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Wednesday, 24 October 2012 11:16

Outlook still positive despite confidence drop

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LONG-TERM PROSPECTS are still bright for sheep and beef despite a big drop in farmer confidence, says Beef+Lamb NZ chairman Mike Petersen.

This drop results from farmers coming off three seasons of record prices, Petersen says. But good debt repayment means the sheep and beef sector is in a good position.

The latest quarterly Rabobank Rural Confidence Survey late last month found 44% of all farmers expect the agricultural economy to worsen over the next 12 months (compared to 36% in the last quarter).  Just 15% expect conditions to improve.

Beef and sheep farmers had the lowest levels –  54% of beef and sheep farmers expect worse performance over the next year, with only 12% expecting an improvement. 

Peterson says all meat company predictions were for a reduction in prices for sheep meat but not beef. 

“For sheep meat the correction is significant – around $20-30 a head for lamb. On top of that wool prices are nearly half what they were last year. For those two reasons combined you are seeing a confidence drop.

“Beef is different: it has held up and is fairly steady which is remarkable given the high value of the New Zealand dollar. 

“If you look at the medium to long term, and ask farmers about their confidence levels, then you would see a very different result. We have had three very good years and the sheep and beef sector has repaid a lot of debt, so the sector is in a strong position.

“Farmers haven’t been silly with the money that was coming in over the last three years, they have been very prudent with what they’ve done with those very good profits so the sector is still in really good shape.”

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