthetic meat products will be made available to consumers.

"Synthetic fibres are today the mainstay of the textiles industry, as well as other industries, with wool relegated to niche applications; the result of the 40-year decline of the wool industry," he said.

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"Back in the 1950s, it's not likely many farmers anticipated that the New Zealand wool boom would end so rapidly by 1966. The same mistake needn't be made with synthetic protein."

Lab-grown meat has a much longer history than most might imagine, with the first synthetic cultivation of animal muscle fibres having been achieved in 1971, and the product is "grabbing mainstream attention and moving inexorably towards commercial-isation", he said.

"The continued emergence of synthetic proteins most certainly has the potential to disrupt grass-fed protein. That's something the entire country's farming community should have on its radar."

But he said New Zealand farmers were starting to respond, with the recent launch of the Red Meat Story and Taste Pure Nature origin brand what he called "a great step in the right direction".

"Buy-in from all industry stakeholders will be essential, with quality and consistency of product, at the core of making it work," Bennett said.

Historically, when processors had competed heavily for livestock they had offered all weights-all grades to farmer suppliers, in order to secure supply, he said. But that part of the business model has no place in the future "if we are to send the right message to farmers in terms of these core values".

The annual review provides detailed insights into Hawke's Bay farm performance, with the results of 120-plus operators analysed.

Crowe Horwath said the review revelaed uneven results for the region's primary producers, due to the lingering effects of weather phenomena, but the best run farms were achieving sound returns despite multiple challenges.

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Dry conditions resulting from El Nino conditions affected pastures, with reduced stock numbers on many farms and slower than usual growth rates for lambs. This has led to lower returns overall for farms in the region.

"We've seen slightly reduced stock units across all farm classes, down from 9.7 to 9.6 per hectare," Bennett said.

"Farm businesses have been looking to restock after the drought, but demand has hit availability and driven up livestock prices, making the process challenging for many," he said.

The top 10 per cent of farmers managed to achieve better per hectare income despite higher debt levels and a higher cost base, indicating clearly targeted expenditure would generate better return on assets of 5.4 per cent and a return on equity of 8.9 per cent for the 2017 year.

The top 10 per cent of farm businesses also experienced less volatility in returns in comparison with others surveyed from 2013-2017.

Bennett said the outlook for the rest of this year was positive.

Beef pricing was forecast to ease slightly, but strong pricing for mutton and lamb was anticipated, because of continued low supply and increased Chinese demand.