High prices delaying flock rebuilding

High prices delaying flock rebuilding

As farmers look for more long term certainty for their meat and wool products this years shortages of product brought about by the September storms, may ensure these prices carry on for a while yet.

Unprecedented demand for sheep meats, principally mutton due to shortages out of Australia, have seen NZ farmers cashing in at the expense of medium term recovery of stock numbers.

Sheep meat values have been helped substantially by a recovery in the co products markets, including wool, which had dropped to only 7% of the carcase returns.

With this now being the case do farmers want to see more transparency in their schedule information, so they can see where the value is coming from? Why have wool and pelt values disappeared from killing sheets? Tell us what you thnk.

The rebuilding of storm-decimated ewe flocks could be hampered by competing record mutton prices which are returning $100-plus a ewe to farmers - similar prices to prime lambs. Cash-strapped farmers say that cull ewes capable of one more lambing are returning more for meat value than for breeding and are being sold to meat processors reports The ODT. Farmers attending a Perendale Sheep Society of New Zealand field day in West Otago last week described mutton prices as the hidden success story of the season, but several admitted it would mean a delay in rebuilding flocks and could see quality genetics trucked off to processing plants.

Alliance Group livestock manager Murray Behrent said high mutton prices were a symptom of a world shortage of sheep meat and growing demand for protein, especially out of China. He told about 60 people at the field day that flaps, which were selling for $700 to $800 a tonne, were now fetching $3000-plus a tonne in China. Beef and Lamb NZ Economic Service director Rob Davison said for the month of December, the average export price of mutton meat exports was 26% higher than at the same period a year earlier. Skin and wool prices were also higher. Australian production would dictate future mutton supplies and prices.

Mr Behrent said unsatisfied demand for sheep meat allowed companies to direct product to the highest paying markets and those where companies were not being harmed by wild exchange-rate fluctuations. Co-products were also strong. He said 17 years ago co-products contributed 23% of carcass returns to farmers. This fell in recent years to 7% but has since recovered to 14%. He expected values to reach 18% of lamb value by the end of the season.

Other commentators are saying the high pricing will make farmers less accepting of change, as they start debating a new business strategy for the red-meat sector. While farmers were relishing lamb prices $20 a head higher than last year, many will still make less money than last year because they have less product to sell.

 

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7 Comments

Those who closed the gate on the banks during the lean years have learned a valuable lesson now they are harvesting all of the profits from the market change. It is possible to build a farm without a barbed wire load of debt round your neck. Watch now as the banks start to worm their way into the sheep meat industry in an effort to clip the tickets.

Seems to me if you've been hanging on for the last few years, selling $50 - $60 lambs, then cashing in on $100 + ewe prices is only to be expected, most (over half) of the countries sheep farmer are too buggered, or too old to be mucking around with sheep when they could be running grazers, leasing out, or god forbid (assuming a lazerous effect on the property market) selling to carbon credit foresters or overseas investors.

Can't blame them, ...............

and truthfully if we're too half arsed to get behind a better red meat strategy, then we probibly don't deserve one.

The next few weeks will tell....

 

 

 

 

 

Is it a case of 'new strategy' fatigue????

 

Ive gone through my old girls abit harder this year because of the price increase. Its a case of a bird in the hand..... We saw it a couple of years back when there was a spike and then a drop quickly after. I dont think this will be the case this time but nothing in this life is guaranteed.

As for stategy fatigue, I think you're right. I recon the only chance of meaningful change is for it to be driven by the companies. Unfortuately alot of cockies will take a short term win with no view to the bigger picture. The companies facilitate this by engageing the very third party traders they denounce.

any of you farmer dude,s got any thoughts on the continuing decline in sheep numbers?sheep pop numbers approx 70 million in the early 80,s--down to an estimated 25.1 million this year--an annual  average decline of about 1.6 million--when is it going to stop?The flow on effects will have to eventually start to spill over into local community,s which have freezing works as major employer,s and local service industries such as transport co,s etc

http://www.odt.co.nz/news/business/144550/meat-workers-wages-slaughtered

 

 

There's apparently 29 conversions south of the Waitaki this year and I understand forestry up north is consuming some of the more marginal land up there.  Add the point made above  about culling harder because of the high mutton returns and the storm meaning some will not have the ability to retain as many ewe lambs and there must be a further decline. However the rise in returns is significant and that surely must lead to a stablisation shortly. Its ineveitable that more meat works have to shut its just who will be forced to bite the bullet first.

I don't think banks will be scrapping over market share in the sheep and beef sector any time soon. Understand the ewes are getting flash frozen and exported whole to India and Russia

pwilkie there has been over capacity for some time. The major players are just waiting to see who blinks first and who will be the last man standing according to one pundit.

Sheep shagger, talking to someone the other day that had done alot of conversions and they had dismantled 28 woolsheds represents a lot of jobs.

Some of the reason for sheep numbers declining aside from weather events is the pressure from banks to sell capital stock to reduce debt, a lot of those sheep got their heads cut of and a lot of replacement ewe lambs sold for the same reason.

Sheep shagger,

I agree that eventually there will be steadying in the ewe flock, it has to bottom out somewhere and will generally do so when the money is good.

There also, however, we find the problem.

Lamb price good, build flock.......few years pass..... meat works capacity  is pushed, drops price = drop in flock = reduced capacity once again, price goes up ....flock builds again, this time it takes even fewer sheep to reach the point over over capacity....etc  etc

Good pattern? Probibly not unless we are truelly to be a niche market.

The cycle needs something radical to change, it isn't really enough just to rely on increased global demand, the pattern of over supply still leaves half the country vulnerable to when the proccessor want to squeaze every last dollar out of the latest drought. I still have vivid memories of being told the $45 lamb finished lamb price was the result of us farmers oversupplying the market with too many heavy lambs the previous year. No one seems to be complaining about the heavy lambs this year.