The national average livestock taxation values produced by the Inland Revenue gives us a snap shot at prices in the livestock market.
With a year of volatility with product prices some disalignment with their earning capacity is evident depending on when purchases were made.
In the sheep sector ewe hogget values have remained steady from last year and the margin for taking these animals through to two tooths looks good.
Their value being made later in the season looks to have the downturn of lamb values factored in. With many above average farmers mating hoggets this early entry point into the breeding market is close to their productive value.
Two tooth prices are the highest seen in the last 10 years and show a lift of nearly $30/hd on last years values.
There has been a wide range of prices achieved for these young sheep as the early sales were made while the lamb schedule was bouyant and prices reached $300/hd for premium stock.
Mixed aged and older ewes lifted in price by $14-$22 a head on last year, but for fertile sheep will provide a good return on their investment even if sold only one year after sale.
The downturn in numbers in the sheep industry has given farmers an opportunity to upgrade the quality of their flocks and productive returns are improving as they do that.
With the mutton kill down 26% from last year it appears many farmers have already had a good cull and the stellar grass growing season has encouraged stocking rates to be kept high.
Optimistic beef prospects combined with good feed levels have seen beef prices at record levels. There has been some disparity between recent product prices for beef and livestock values especially in the bouyant calf market but most agree grass and ample winter feed supplies have been influencial price drivers.
Substantial capital is now invested in large cattle herds and low interest rates have helped maintain some margin in the face of these new high values.
The dairy pricings reflect the rapid growth in that sector and resulting demand for quality stock but large price variations do occur dependant on their recorded genetic background.
It's interesting to note that the mixed aged Friesian type animals value of $2155 needs a $6.45 payout at industry average 334kg/ ms to pay for its capital cost in the one year.
With a major downturn in milk pricing and increase in costs farmers will be looking hard at capital cow values as they adjust to the new dairy income norms.
Deer values reflect the stable product pring now evident in a once volatile industry. Industry strategy is aimed at improving average productive performance to levels achieved by the top 10% of the sector which if achieved could put another $30 million into deer farmers pockets.
All animals values are aligned nicely with their productive value and if per head performance can be improved will allow profitable growth to resume in this industry.
7 Comments
These livestock values are well above the market - the IRD has got us all screwed, specially so when we are facing a year of low dairy payout, lamb prices etc etc - the combination of the two is going to put serious pressure on cashflows.
Is there anyway to object to these values or does big brother make all the rules?
Grumpy Bid brother does make all the rules.The Goverment is way out of control they are hell bent on taxing everyone to death in this country because of the simple fact the goverment has to much say in peoples lives.the role of Goverment should be reduced by 50% no goverment can produce wealth create jobs its not there role its just out of control big brother nanny state I wouldnt want to be a farmer in the next few years. If Shearer and the Greens get in you will lose some private property rights and be taxed off the land.
Baz
Baz are you suggesting the National coaltion is a much better alternative? In the last 30 years Labour and National have been nominal parties implementing the bidding of neo liberal policy developed in the U.S. And look were we are, selling the rest of our assests, and getting taxed to high heaven, and for what?
With the active destruction of the cooperative dairy industry through DIRA and TAF, National can jam our membership.
mist42nz - billions are allocated by the government – mostly to foreign companies/ workforces. Where are the incentives to change that ?.
Baz - couldnt agree more, to many years of pandering to the wims of the weak has left the country with a bunch of no hopers waiting to be handed everything on a plate. The government and local governments are out of control, sitting in their ivory towers making life difficult of the real people that keep this country afloat.
The IRD has become Big Brother and is using bullying tactics to suck what they can from any one thats poor enough or dum enough to let them.
I spoke to one of the larger NZ dairy stock agents who tells me hes only sold one herd at $2200 and all the rest where well below that figure plus in the last 8 weeks the jobs turned to crap with the drop in payout and herds sales are now well below the $2k mark.
So those that sold for less than valuation bank a a loss. I know of a small herd still not sold, they were offered $1500 a few weeks back, looks almost good now. Stock values like that combined with a low payout this coming season won't do the average 50/50 sharemilkers much good, with nasty tax surprises to come.
Stock values have risen before in the year before a low payout. The following financial year they will come down and there will be tax losses incurred. Problem with this is that it has a tendency to play havoc with the cash flow.
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