Analyst Intel

9 August 2019

ACROSS THE RAILS | There's a silver lining in the dark cloud over farming

BySuz BremnerSuz Bremner

The last year or so has thrown a lot at the farming community. Mycoplasma bovis combined with talk of emissions taxes and farmers selling up for forestry have created a dark cloud over the industry but, for once, the silver lining has been positive outlooks for New Zealand meat and, in turn, farmgate livestock prices.

To a large degree we farmers are price takers, having to adjust margins and budgets to meet the market, essentially, and many know what it feels like when the shoe is on the other foot – when lambs are barely making a margin over the cost of rearing them. Unfortunately, those costs don’t alter when the prices do so there have been years when making ends meet has been a real struggle. In the past few years we have been rewarded with high overseas demand for our products, which has been partly responsible for very strong farmgate prices and if there is any time that we need a big positive like that it is now. In a time of unrest it is keeping farmers optimistic about their industry and determined to protect it as much as possible.
Lamb prices continue to reward sellers though buyers are still seeing a good margin. Spring cattle fairs have just got under way and there is a clear lift on last year’s levels though there is some chatter about how the beef-dairy market will hold up if we get an oversupply in that market. That’s not likely for the traditional market, though, with those breeds well sought after and attracting high premiums.
As an agri-market analyst it has been a pleasure to be able to bring good news to readers each week and while no-one is under any illusion there won’t be a downside at some stage, at least we can enjoy something positive when we need it most.