Sheep and beef farming could all but disappear in New Zealand if “structural issues” causing profits to drop are allowed to continue, says Federated Farmers, as new figures show profits have dropped again.

Bruce Willis, meat and fibre chairman for Federated Farmers, said sheep and beef farmers were converting to dairying and forestry in droves, mostly because of falling profits.

“The New Zealand meat industry is broken and it needs to be fixed,” said Wills.

“If it’s not fixed we’re going to have a country covered by dairy cows and pine trees.”

His comments come on the back of a Ministry of Agriculture report which says that – despite record lambing in spring last year – the average lamb price fell by $8.43 in 2009/10 compared with the previous year.

MAF’s Christchurch regional team leader, John Greer, said drought in Northland and many parts of the South Island caused reduced production and early sales of stock.

Farm surplus for reinvestment on sheep and beef farms fell 37 per cent to $19,300 in the 2009/10 season, while cash surplus dropped to $6900, according to the report.

Greer said the figures highlighted the challenges faced by the “commodity-driven model” in the sheep and beef sectors. After meat processing and marketing firms, as well as supermarkets, took their margins only “crumbs” were left over for farmers, he said. “We’ve got too many meat companies chasing too few lambs.”

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