Meat & Livestock News

New Zealand Lamb Market Faces Steep Price Decline, Impacting Farmer Incomes

Production of meat products in the supermarket in the supermarket. Next, distribution of finished products to the store’s shop for customers

The New Zealand lamb industry is experiencing a significant downturn in market prices, reaching lows not seen in the past six years and resulting in a substantial income reduction for sheep farmers.

Recent weeks have seen lamb schedules fall, with some companies now offering as little as $6.50 per kilo, a stark contrast to the $8.30 seen two seasons ago and $7.20 last year.

This decline in price is largely attributed to a persistent lack of demand from key markets, including China, coupled with an influx of Australian lamb saturating the market.

Gary Massicks, a consultant with Manawatū-based Baker Ag, noted that while a drop was anticipated six months prior, the reality of the situation has unfolded more rapidly and severely than expected.

Traditionally, lamb prices would remain stable until around March, when an increase in market availability typically occurs. However, Massicks describes the current situation as alarming, with farm budgets dipping into the red.

This downturn coincides with a season where many ewes had twins due to being in excellent condition at mating time, leading to a higher number of lambs but of smaller size, which does not compensate for the lowered market price.

Massicks remains cautiously optimistic, suggesting that there may be a turnaround in the future, potentially next winter, although he warns that the recovery may not be robust. In the meantime, he advises farmers to make well-considered decisions to avoid compromising next year’s production and to sell as many lambs as possible.

Farmers who typically rear lambs for finishing have been known to sell surplus grass as silage as a contingency plan. However, this year, the demand for silage from dairy farmers is low, and they lack the funds to make such purchases.

Marlborough farmer and meat and wool chairperson for Marlborough Federated Farmers, Richard Dawkins, compares the current downturn to the significant economic challenges of the 1980s.

He expresses that the situation is disheartening, especially as farmers prepare to send their first lot of lambs to the works, fetching around the mid $6 range, which presents a considerable challenge.

Dawkins points out that while all farm businesses are unique, many are looking to cut costs where possible. However, with rising expenses and interest rates, options for savings are limited. Some farmers are opting for interest-only loan repayments to manage.

He also notes that the impact of falling prices varies depending on each farmer’s financial situation, with those carrying less debt being less vulnerable.

In regions like Marlborough, some farmers have diversified into viticulture and horticulture, providing alternative income streams to help with cash flow.

Dawkins emphasises the need for community awareness and support for those struggling, particularly younger farmers with significant loans or those leasing farms with limited alternative income sources.

He concludes by highlighting the importance of personal well-being during these challenging times, encouraging farmers to engage in activities they enjoy, such as fishing or hunting, to maintain a healthy work-life balance.