High dollar will hurt farmers

A high New Zealand dollar and reduced demand for sheep and beef looks set to hurt farmers in the coming year, says the Ministry of Agriculture and Forestry (MAF).

MAF's latest farm monitoring report showed sheep and beef profit improved tenfold in the 2008/09 season, boosted by better prices for lamb, sheep and cattle, MAF Christchurch natural resources team leader John Greer said.

But droughts in both years meant production was lower than usual.

"Sheep and beef numbers continued to fall last season and the average stocking rate is now nearly one stock unit per hectare lower than it was two years ago."

Production was expected to recover this year, Greer said.

"However, farm gate prices are predicted to fall for all products due to the rising exchange rate and reduced demand in some markets.

"As a result, sheep and beef farmers are budgeting to make a cash loss of $18,000 for the 2009/10 season."

This would be challenging for many farmers, he said. But cash surpluses from the last season combined with lower interests rates in the coming year could see farmers reduce debt.

- NZPA