Tough times for sheep farmers

Hill country sheep farmers are being stung by the increasingly high interest in manuka honey and carbon credits from trees. Photo / Bevan Conley

Making ends meet in the sheep farming industry is becoming increasingly difficult as both breeders and finishers struggle to balance the books.

Traditionally the sheep and beef markets have followed similar paths, either up or down.

But at this stage of the season they are poles apart with sheep farmers continuing to battle falling schedules, while the beef players enjoy an extremely strong market.

Independent Whanganui livestock commentator David Cotton, of River City Livestock, said the store cattle market was especially strong with most classes fetching in excess of $3/kg liveweight with the exception of yearling Friesian bulls selling at $2.80/kg-$2.90/kg liveweight.

"This looks to be the best buying and pretty good shopping in my books," Mr Cotton said. "Beef finishers are balancing exceptionally good liveweight gains of up to 2-3kg a day against falling schedules and the high cost of buying replacement store stock."

In stark contrast, however, the news for lamb breeders is heartbreaking.

"The schedule continues to slide back week after week and is heading to sub $5/kg where traditionally it has been $6/kg-$8/kg at this time of year. Store lambs are trading at less per kilo than cattle making around $2.80/kg liveweight and that equates to between $50 and $75 per head before charges are taken out.

"That's just not enough for breeders to have a viable industry to operate in. And while it may be cheapest for finishers to buy in stock, the rapidly falling schedules are eating into their margins."

Mr Cotton said wool prices were also not helping and neither were global lamb prices.

"Land use continues to change and especially the home of store lambs in the hill country.

Farmers are looking to cash in on carbon credits or the buoyant manuka honey industry.

Way more cattle than sheep were sold at last Friday's Feilding sale.

"It will be interesting to see how they will pen and sell bees at upcoming sales," Mr Cotton quipped.

The recently-released Beef + Lamb New Zealand New Season Outlook 2016-17 reflects Mr Cotton's concerns and backs some of his assessments.

The Outlook predicts beef prices to remain favourable and limited availability should ensure good returns for breeders, however competition for store stock is likely to reduce the margins for those finishing farmers.

Beef + Lamb New Zealand chief operating officer Cros Spooner said while sheepmeat prices are uncertain, farmer reports indicate that it has been a very favourable lambing with high survival.

The Outlook predicts that the average farm profit before tax on sheep and beef farms in New Zealand will fall 13 per cent to $67,000 this season.

"This outlook sets the scene for a tough year and we'll see farmers tightly control expenditure and focus on what can be optimised behind the farm gate to make the most of the season and be best placed for the next," Mr Spooner said.