Wednesday, April 24, 2024

Wet summer puts brakes on Aussie slaughter train

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Some comfort for NZ farmers as Australian producers slow offloading stampede.
Australian farmers who sold prime lambs through the yards – much more common than in NZ – have watched prices fall in the past month, at a time when the market is usually lifting. File photo
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New Zealand farmers are not alone in facing the challenge of striving for value while mitigating their environmental footprint. Senior reporter Richard Rennie is in Australia to find out how our neighbours are approaching the issues of gene technology, carbon farming and sustainability.

New Zealand sheep farmers still stinging from Australia’s rampage across their coveted Chinese market may take some comfort from news across the Tasman on prospects for Australia’s farming year ahead.

Dr Jared Greenville, director of Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), presented an upbeat picture of the year ahead for ag Australia to delegates at the agency’s annual Outlook conference in Canberra.

It came on the back end of a summer when Australian farmers had offloaded millions of animals in expectations of El Niño drought conditions, only to find on average the summer has been wetter than expected in many areas, other than Western Australia.

“We did get a significant reaction to some of the announcements made about El Niño and had a definite rush to slaughter early on,” he said.

That has resulted in slaughter rates for sheep being up 12.5% on last year, which has had a major impact on pulling down prices internationally to unsustainable levels.

“That came after three years of restocking, causing prices to collapse in local saleyards,” Greenville said.

“The seasonal forecasts were not that extreme, but when it started getting dry last year producers did not want to take the risk. The quality of some of the stock offloaded was also lower. Then it did start to rain, and supply has now held up.”

Offering some relief to Kiwi farmers feeling the effects of Australian sheep offloading, he said expectations are for a more average season in the year ahead. Slaughter rates are anticipated to be lower, and only a very small drop in numbers for the nation’s 75 million sheep is expected.

“We usually flip from wet to dry, and dry to wet, without really having a neutral conditions, so there is some upside risk there,” he said.

Four years after the devastating drought period ended with the bush fire summer of 2018-2019, Australia’s primary sector is gathering a head of steam. 

The sector is surging from its current production value of A$85 billion (about $90bn) towards $100bn, possibly within the next five years. Greenville said it has surprised many who had long anticipated it running steady at a value of about A$60bn a year.

“The cropping sector’s ability to respond has been phenomenal, but the biggest risks there are cost pressures for smaller producers.”

Key crops have included significant growth in cotton production with growing areas expanded further south into states including Victoria.

Longer term growth is also coming from horticultural production. 

Shifts in tastes and improvements in water management have the sector’s vegetable fruit and nut production almost doubling in under 10 years. Similarly, beef production has also doubled in that time to account for about A$12.5bn of agricultural value.

The coming year promises to deliver Australian farmers better balance sheets, with expectations average broadacre properties will swing from an average of $40,000 loss to $40,000 profit.

The prospects of continuing growth are coming in a sector that was subsidised as heavily as European producers were up until the late 1980s to the tune of 13% of farm incomes. That is now estimated to be about 4%. 

Productivity gains, once the strongest of all sectors, have since fallen to well under 1% a year from highs of 2.2%.

While a better year may signal lower lamb sales into NZ’s valued Chinese market, Australia is talking a strong case for being among the world’s lowest for agricultural carbon emissions.

The sector sits among the world’s top three for lowest emissions intensity, and ahead of NZ on a kgCO2 per US$ of production, at 1.5kgCO2/US$ compared to NZ’s 2kgCO2/US$.

“It has us in an enviable position when it comes to sustainability credentials, but more is required, as we are on track to become 20% of total emissions by 2030, compared to 16% at present,” Greenville said.

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