South no longer land of sheep

Southland was once the most intensively sheep-farmed region in the country, but new research showed the economy was now more reliant on the dairy industry than it was sheep reports The ODT. Agribusiness Consultant, Ivan Lines, has calculated direct annual income from the dairy industry at more than $930 million, twice that of sheep, which has been estimated at $430 million. He said that nearly a decade ago there were six million ewes in Southland, but today the flock had shrunk to just over three million. In 1998-99, there were 467 dairy herds in Southland milking 170,000 cows, but by 2007-08 there were 750 herds with more than 360,000 cows. Gore farm consultant Graham Butcher, of Rural Solutions, said last year when lambs sold for $50 to $55 each, dairy support such as winter grazing of cows and young stock was viable. Sheep farmers were receiving $30 a cow a week for grazing last winter, but this year grazing prices had fallen about $20 or $25 a week a cow, prices driven down by a combination of oversupply of grazing and a reluctance by dairy farmers to commit to grazing early. This had occurred as lamb was making closer to $90 per unit, and Mr Butcher said gross margins achieved from lamb finishing were now comparable and, in some cases, ahead of winter dairy grazing. The M&WNZ sponsored seminar was designed to help sheep and beef farmers benefit from the financial windfall they enjoyed this season. Ashburton farm consultant Phil Everest warned that sheep and beef farmers risked repeating the mistakes of dairy farmers by eroding higher incomes through increasing farm expenses. He said when the milk price hit $7.66 a kg/ms, operating expenses on Southland owner-operator farms blew out to over $4.60 kg/ms. With a forecast milk price of $4.55 kg/ms next season, many were now pruning operating expenses to $3.40 kg/ms. Mr Everest reminded sheep and beef farmers that product prices tended to follow cycles and they should contain costs and position themselves for an inevitable turnaround in fortunes, and that included repaying debt. "Cost control should be your number one objective, so that when income does drop, expenditure can also," Mr Everest said.