Livestock report: Uncertain times for the sheep industry

A potential drought could cause pain for the sheep industry. Photo / Bevan Conley

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The sheep industry is doing it tough right now, and unfortunately, things could get worse, according to PGG Wrightson’s Kevin Mortensen.

“It’s hard at the moment and it could even get harder,” the King Country regional livestock manager told The Country’s Jamie Mackay.

Many farmers were “entering the unknown”, and media coverage was adding to the pressure, Mortensen said.

“Everything you pick up and read, or you listen to, it’s [about] the downturn in the sheep [market] accompanied with the drought and, as we can all appreciate, neither of the two work very good together.”

However, there was no sign of doom and gloom in the King Country just yet, he said.

“There’s not a cloud in the sky, it’s a magnificent day, the grass is blowing in the wind and we’ll probably get to 20 or 21C here today, and we’re having a great season right at the moment.”

Mortensen said there were plenty of lambs about and farmers’ docking percentages were successful, but uncertainty in the market meant they weren’t sure where those lambs would end up.

“They’ve got extra lambs on the ground, but of course, you know, where do they go with those?

“Some of them are talking that they may have to unload them as a store lamb.

“Well, where’s that market going to sit in the very near future?”

Although it was early in the season, some lambs had already sold, but not for a lot of profit, Mortensen said.

“I heard one of the boys [saying] just yesterday that they actually heard some lambs sold for $2.50 a kilo, which doesn’t make great reading right at the moment, considering there is a bit of grass.

“At $2.50, obviously some people are running scared, there’s no doubt.”

Lamb schedules have fallen in recent weeks, with some companies now offering just $6.50 a kilogram.

Mortensen thought it would drop even lower in the new year.

“[The] talk on the street is that it may be down to $5.50, and you may even see the mutton schedule down to $2.50.”

The drop is being put down to continued soft demand from key markets like China - and an influx of Australian lamb flooding markets, as farmers there face the prospect of drought.

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“Our good mates over in Australia at the moment, with what they’re going through, they’re certainly not helping us with unloading the amount of stock that they are,” Mortensen said.

Meanwhile, it’s ram-selling season, and prospects for breeders were also uncertain.

“They’re all pretty nervous.”

Mortensen said ram breeders’ costs had increased, but they were aware farmers were dealing with the same situation.

“They know what the farmer’s going through and the pain that they’re feeling.

“To be fair to the ram breeders, they’ve looked at dropping their reserve prices a little bit and coming up with options to help the farmer, whether it’s deferred payments, or whatever the case may be.”

In positive news, Mortensen said beef was holding up relatively well, despite recent sales meaning there were fewer farms in the King Country.

“Everybody seems more relaxed in the beef job - there’s no doubt about that.”