The forecast uptick in global sheepmeat and beef trade is supported by generally solid fundamentals in key markets, with demand projected to recover, while global supply levels remain tight.
This followed a stark drop in demand for sheepmeat at the start of the season, before China relaxed its zero-covid policy, Burtt said.
“As 85 per cent of New Zealand’s mutton exports are to China, this impacted export receipts, which were one-third lower compared to the same period last season.”
However, a recent case of bovine spongiform encephalopathy (BSE) in Brazil has added fuel to a tightening global beef market.
Burtt said as falling farm-gate prices led to a decrease in revenue, farmers sought to reduce costs by deferring repairs and maintenance and reducing fertiliser use, but inflation and the increasing price of farm inputs outweighed cost-cutting initiatives.
“Overall expenditure has increased to an average $531,500 per farm in 2022-23.
“Fertiliser, lime, and seeds expenditure is forecast to increase by 6 per cent to average $102,100 per farm, following a 15 per cent increase last season.”
At around 19 per cent of farm expenditure in 2022-23, this was the largest area of expense for sheep and beef farms, he said.
Interest rate rises and increased overdraft borrowing is forecast to increase interest expenditure 12.5 per cent above last season – averaging $54,000 per farm.
Managing cashflow would be a challenge this season, as farmers refinanced and extended overdrafts while receiving lower farm-gate prices, Burtt said.
To add to the financial pressures facing farmers, the full impact of ex-cyclones Hale and Gabrielle is not yet known.
“Weather events like [ex]-cyclones Hale and Gabrielle and [the] flooding during January means farmers will be rebuilding vital infrastructure. This will significantly lift repairs and maintenance expenditure, and much of this spending will be on extended overdrafts.”
Slips and silt destroyed farm infrastructure and stock losses were not fully accounted for after Gabrielle, he said.
“The economic impact on the supply chain for agriculture will be felt for years to come.”
Meanwhile, conditions are extremely dry in Otago and Southland, placing a different pressure on farmers.
B+LNZ CEO Sam McIvor said the significant financial pressures farmers faced were another reason the Government should put the brakes on its “raft of environment policy changes”.
“Farmers are already feeling overwhelmed with the environment-related policy changes, on top of reduced revenues and high on-farm inflation.
“For some, they’re also now faced with having to rebuild their businesses after severe weather events like the cyclones.”
McIvor said almost one-third of New Zealand’s sheep and half of its beef cattle are in the North Island regions that were subject to a state of emergency following the cyclones.
Another third of New Zealand’s sheep and one seventh (14 per cent) of New Zealand’s beef cattle were in Otago and Southland, he said.
“This means two-thirds of New Zealand’s sheep flock and two-thirds of New Zealand’s beef cattle are in areas either suffering from the effects of the cyclones or suffering very dry conditions.”
When farmers were affected in this way, it had a knock-on effect on the wider economy, including businesses that serviced farms, such as vets, trucking companies, shearers and many more, McIvor said.
He said it was time for the Prime Minister to stop the “tsunami of legislation and regulations” constraining the food-producing, export-earning sector.
“This is the time to get behind the sector so farmers can navigate this financially challenging time, plan ahead and ensure their businesses remain sustainable in every sense of the word.”
