"A trip down memory lane was a bit of an eye-opener and shows not much has changed from December 2011 apart from costs," Cotton said,
He prides himself on his ability to forecast market direction given several important factors.
"Tell me the weather, tell me the value of the New Zealand dollar, tell me whether or not there is confidence in the market, and I will predict which way the market is heading with some confidence.
"We do get the odd curve ball thrown in to keep us on our toes with the likes of Mycoplasma bovis and Covid-19 certainly unsettling the markets.
"Last month I compared livestock prices to November 2019 which provided sobering reading. Now let's take a look back in history from when I first began delivering these market reports.
"In December 2011 store lambs were $3.80/kg and December 2020 just $3/kg; prime lambs $7.80kg in December 2011 ($6.80/kg 2020); mutton $4.80/kg (Dec 2011) $5.30/kg (Dec 2020); prime ox $4.60/kg (Dec 2011) $5.20/kg (Dec 2020); strong ewes wool clean $3.70/kg (Dec 2011) $1.94/kg (Dec 2020); dairy payout $7-$8/kg milksolids (Dec 2011) $6.30/k-$7.30/kg (Dec 2020); interest rates 7.23 per cent (Dec 2011) 3.09 per cent (Dec 2020).
"And the average kill weight for lambs was 18.1kg in 2011 and 19 kg today. In 1970 it was just 13.5 kg.
"These numbers just show how resilient New Zealand farmers are to survive these changing numbers in their income, while the increase in production in terms of lambing percentages and the increase in lamb killing weights is astonishing and a credit to the industry," Cotton said.
On the other side of the coin is the ever-increasing costs associated with farming.
"Freight costs, fertiliser, insurance, compliance along with, in my personal view, the ever-increasing rate demands on property owners.
"We have seen property prices rise sharply over the past few years and a large proportion of rates are set on RV (the property value) which has little bearing on profitability.
"With my Horizons hat on I have been trying to instigate a conversation around the council table about what is affordable to our community with rates looking to increase again next year by around 10 per cent.
"You only have to look at the above numbers to see the drop in farming incomes over the last 12 months (not inflation adjusted).
"The increases at Horizons over a similar period make interesting reading. The general rate income for 2013-14 was $23,544.000 while 2020-21 yielded $31,451.000 - approximately 33 per cent in six years.
"The low interest rates will be an interesting factor in farm property sales in 2021 as older clients looking to retire off the farm have told me that selling up and buying a house in town and investing the money at below 1 per cent gross then paying the tax just doesn't cut the mustard for them.
"Interestingly, I have sold one farm this year to a town investor who leased the property out at a 3 per cent net return and I've had a steady increase in phone calls from investors looking to buy rural property as a safe place to put their cash."
All that aside, Cotton has again warned that killing space at processing plants is very tight heading into Christmas-New Year.
"Although good grass cover is helping with the pressure to hold livestock on farm. But it is always hard to watch the schedule reducing each week.
"Despite the surprising comparisons and at the risk of repeating myself, I believe the markets, with the exception of crossbred wool, look okay for 2020 when taking into consideration the world market and the collapse of some industries," Cotton said.
The weather is also a major factor in the fortunes of farmers.
"We normally receive between 1000mm and 1250 mm of rain year in, year out on our coastal property at Kai Iwi for over 25 years. But what is interesting in 2020 there has been the lack of rain, with just 12mm in January and only two months with over 100mm of rain. (Jan 12mm, Feb 67mm, Mar 35mm, Apr 37mm, May 63mm, June 101mm, July 96mm, Aug 75mm, Sept 108 mm, Oct 43mm).
"In 10 months we had just 57 per cent of our average rainfall.
"November 2020 changed all that with 224mm of nice gentle rain with good warm ground temperatures which ensured the grass grew well - that has set us up for the next few weeks, although the wet weather has delayed some from getting crops in the ground.
"All that said, we still need to receive 239mm in December to reach previous year's average rainfall of 1100mm."
