Demand for sheepmeat and beef will recover slightly, but not enough to cover continuing increases in farming costs, according to Beef + Lamb New Zealand’s new season outlook.
“It’s going to be another tough year for farmers,” BLNZ chief economist Andrew Burtt said.
Farmgate prices are expected to be similar to last season but increasing costs, driven by inflation and high interest rates, will continue to squeeze farm profitability, he said.
“We’re forecasting farm profitability to fall by 31% for the 2023-24 year, which follows a decline of 32% in 2022-23 and means profits for farmers have more than halved in two years. This is a 15-year low, when you take inflation into account.”
Demand in key markets is also likely to be soft as economies remain weak and China’s economic recovery remains uncertain.
Competition from Australia could add to the pressure.
“While the sector faces a challenging year, this is balanced by strong longer-term fundamentals, and we expect an improvement as the economies of our key markets recover. The global population and demand for protein is expected to continue to grow and therefore the fundamentals for the sector remain sound,” Burtt said.
“The sector has gone through turbulent times before, along with our processing and exporting companies, and while farmers are resilient, these are very challenging times.”