Wellington, New Zealand — According to the latest ANZ Agri Focus report, the global economic downturn, coupled with decreased demand from China, is causing an alarming drop in New Zealand’s dairy and meat prices.
Who will be impacted? New Zealand dairy and meat farmers.
The ANZ Agri Focus report reveals a swift drop in farmgate returns, with most sectors, notably dairy and meat, facing critical price reductions.
In the past 18 months, the Global Dairy Trade price index has plummeted over 50%, marking dairy prices at their lowest in nearly five years.
New Zealand, with a particular emphasis on the significant impacts of Chinese market demands.
Multiple factors contribute to this trend, including the global economic downturn suppressing demand for dairy and meat products. A notable downturn in demand from China, traditionally a robust market for New Zealand exports, has exacerbated the situation. New Zealand’s export commodities, such as mutton which has seen 86% of its exports go to China this season, have been severely affected.
To navigate these challenging times, New Zealand farmers are encouraged to maintain accurate cash flow forecasts, seek advice from professionals, and explore various plans to manage the downturn.
Farm costs remain high, and the rising interest rates have compounded the financial strain on farmers. Given the vast milk supply anticipated for the upcoming season, the dairy market is predicted to remain weak, putting dairy farms at an expected loss this year. The breakeven point is inconsistent across farms. For many, even with meticulous cost management, profitability may still be elusive.
Lamb and mutton, key exports for New Zealand, haven’t been spared either. Schedule prices for these meats have dwindled, with lamb prices 25% lower than the last season and mutton prices plunging by 46%. This dramatic drop in mutton prices is largely attributed to its significant market exposure in China.
The report suggests a likely modest start for the new lamb season, with hopes of a revival before the primary processing phase in the upcoming year.
Beyond the dairy and meat sectors, other markets also show high stock levels and muted consumer demand, with little incentive for purchasing. Interestingly, large volumes of New Zealand and Australian beef have found their way into the American market, a pivot resulting from weaknesses in other global markets.
With China’s consumer slowdown significantly affecting New Zealand’s export returns, farmers are urged to remain vigilant, adapt, and brace for a challenging year ahead.
