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MAF report shows farmers likely to face challenging year ahead
Farmers recovering from drought are likely to have a challenging year due to rising costs coupled with economic
uncertainty, according to the Ministry of Agriculture and Forestry’s latest report.
MAF Deputy Director General, Policy, Paul Stocks says the Pastoral Monitoring Report 2008, released today, showed that dairy, deer, and sheep and beef farmers had had a tough season and were preparing for
rising costs in the year ahead.
``The pastoral sector was significantly affected by the drought last season. One of the biggest challenges for farmers
in the coming year will be recovering from drought as well as managing the potential increased expenditure associated
with rising prices for core products and services,’’ Mr Stocks said.
``Due to the economic downturn, price expectations for New Zealand’s agricultural commodities in export markets are
generally lower than initially anticipated. However, the falling exchange rate in October and November 2008 may offset
some of the weakening in international market prices.’’
The report showed that profitability varied across the pastoral sector.
``Dairy revenues are expected to be down as payouts recede from the previous year’s record high, while sheep and beef
farmers are in a finely balanced situation after the previous year’s drought. There is less stock on hand and
supplementary feed supplies are low,’’ Mr Stocks said.
``Sheep and beef sectors had a tough season with drought and increased expenditure on-farm. The combined effects of land
use change and drought led to a 4.3 million (11 percent) decline in sheep numbers in 2007/08. For the 2008/09 season,
farmers were cautiously positive – they expected lamb, wool and beef prices to improve and the exchange rate to drop.
However, continued increases in on-farm costs and less stock on hand are expected to offset some of these gains.
``At the time of publishing, dairy farmers were expecting profitability to decrease due to increased input costs. They
also expected a likely drop in the dairy payout to offset the expected higher milksolids production.
``Deer farmers’ profitability for venison improved in 2007/08 despite falling velvet prices. In the year ahead, farmers
expected that venison prices and revenue will continue to improve.’’
The annual Pastoral Monitoring Report provides information about the production and financial status of dairy, deer, and sheep and beef farms as well as
broader trends, issues and sector concerns.
The report is compiled from feedback from pastoral farmers each year and helps MAF to track the sector’s progress and
growth. The models in the latest report were prepared between June and August 2008 and are based on farmer and industry
expectations at that time.
ENDS
A fact sheet and a copy of the report can be found on the MAF website: A fact sheet and a copy of the report can be found on the MAF website:
http://www.maf.govt.nz/mafnet/rural-nz/statistics-and-forecasts/farm-monitoring/