NEW ZEALAND, Wellington. Falling wool and meat prices are causing declining income on New Zealand sheep and beef farms.
New Zealand beef and sheep farmers must prepare for a challenging marketing year 2020/2021. The trade organisation Beef+Lamb New Zealand (B+LNZ) last week issued a rather gloomy forecast, expecting weaker export revenues, falling prices and lower profits on farms. The main reasons for the slowdown in the meat and wool markets, which have been doing well in recent years, are the corona effects and uncertainty about the further development of the pandemic, as well as the uncertain outcome of the ongoing international trade conflicts or Brexit, the report says.
The trade organisation expects revenues from New Zealand beef exports to fall by nine percent to NZD 3.5 bn. compared to 2019/2020. This is equivalent to around € 2 bn. Given relatively stable production and export volumes, the expected price weakening alone is expected to be responsible for this. B+LNZ explained that in the global beef trade, very intensive competition between suppliers is to be expected in the face of a corona-related decline in consumption.
The situation is hardly any better according to the New Zealand Sheep and Lamb Exporters' Association, whose export earnings could fall by 15% to NZD 3.5 bn. (€ 2 bn.) compared to the previous marketing year. In addition to weaker prices, exports are expected to fall by 6.5% for lamb and 10% for sheep meat. According to the industry association, weak demand in Corona periods - especially for high-quality cuts for the catering trade - and lower lamb and slaughter meat production in New Zealand with declining livestock stocks will lead to lower exports.
In the case of wool, high stocks and further falling prices due to weak international demand are even expected to cause a slump in export earnings by a good third to only NZD 278 mill. (€ 157 mill.). The market downturn and lower exports will also have an impact on the incomes of sheep and cattle farmers. The industry association's forecast, based on various scenarios, assumes that operating profit before taxes in 2020/2021 will fall by a good quarter on average to NZD 115,000 (€ 64,78) compared with the previous year.