Less income likely for sheep, beef farmers

Press, 1 March 1984, Page 6

Less income likely for sheep, beef farmers

PA Wellington Sheep and beef farmers face declining gross incomes in 1983-84, while dairy farmers can expect a slightly higher gross income, according to a report of the Agricultural Review Committee released yesterday. The report, “State of Agriculture, 1983-84,” says that horticulturplists, particularly kiwifruit growers, should earn significantly higher gross incomes. It notes that in the absence of Government-funded supplementary minimum prices, the effects of the cost-price squeeze would have left many meat and wool producers in serious financial difficulties. Higher S.M.P. payments

will be made for sheepmeat in the 1983-84 year, but no payments for beef or dairy farmers are expected, the report says. S.M.P. payments for wool are forecast to total $6O million this year, considerably down on the 1982-83 payments of $176.7 million.

Production levels for agricultural products are expected to continue recent trends.

Total meat production is likely to fall by 7 per cent, with beef production contributing the biggest decline, 11 per cent, while mutton and lamb are expected to drop by 2 and 3 per cent respectively. Wool production is expected to decrease by 2 per cent from 370,900 tonnes in 1982- to 363,000 tonnes in 1983-

Record milk production is expected, with the report forecasting milkfat to reach 294,000 tonnes, compared with 290,300 tonnes for the 1982-83 season and the previous highest at 290,900 tonnes in 1979-80.

An increase of 16 per cent in the production of apples

is likely, while total kiwifruit production for 1983-84 at 48.100 tonnes is estimated to be more than double the previous year’s production of about 22,200 tonnes.

Cereal production is forecast to rise by some 18 per cent from 918,200 tonnes to 1,083,700, due mainly to a 53 per cent increase in barley production, supported by smaller 6 per cent and 3 per cent increases in maize and oat production respectively. Wheat production is expected to decline by 12 per cent.

The Minister of Agriculture and Fisheries, Mr Maclntrye, commenting on the report, said that while high value products such as horticulture were important, in the foreseeable future, the bulk of export earnings would continue to be generated by meat, wool, and milk products.

“It is, therefore, in the national interest that these industries remain viable, innovative and able to adapt to changing circumstances.

“Continued deterioration of incomes and investment will not help to achieve these ends.”

The report says that the international outlook is somewhat brighter and there has been a marked drop in internal inflation. However, the deterioration of sheep and beef farm incomes and the effect of this on farmers’ expectations, growth rates in the industry and on the economy as a whole is still of concern.

The report says that without S.M.P.S, sheep and meat farmers would have faced serious financial difficulties. “The serious contraction in the real amount that sheep and beef farmers are able to spend on farm inputs must lead eventually to a fall in production.” The report welcomes the Government’s recent announcement that it will re-

place import licensing by an appropriate tariff structure and the gradual reduction of assistance throughout the economy.

“This is a major, positive step and its urgent implementation would be of great value to the agricultural sector.”

It is important, however, that the over-all level of assistance to agricultural activities be maintained relative to that available to other areas, the report says. On the price freeze, it says the rapid reduction in the rate of increase in farm input prices had assisted agriculture in a difficult period. “Erosion of the sector’s competitive position has now been almost arrested after a five-year period in which input prices rose about 100 per cent and the sector’s terms of exchange deteriorated markedly as a consequence. “It is now important that policies fostering continuing moderation in price and wage movements are operative as the economy emerges from the ’freeze’ so that the gains from it are retained,” the report says. The report predicts improved wool prices this

year, and some improvement in lamb and beef prices but little prospect of any significant price recovery for mutton.

“Large international stocks of dairy products and unfavourable market prices mean a poor outlook for dairy products in the next two years."

The volume of output of the sheep and beef sector is expected to fall in 1983-84 as a result of adverse climatic conditions of the previous season, the report says.

“With producer prices for sheepmeats and wool having been determined mainly by Government support levels, sheep and beef farmers have faced declining average gross incomes and continuing input price increases mean declining net incomes as well.”

Dairy output is expected to be marginally higher and gross incomes to be maintained, but it is only as a result of the industry's stabilisation measures that incomes will be prevented from falling in line with the depressed state of the international market, the report says.