A mixed bag for the 2023 livestock values

Kelly Millar, senior manager at Findex Waipukurau.

OPINION

As farmers are preparing their financial accounts and tax returns for the 2023 year, it’s important they take note and understand the implications of recent changes in livestock values.

The Inland Revenue Department (IRD) has recently released the 2023 National Average Market Values for livestock (per head).

The IRD contracts with experienced livestock agents throughout the country to advise on market values for livestock classes from each region to obtain the National Average Market Value at the end of April each year, and they are released at the end of May.

As a result, all classes of sheep have decreased in value by between 3 per cent and 18 per cent.

The largest decrease was for mixed-aged wethers which decreased from $147 in 2022 to $120 in 2023. This is a significant change from the increase in all sheep classes in the 2022 National Average Market Values.

The lowest decrease was breeding rams which dropped from $384 in 2022 to $372 in 2023.

Beef cattle values have increased in all classes by between 0.45 per cent and 11 per cent.

The largest increase was for rising 1-year heifers which went from $665 in 2022 to $742 in 2023. This is another increase from the 2021 National Average Market Values when values declined i.e. rising 1-year heifers were $717 in 2020 and $563 in 2021.

The lowest increase was mixed-aged cows which went from $1328 in 2022 to $1334 in 2023.

Dairy cattle (Friesian and related breeds, Jersey, and other dairy breeds) values are a mixed bag, some classes increasing and others decreasing.

The largest rise was for rising 1-year steers and bulls which increased from $476 in 2022 to $579 in 2023. The largest decrease was for rising 1-year heifers which dropped from $809 in 2022 to $693 in 2023.

Deer (red deer, wapiti, elk, and related crossbreeds) values across all classes have increased between 12 per cent and 25 per cent.

The largest increase was for rising 2-year stags (non-breeding) which went from $475 in 2022 to $595 in 2023. Values in 2021 year had declined from 2019 year, where there was a spike in values.

The overall gains (and decreases) in value for those with livestock in the “herd scheme” (based on National Average Market Values) will be treated as capital rather than assessable income, as this livestock is deemed to be capital in nature.

Assessable income/deductions will only arise where there has been an increase/decrease in the numbers in each class of herd scheme livestock.

The decision whether to move surplus stock into the herd scheme each year will need to be discussed with your accountant/advisor.

There is no right or wrong answer to this question as each farmer’s circumstances are different. For example, if you’re planning to retire soon then the herd scheme may assist with tax planning.

However, it’s fair to say that moving stock into the herd scheme in years of high values may not be the best decision. To talk with an accounting and business advisor about your circumstances and weather the herd scheme would be of benefit to you, contact our agribusiness experts at findex.co.nz