Early boost for farm prices unlikely says economist

WELLINGTON - The overall outlook for farm product prices remains subdued, says the National Bank in its quarterly Rural Report.

The bank's rural economist, Kevin Wilson, said kiwifruit and apples looked likely to fetch similar prices to last season, but wool, lamb, beef, deer and dairy products were less promising.

He said the average farm gate return for the benchmark 15kg prime lamb in the 1999-2000 season was forecast at $38 a head, down slightly on the estimated average of $39 for the 1998-99 season.

The benchmark price of our lamb in Britain had been consistently lower so far this season, compared with the same time last season. The average differential is 50c a kg or $7.50 a lamb.

The outlook for mutton was for little change.

The average farm gate return for the indicative 20kg mutton in the 1998-99 season has been estimated at $20, down $5.30 a head on the last season overall average of $25.30.

Export mutton is used as a low-cost meat protein for sausages, and pies, and ample supplies of lower value cuts of pork and beef were competing strongly as a substitute source of meat protein.

The outlook for international dairy prices was gloomy, Mr Wilson said. Any forecast for a farm gate price for milk solids had been clouded by uncertainties associated with restructuring of the industry.

The proposed mega cooperative had a short-term potential to reduce onshore financial overheads at the margin and a single seller would retain a position of advantage in international markets.

But other benefits would take longer to accrue.

Industry issues yet to be resolved included ownership structures and capital requirements for marketing. - NZPA