Profits for beef and lamb farmers are estimated to plummet by 54 per cent as the industry battles economic headwinds. Some farmers are now relying on off-farm work or their partner’s income to provide an ‘insurance policy’. Carmen Hall - as part of the Tough Times on
Recession: Farmers taking on off-farm work or relying on partner’s income to survive
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The industry is facing severe economic headwinds, with average profits before tax forecast to drop by 54 per cent nationally, according to Beef and Lamb New Zealand. Costs have also jumped about 35 per cent over the past three years.
Federated Farmers national president Wayne Langford said some beef and sheep farmers, or their partners, were taking off-farm jobs to supplement their income.
“In a number of cases it’s younger farmers that have taken on their first venture and might be a bit more highly geared than others. They might be going out and spraying on another farm or something like that.”
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Lambs worth $140 to $150 last year are now worth $60 or $70. Farmers had been in a recession for months, he said.
“It’s really, really challenging times.”
Average profits plummet as costs soar
Beef and Lamb NZ senior agricultural analyst Angie Fisher said average profits before tax were forecast to drop by 54 per cent nationally and 35 per cent in the Bay of Plenty.
“It has performed a bit better on average as there is a higher proportion of cattle revenue for farms in the region, and cattle prices have held up better than for lamb and mutton, but for farms that have more sheep in this region, their profitability would fall by more.”
Estimated costs of inputs had jumped 35 per cent over the past three years. On average, Bay of Plenty sheep and beef farmers’ bank interest would have risen more than $20,000 annually due to rising rates, she estimated.
Many sheep and beef farmers brought in other sources of income, such as a partner working off-farm but most commercial farms had little or zero off-farm income.
’None of our children are remotely interested in farming’
Federated Farmers Bay of Plenty provincial president Brent Mountfort said his wife worked as a kindergarten teacher and they “live off her wage”.
“It means anything made on the farm goes back into the farm,” he said.
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The couple are second-generation farmers on a 270ha block of land near Matatā and say they are fortunate the farm remains profitable.
However, Mountfort knew an increasing number of partners who were holding down other jobs as debt levels rose.
His wife Antonia, who has been teaching at a kindergarten for 16 years, said she loved her job and her income gave them “stability”.
“The last five years have been challenging with the big drought. Then we had Covid, the rise in interest rates and the recession which has certainly put a squeeze on things.
“With me working and having a stable career, it’s given us an insurance policy to keep going and doing what we are doing.”
The Mountforts are also investigating different land uses such as tourism to diversify.
Mountfort said many farmers were doing the same especially if succession was an issue.
“None of our children are remotely interested in farming. They see how hard we work and say, ‘We don’t want to be tied there slugging away day in and day out’,” Mountfort said.
“Then they look at the returns. For me, it’s deeper than that. I farm because I love the animals and all the conservation work, we do.”
He was determined to carry on his family’s legacy and was exploring non-traditional farming practices.
Potential conservation and tourism money-makers
The Mountforts share an enthusiasm for the environment and have 100ha of fenced-off native bush.
“To that we’ve added 30,000 native trees and like rimu, rewarewa - anything you can think of really, there are dozens.”
Wild and birdlife such as kererū, tūī, bellbirds, fantails and weka had flocked to the habitat alongside skinks and frogs.
Mountfort said the couple were in the early stages of setting up an eco-retreat cabin that overlooks native bush.
Antonia said there were a lot of lot of rural people doing a lot of amazing environmental work.
“I think it’s great to put a spotlight on those people to help maybe motivate some of the others.”
‘Either at rock bottom or very near to it.’
Federated Farmers January farmer confidence report shows 55 per cent of respondents consider current economic conditions to be bad, down from 80 per cent in July 2023. However, by industry group, beef and wool was still 72.5 per cent.
Federated Farmers national meat and wool chair Toby Williams said: “We’re either at rock bottom or very near to it, so there’s more opportunities for it to improve than get worse”.
“Meat prices have been falling for nearly two years, wool’s terrible, and we’ve faced sharply higher input costs – but there’s a feeling now that this is about as bad as it can get.”
Survey results show debt, interest, and banks remained the biggest concern. Mortgage and overdraft interest rates had risen sharply in response to the Reserve Bank tightening monetary policy to fight high inflation.
The report said lending conditions continued to be strict, adding to farmers’ financial pressure.
‘Important farmers look after each other’
Te Puke sheep and beef third-generation farmer Rick Powdrell remained positive about the future despite pessimism in the industry.
But he was realistic: ”The increase in farm costs have been significant ... when you combine that with the fall in wool and sheep meat prices and the higher interest rates it has really put the squeeze on.
“A lot of older farmers are saying, ‘Well, it’s too tough. We will sell up.’”
Powdrell said a lot of farmers’ partners worked off-farm, including his wife Rose, who had worked until a few years ago.
”It certainly helps. It’s just more money that you can use to pay off debt quicker, invest in the property or enjoy life a bit more off-farm than you would otherwise be able to.”
Many sheep and beef farmers would not be having holidays, and it was important farmers looked after each other.
”It’s about everyone supporting everyone until we come out the other end.”
Carmen Hall is a news director for the Bay of Plenty Times and Rotorua Daily Post, covering business and general news. She has been a Voyager Media Awards winner and a journalist for 25 years.
