'Breathing room': Sheep and beef sector bounces back after lean years

While sheep and beef farmers are enjoying a strong season, a sector leader says it has come too late for some.

Waikato Federated Farmers’ meat and wool chairman Reon Verry knows of several people who previously ran sheep who have turned to commercial forestry on their properties.

Verry said a spike in fuel costs caused by the conflict in the Middle East added to rising costs already faced by sheep farmers, including a 10% jump in shearing bills.

Returns for wool – $5/kg – have simply reverted to what they were 10 years ago, after slumping to $1.50/kg.

Added to this are a 10% rise in shearing charges through ACC costs, an increase in the minimum wage for staff and travel expenses.

He said the fuel issue had caused fertiliser prices and associated spreading costs to increase, with contractors engaged for regrassing at this time of year.

“Profit has come from a pretty low level,” Verry, who runs 6000 sheep and 1500 head of beef cattle on a 1800ha property near Te Kūiti, said.

“But current returns have given us a little bit of breathing room.”

He said the cash boost would most likely be used by sheep and beef farmers for debt repayment and deferred repairs and maintenance on their properties.

Beef + Lamb New Zealand (B+LNZ) said farmers could expect continuing strong returns, with average farm profit forecast to climb to $287,600 per farm in 2025-26.

B+LNZ said its mid-season update report marked a sharp shift in fortunes for the red meat sector, which has weathered two difficult seasons, with the latest data reflecting strong global demand for beef and lamb and tightening supply.

Real farm profit before tax (FPBT), accounting for inflation, is expected to sit about 80% above the decade average.

B+LNZ chairwoman Kate Acland said the report painted a positive picture for the sector, with farmers cautiously optimistic.

“Farmers are aware that while revenue is improving, costs can move just as quickly.”

The average lamb price is forecast to reach $10.28/kgCW (kilograms of carcass weight), adult sheep $5.55/kgCW, and all-cattle $7.59/kgCW.

In the Waikato and Bay of Plenty, FPBT in the sector is set to rise by an average of 73% to $324,500, with EBITRM (earnings before interest, tax, rent and any wages paid to a manager) up 43% to $401,300.

Bay of Plenty Federated Farmers’ meat and wool chairwoman Anne Mackersey manages a family farm running 700 ewes and hoggets, 700 calves and 50 Angus breeding cows at Whakamarama.

She said the sector had come through some “really difficult” years.

“Three years ago, sheep and beef were at an all-time low,” she said.

“The future for young farmers entering the industry was really bleak.

“You have to remember what it has turned around from.”

While appreciating the current “high” in the sector, Mackersey said sheep and beef farmers were always conscious of “what’s around the corner”.

She said the current situation in the Middle East could cause significant disruption to New Zealand’s export supply chains.

Unexpected storms and droughts can also have a serious localised impact on farming.

“You can’t plan for those,” Mackersey said.

Rotorua-Taupō Federated Farmers’ meat and wool chairwoman Ruby Mulinder said that, while good pricing for all stock classes was pleasing, these returns were needed after some very tough years.

“Due to poor profitability, sheep and beef farmers often erode their farms’ fertility and infrastructure during hard times.

“Improved profitability has seen plenty of farmers invest back into their farms, be it fencing, fertiliser, genetics, pasture renewal, yards or infrastructure – which is really positive for the sector and our economy.”

Mulinder said the money farmers earned added significant value to communities, as they spent most of their earnings.

“Inflation is starting to spark up again. We are already seeing this as over-inflated invoicing that farmers receive monthly.

“The core concern is that farms have no ability to pass on any costs. We are ultimately a price-taker.”

Mulinder has a mix of activities on the 150ha property near Lake Taupō, which she owns with husband Sean Nixon.

They run sheep predominantly, for meat and milk – milking 1015 in a 30-a-side herringbone shed – plus 50 breeding cows.

In their fifth season milking sheep, she said the outlook was “fairly positive”, as the season has been extended by a month.

Mulinder said Maui Milk, the collection and processing company they used, also had some positive milk price movements for the next season.

“Our natural lamb rearing system remains key to our business, which has seen a greater uptake within the Maui suppliers’ pool, supporting profitability and a more sustainable farm system.”