Sheep, beef producer incomes set for rise

By Philippa Stevenson

Sheep and beef farmer incomes are expected to rise slightly in the next 12 months but without offsetting two years of plummeting profits brought by drought and weak commodity markets.

Yesterday, the Meat and Wool Economic Service forecast sheep and beef farm gross revenue for 1999-2000 would increase 2 per cent on the back of higher production and improved product prices.

Service executive director Rob Davison said that indicated "some upside" to the year.

"While 1998-99 saw drought affecting livestock production - the second year for some - this autumn and early winter have been mild to date. Livestock are generally in good condition leading into this winter."

He said the slight income rise indicated farm spending would again be tightly controlled particularly in drought-hit regions. Interest expenditure was expected to increase by 2 per cent per farm as debt levels rose to finance a rebuilding of capital stock numbers after the droughts.

As a result, profit before tax was likely to rise by 10 per cent for the year following falls of 25 per cent and 4 per cent for 1997-98 and 1998-99 respectively.

"While farm profit before tax for 1999-2000 estimated at $30,800 per farm is a recovery on the previous year, this is 21 per cent below the pre-drought level," Mr Davison said.

The service said North Island east coast regions showed the greatest recovery with a 37 per cent rise in farm profit but that would still be below the pre-drought level.

Sheep numbers are forecast to stabilise at 46.46 million, though most of a 0.7 per cent increase were lambs held over for meat processors in the September 1999 quarter.

Beef cattle numbers were expected to be up by 4.4 per cent on last year, with most of the increase linked to a greater retention of dairy beef calves last spring.

Export beef production for the upcoming year was forecast to rise by 4 per cent with better prices linked to improvements in the US market.

Wool production and current low prices should remain unchanged.