Rarely do the stars align, with almost all facets of farming providing solid returns. Photo / NZME
Farmers can be forgiven for thinking they are living in the land of milk and honey, especially when you add in the returns for mutton, lamb, beef, forestry, property, carbon, venison, and low interest rates.
Can life get any better down on the farm?
However, there is always an exception and in this case it's wool.
Independent Whanganui market commentator, farmer livestock trader, rural real estate agent and Horizons regional councillor David Cotton said, tongue in cheek, "on the positive side it cannot drop much lower".
But seriously, even the weather gods have been kind to farmers in this region.
"A few years back I asked Father Christmas for $6/kg for lamb, $6/kg for cattle and a 6 per cent interest rate – unfortunately, he did not deliver. But 2021 has proven unexpectedly to be a positive year in agriculture," Cotton said.
"I can't remember a time when all our produce across the board sat at such a high level, so it should be no surprise we've seen property prices also take a major lift. A comparison of prices just over the past year makes interesting reading."
June 2021, June 2020 (Note approximate values )
• Lamb: $8 (2021) - $6.75 (2020)
• Mutton: $6 (2021) - $4.80 (2020)
• Beef: $5.30 (2021) - $5 (2020)
• Milksolids: $7.65 (2021) - $8.00+ (2020)
• Forestry: $110 (2021) - $162 (2020)
• Venison: $5.20 (2021) - $5.30, winter contracts $7.20 (2020)
• Carbon: $ 31.20 (2021) - $37.70 (2020)
• Interest rates: 2.8 % (new housing 1.79 % ) (2021) - 2.25 % (2020)
Meanwhile, the store cattle looks good shopping for those who can feed them over winter.
"With strong demand from China and the USA, the future looks bright for the rest of the season," Cotton said.
"Schedules are slowly lifting as the kill numbers start to fall back after the cull cow kill. Under current pricing prime is set at $5.30/kg."
The prime lamb schedules continue to go from strength to strength.
"We started the year in January at $6.55/kg, in February contracts came out at $7-7.15/kg.
March contracts came out at $8/kg and over the last few weeks winter lamb contracts at $9/kg.
"Although the store lamb market is strong, there is still a good margin to be made for those who can get the weight into their lambs. The store lamb market has not always followed the strengthening kill price.
"Some weeks we have had huge numbers hit the sale yards and private sales, taking some of the sting out of the market. Last week's Feilding sale had the sting back in the market with some lambs topping $4.20/kg - simply supply and demand in action."
Mutton prices have made a miraculous recovery since an almost-debilitating low five years ago.
"What can I say about $6/kg schedules on a product that in June 2016 was selling at $2.60/kg (just for the record lamb was $5.20/kg June 2016 )," Cotton said.
"In-lamb ewes look good buying at current levels, and a good option to control feed in the
spring.
"In the property market it's not surprising to see very, very strong demand for all rural land given the height commodity prices are at combined with low interest rates.
"A farmer said to me last week why would you sell the farm when product prices are so high and returns are good on capital versus putting the money in the bank at 1 per cent, and taxable at that.
"But with all this good news we still do have our challenges down on the farm. I have noticed an increase in both product and servicing costs over the last 12 months, often blamed on Covid-19. Adding to this the ever-increasing regulatory controls and costs, like the Horizons rates going up 25-30 per cent over three years - it's not all beer and skittles down on the farm, but we have been very lucky over the last 12 months compared to some industries."
