{"id":40378,"date":"2020-07-30T00:00:00","date_gmt":"2020-07-29T12:00:00","guid":{"rendered":"https:\/\/www.farmersweekly.co.nz\/revenue-fall-for-central-north-island-drystock-farmers\/"},"modified":"2020-07-30T00:00:00","modified_gmt":"2020-07-29T12:00:00","slug":"revenue-fall-for-central-north-island-drystock-farmers","status":"publish","type":"post","link":"https:\/\/www.farmersweekly.co.nz\/news\/revenue-fall-for-central-north-island-drystock-farmers\/","title":{"rendered":"Revenue fall for Central North Island drystock farmers"},"content":{"rendered":"Reading Time: <\/span> 3<\/span> minutes<\/span><\/span>

AgFirst\u2019s Central North Island Sheep and Beef Survey is forecasting a 22% fall in cash income compared to last season because of lower lambing percentages and expectation of reduced prices for lamb, wool and cattle.<\/p>\n

The fall in income meant farm profit before tax was down 57%, AgFirst sheep and beef consultant Steve Howarth said in presenting the survey during a webinar: \u201cIn absolute terms, we have come from $112,000 in the previous year down to $48,000 profit for 2020-2021.\u201d<\/p>\n

Allowing for tax and drawings, the result was a deficit of $28,600.<\/p>\n

Howarth urged rural professionals and farmers to plan for this forecasted shortfall.<\/p>\n

\u201cThe budget for the coming year isn\u2019t great and working through the budget with clients there was a bit of \u2018I don\u2019t really like that\u2019, and I really encourage people to be encouraging their clients to do those budgets and to start that planning process,\u201d he said.<\/p>\n

The survey is based on 13 Central North Island hill country sheep and beef farms assessed during June. From that data, a farm model is created following consultation with industry personnel.<\/p>\n

This model is 614 hectares, running 2300-2500 breeding ewes, lambing at 128%. Two-thirds of the lambs are finished and one third sold as store.<\/p>\n

Its cattle policy is to finish any progeny not kept as replacements at 18 months, and finish steers to 300kg carcass weight. The farm also buys in 60-70 weaner steers which are also grown to 300kg CW.<\/p>\n

Howarth said the drought had a huge effect on both production and profitability for the 2019-20 season.\u00a0<\/p>\n

Subsequent rain in May and June had led to some recovery, and stock conditions going into the new season are very mixed.\u00a0<\/p>\n

While cattle condition is reasonable, breeding ewe condition is generally down.<\/p>\n

Howarth emphasised that management response to the drought did vary between the farms.<\/p>\n

\u201cScanning results have generally been down in the range of 0-20%. There have been some large drops while other farmers have managed to protect their ewe performance,\u201d he said.\u00a0<\/p>\n

As a result, AgFirst\u2019s model farm will have a 3% fall in scanning for the new season.<\/p>\n

The significant processor backlog caused by drought combined with the covid-19 lockdown led to beef chains running at 50% capacity and lamb chains at 75%.<\/p>\n

\u201cThat created a perfect storm on-farm \u2013 the dry conditions and farmers needing to offload stock and the limitations on killing stock thanks to covid-19,\u201d Howarth said.<\/p>\n

Heading into this season, a lower schedule outlook combined with fewer stock wintered with lighter weights and lower lambing percentage would cause the fall in revenue.<\/p>\n

Financially, last season saw net cash income for the farm model increase by 2% compared with 2018\/19. Farm profit before tax up 4% to $112,200, which was similar to the previous year, Howarth said.<\/p>\n

Looking ahead at schedule predictions for the current season, Howarth said a lot will depend on covid-19 which was still impacting on overseas markets.<\/p>\n

Currently, values are sitting at $7.20 for lamb with half of it exported to the UK and EU. Consumption was falling in those markets as restaurants close due to covid-19 and consumers choose lower value protein.<\/p>\n

The survey was forecasting a lower price for lamb because of those factors, he said.<\/p>\n

However, there was still a lot of optimism in the sector in the longer-term prospects for red meat.<\/p>\n

The improved public sentiment towards farming on the back of the covid-19 lockdown had also pleased farmers because they have been recognised as an important part of the rebuild, he said.<\/p>\n

Other issues the sector faces is continued uncertainty around the plan change 1 in Waikato and the Government\u2019s freshwater reforms.<\/p>\n

\u201cWhat these two items mean at the farm gate is that there is a potential to restrict how a farm operates and there will be an increase in compliance costs,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"The lingering effects of the recent drought are set to hit the pockets of Central North Island sheep and beef farmers after a new report projects a significant fall in revenue this season.\n","protected":false},"author":20,"featured_media":40379,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_FSMCFIC_featured_image_caption":"","_FSMCFIC_featured_image_nocaption":"","_FSMCFIC_featured_image_hide":"","footnotes":""},"categories":[3],"tags":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t