New Season Outlook 2012-13 - Beef + Lamb New Zealand

NEW SEASON OUTLOOK 

2012-13 

BEEF + LAMB NEW ZEALAND ECONOMIC SERVICE 

© Beef + Lamb New Zealand Economic Service | New Season Outlook 2012-13 | P12022

CONTENTS 

Executive Summary – Outlook 2012-13 3 

Economic Conditions 4 

Exchange Rate Sensitivity – 2012-13 7 

Livestock Numbers 8 

Wool Exports 9 

Wool Prices 9 

Wool Production 10 

Lamb Exports 11 

Lamb – International Situation 12 

Lamb Price – Farm Gate 13 

Lamb Production 14 

Beef & Veal Exports 15 

Beef Price – International Situation 16 

Beef Prices – Farm Gate 17 

Beef Production 18 

Climatic Conditions 19 

20 

23 

Region Comment – North Island – per Farm 24 

Region Comment – South Island – per Farm 25 

© 2012 Beef + Lamb New Zealand Limited also referred to as 

B+LNZ, B+LNZ - Economic Service and the Economic Service. 

All rights reserved. This work is covered by copyright and may 

not be stored, reproduced or copied without the prior written 

permission of Beef + Lamb New Zealand Limited. 

Beef + Lamb New Zealand Limited, its employees and Directors 

shall not be liable for any loss or damage sustained by any 

person relying on the forecasts contained in this document, 

whatever the cause of such loss or damage. 

 

PO Box 121 

Wellington 6140 

New Zealand 

Phone 04 473 9150 

Fax 04 474 0800 

 

Contact: 

Rob Davison 

Executive Director, 04 471 6034, Economic Conditions 

 

Agricultural Analyst, 04 494 9508, Lamb, Beef, Exchange Rates 

Rob Gibson 

Agricultural Analyst, 04 471 6037, Livestock numbers, Wool, Farm 

© Beef + Lamb New Zealand Economic Service | New Season Outlook 2012-13 | P12022| PAGE 2

Executive Summary 

– Outlook 2012-13 

Economic conditions, 

exchange rates and prices 

 

are stronger than 6 months ago and while growth 

in North America is positive, it’s slow. The growth 

engines of China and India have slowed but 

 

economy. 

 

 

further against the EUR. The NZD for 2011-12 was at 

its highest annual average against the USD since 

 

Livestock 

 

31.9 million were up 2.6 per cent on the previous 

year. Within this ewe numbers stabilised (+0.6%) but 

more hoggets were on hand (+7.1%). The increase 

in hoggets includes more trading stock carried 

over than last year to utilise good feed conditions 

and increase carcase weights to help offset low 

prices for September quarter sales. 

 

 

increase was largely underpinned by trading stock 

carried over providing the opportunity to increase 

weights particularly in the North Island where 73 

per cent of the beef herd resides. 

Wool 

 

per cent to 172,600 tonnes greasy from increased 

 

growing conditions and sheep numbers increasing 

2.6 per cent. Slipe wool also increases from 

 

year wool production basis. Wool export receipts 

estimated at $644 million are down 17.1 per cent 

 

2011-12. 

Lamb 

 

billion are down $230 million (-8.7%) on the previous 

year. While lamb meat tonnage shipped increases 

4.1 per cent the price per tonne falls 12.4 per cent 

from softer international prices than last year. The 

lamb crop for the spring of 2012 is expected to be 

up 3.4 per cent on the previous spring to 26.3 million. 

As a result the export lamb slaughter is estimated to 

increase 6.1 per cent to 20.4 million. Only the 2010- 

11 and 2011-12 slaughter were lower in the past 

50 years. Carcase weights are expected to ease 

(-1.9%) on last season’s record high of 18.6 kg. 

 

export lamb prices are expected to average $95 for 

an 18.25 kg lamb. Last season’s price provisionally 

 

adjusted terms in at least 50 years. Only 2010-11 was 

higher at $117.65 per head. 

Beef 

 

estimated 7.5 per cent to $2.6 billion. Export volumes 

increase 4.9 per cent. The export price per tonne 

increases 2.4 per cent from expected stronger 

international prices and little change in the NZD:USD 

exchange rate. Australian beef exports are forecast 

to increase 2.0 per cent. 

 

cent increase to 2.3 million head largely from a 

carryover of cull cows from last season linked to 

the excellent season and expanded dairy herd. 

Carcase weights decrease 2.6 per cent largely 

 

 

gate prices per kg increase 2.5 per cent. 

Sheep & Beef Farms 

 

cent for the All Classes average Sheep and Beef 

Farm and follows a 10.6 per cent increase for 2011- 

12. 

 

 

increase an estimated 2.2 per cent. This implies a 3.3 

per cent decrease in the volume of farm goods and 

services purchased. Interest expenditure decreases 

6.7 per cent from lower interest rates and some debt 

reduction. Fertiliser expenditure decreases 2.4 per 

cent following two years of higher spending. 

 

estimated at $96,500 per farm falls 34 per cent on 

last year’s peak $146,000 per farm which was the 

 

years earlier. 


Economic Conditions 

 

Table 1 

Source: Statistics New Zealand, Consensus Forecasts, 

NZIER estimates and forecasts 

Global Prospects 

The global economy slowed in 2012 with the 

 

prospects are weak with little growth while the US is 

expected to show positive growth but below 2 per 

 

 

problem debt still emerging. Some commentators 

see the debt crisis is in its 4th year of a 12 year period 

of correction and recovery. 

While Asian growth has slowed, it along with 

emerging economies continue to show strong 

growth relative to the US and Europe and underpins 

the global economy. 

The biggest concern for Europe is if Greece exits the 

 

 

markets and raise uncertainty for other indebted 

countries such as Ireland, Portugal, Spain and Italy. 

While the European Central Bank has bought time 

there is political rescue fatigue in northern European 

countries and austerity fatigue in the indebted 

southern European countries. The political resolution 

is far from clear at this stage. 

In contrast to Europe there is a gradual recovery 

evident in the US economy out to 2014. This along 

with Asian economic growth noted above provides 

some off-set to the European recessionary situation. 

With the US presidential and congressional elections 

in the news, whoever wins in November 2012 faces 

 

USD 1.2 trillion for 2012. 

 

the worst in 50 years. The US grows about 50 per 

 

internationally. As a result of the drought, US farm 

 

 

per bushel (+39%) for 2012-13. 

This increase in feed grain prices due to drought 

 

 

carcase weights than in 2012. 

Figure 1 

Source: Beef + Lamb New Zealand Economic Service 

SNZ, NZIER forecasts 

 

The New Zealand economy seems to be a work 

in progress of a slow if uneven recovery. The 

Canterbury rebuild clearly is a slow process and 

head winds from weak global activity, particularly 

Europe, dampen prospects for 2012 13. 

Household spending remains cautious while 

households continue to reduce debt and income 

growth is modest. There is some relief for consumers 

 

prices particularly for sheep meat and dairy coupled 

with the New Zealand dollar continuing to remain 

strong for the second year. The strong dollar has 

kept the lid on prices for imported consumer goods 

and moderated the impact of high international oil 

prices. 

 

New Zealand economy though for farming, local 

authority Rates were up 5.6 per cent on last year, 

an increase well ahead of the annual consumer 

price index increase of 1.6 per cent (ref B+LNZ paper 

P12020). 


The Reserve Bank of New Zealand lowered the 

 

per cent to 2.5 per cent following the second 

destructive earthquake in Christchurch and this 

 

OCR statement. 

The general thinking is that the OCR will remain 

unchanged out to 2014 given the slow New 

 

Global risks from the weak European situation also 

keep expectations for the OCR to remain at its 

current level. 

Consumer Prices 

Table 2 

Source: Statistics New Zealand, Consensus Forecasts, 

NZIER estimates and forecasts 

 

consumers’ price index (CPI) increased 3.3 per cent 

as shown in Table 2. This average annual rate of 

increase can be split into tradable and non-tradable 

 

for goods and services that are imported or are in 

competition with foreign goods and services. Non- 

 

and services that do not face foreign competition. 

 

 

increased at a faster rate of 3.3 per cent. 

 

 

 

 

 

this decrease coming from the low rate of price 

increases for tradable goods and services. 

Interest Rates 

Table 3 

Comparing interest rates in Table 3 with consumer 

 

interest rates have been lower than the rate of 

 

 

hemisphere countries. 

Reserve Bank of New Zealand later data show that 

 

 

series began. 

Exchange Rates 

Figure 2 

Table 4 below shows the annual average exchange 

rates for the three major currencies in which meat 

and wool products are traded. 2011-12 is provisional 

and for 2012-13 the estimates are mid-point 

averages. Other sections in this report show 

outcomes for 2012-13 using the estimated exchange 

rates below along with analysis showing the impact 

of higher and lower exchange rates. 

Table 4 


Reserve Bank of New Zealand 


Reserve Bank of New Zealand 


trend against the three main currencies that meat 

 

2012 this upward trend moderated in NZ dollar terms 

strong off-shore price increases for meat and wool. 

 

and softer global economies have resulted in softer 

prices particularly for sheep meat, wool and dairy 

 

For the year to September 2012 the NZD provisionally 

strengthened against the USD (+1.8%), the GBP 

(+3.2%) and the EUR (+9.1%). Even then there was 

more volatility within the year than for the previous 

year as Figure 2 shows. 

The outlook shown in Figure 2 is for little change 

against the USD and the GBP though the NZD 

is expected to strengthen further against the EUR. 

 

exchange rates is an estimate as to whether 

 

indicated that the NZ dollar was slightly undervalued 

by a few per centage points. Not good news for 

the export dominant Sheep and Beef Farm sector. 

The EUR and GBP were about right while China, 

Indonesia and Russia were about 40 per cent 

undervalued. This measure means one could buy 

a lot more hamburgers for your USD in these latter 

three counties than the US, UK or New Zealand. 


Exchange Rate Sensitivity 

2012-13 

Table 5 


 

exchange rate scenarios. 

This approach is considered constructive for this 

outlook because of possible exchange rate volatility 

in 2012-13. 

Estimated exchange rates for the major currencies 

are shown in the middle shaded column, with 

related farm-gate prices. These estimated exchange 

rates and subsequent prices received were used to 

 

FOB export receipts in the sections to follow. 

Table 5 assumes the same relativities in cross 

rates between the different currencies that were 

 

year continue to apply under the different scenarios. 

 

majority of production sold from late November 

 

exchange rate sits during this period is crucial to 

farmers, export companies and New Zealand. 

The NZD is forecast to strengthen against the 

EUR, but remain similar against the USD and GBP 

compared with 2011-12 (refer to Table 4). These 

 

and wool season average prices and farm incomes. 

Above all it is important to understand the large 

leveraged effect exchange rate movements have 

on farm-gate prices, i.e. an increase in the NZD 

against the USD from 0.80 to 0.90 (+10¢) and the 

associated cross rates against the GBP and EUR 

decreases the farm-gate lamb price 13.5 per cent. 

The converse applies with the NZD moving from 0.80 

to 0.70 (-10¢) against the USD, the farm-gate lamb 

price increases 16.7 per cent. 


Livestock Numbers 

Figure 3 


Statistics New Zealand 

 

per cent (+0.81m) to an estimated 31.9 million head. 

 

 

Breeding ewe numbers have stabilised due to a 

higher input of young replacement ewes compared 

with the previous year. For the second year high 

numbers of tail-ender ewes were culled to take 

advantage of good mutton prices through to 

 

Hogget numbers increased 0.68 million to 10.3 million 

 

farm businesses carrying over more trading stock, 

more so than ewe hogget replacements. Good 

feed conditions since late summer has provided 

opportunity for farm businesses to manage risk by 

carrying stock through to heavier weights to help offset 

reduced schedule prices. 

North Island sheep numbers estimated at 16.1 

million head increased 4.0 per cent (+0.62m) on the 

 

increased 1.2 per cent and hogget numbers 

increased 9.6 per cent due to more trade lambs as 

 

in East Coast regions following destocking during 

previous series of drought years. 

South Island sheep numbers estimated at 15.9 million 

head increased an estimated 1.2 per cent (+0.19m) 

 

static (+0.1%) in contrast to the North Island. South 

Island hogget numbers increased 4.2 per cent 

 

kind conditions providing the opportunity to increase 

ewe hogget mating. 

Total beef cattle increased 1.0 per cent, (+0.04m) 

to an estimated 3.9 million head for the year ending 

 

by trade stock retentions with good feed conditions 

providing opportunity to put weight on stock, 

particularly in the North Island where 73 per cent of 

the beef herd resides. 

North Island beef cattle numbers increased 3.6 per 

 

breeding cows and weaners both increased 3.3 

per cent to 0.69 and 0.85 million head respectively. 

Increased breeding cow numbers across all North 

 

in East Coast and Northland-Waikato-Bay of Plenty 

regions. 

South Island beef cattle numbers decreased 5.6 

 

This is largely due to a decrease in beef cattle 

 

underpinned by a decrease in breeding cow 

numbers (-8.9%) for this region compared with the 

previous year. This indicates that competition for 

standing room with dairy is still prevalent. 

 

6.37 million head. This was an increase of 3.2 per 

 

The increase was largely driven by further expansion 

 

Canterbury and a smaller than expected off-take of 

dairy cull cows particularly in the North Island which 

contains 64 per cent of the dairy herd. An estimated 

120 new dairy farms started in the spring of 2012. 

Table 6 

Livestock Numbers 



See also Beef + Lamb New Zealand Economic 

 

publication number P12030. 


Wool Exports 

Table 7 


New Zealand Wool Services International Ltd 


Wool export receipts for 2012-13 decrease 17.1 

per cent on the previous year to $644 million. 

This decrease is dominated by a 21.1 per cent 

decrease in the per kg FOB wool price, which is 

partly offset by wool export volumes increasing 5.0 

per cent to 111,600 tonnes clean. 

Demand for wool from China remains positive 

and is underwritten by demand for luxury woollen 

carpets. 

Wool export receipts for the previous year to 30 

June 2012 totalled $777 million, 8.6 per cent up 

on the previous year. The increase was driven by 

a 16.6 per cent increase in the per kg FOB price 

 

back of tight global supplies. 

Wool export volumes to China increased 11.2 per 

cent for the year June 2012. China took 50 per 

cent of wool exports, 70 per cent of this was strong 

wool largely used in carpets. 

Wool exports to the European Union decreased 

12.4 per cent for the year to 30 June 2012 

 

with building construction and home renovation 

activity at a low level. 

China and the European Union combined took 79 

per cent of clean wool exports on a tonnage basis 

for the year to 30 June 2012. 

Wool Prices 

Table 8 


New Zealand Wool Services International Ltd 

The price outlook for 2012-13 is for decreases 

across all wool types, with strong wool showing the 

greatest decrease of 27.4 per cent. 

Commodity prices for 2012-13 are unlikely to 

increase at the same pace of the past decade 

according to the International Monetary Fund 

(IMF). A slow-down in demand and improved 

supply prospects contribute to this with increased 

investment spurred on by recent high prices. 

It’s of interest to also note that in this economic 

environment that ABARES 1 forecast the Cotton A 

Price Index to decrease 16.7 per cent in USD terms. 

2 from August 2011 

to August 2012 decreased 16.8 per cent. Within this 

the West Europe Index decreased 21.1 per cent. 

1 Australian Bureau of Agricultural and Resource Economics 

and Sciences (ABARES) 

2 


Wool 

Production 

Table 9 



Total wool production for 2012-13 estimated at 

172,600 tonnes greasy is up 5.0 per cent on 2011-12. 

Shorn wool production per head increases 2.3 per 

 

the 2012-13 wool production year. In addition total 

sheep numbers are up 2.6 per cent. 

Slipe wool production increases 5.6 per cent from a 

higher slaughter of lamb and mutton than last year. 


Lamb Exports 

Figure 4 


 

 

were down 3.5 per cent to 253,900 tonnes on the 

previous year. Within this the EU accounted for 42.8 

per cent of New Zealand lamb export volumes. This 

was a 15.1 per cent decrease on the previous year 

and shipments were split 20 per cent to the UK and 

23 per cent to the rest of the EU. Chilled lamb made 

 

 

The EU made up 54.5 per cent of the value of NZ 

lamb exports, a decrease of 11.1 per cent on the 

previous year. 

Chilled lamb tonnage shipped to the EU decreased 

 

 

EU accounted for 71.5 per cent of chilled lamb 

shipments with 42 per cent shipped to the UK and 

30 per cent to the rest of EU. North America was the 

next largest chilled market taking 14 per cent. 

The overall EU price per tonne increased 4.7 per 

 

increasing 1.5 per cent, and chilled prices increasing 

7.8 per cent. However, it is important to note lamb 

 

quarter were at their lowest price per tonne since 

September 2010. 

North Asia, which includes China, was the next 

largest market taking 24.1 per cent of lamb 

 

per cent and North America with 10.0 per cent of 

shipments. 

Shipments to North Asia were up 20.5 per cent (+ 

10,400 tonnes) and 24.5 per cent (+5,600 tonnes) 

 

 

overall reduced supply of NZ lamb (-3.5%) plus slow 

economic growth in North America. 

North America generated more than 2.6 times the 

 

East due to the high value product mix that includes 

chilled lamb that made up 33 per cent of all lamb 

shipped for the region. Chilled lamb shipments to 

 

cent of their product mix. 

Lamb shipments to all North American countries were 

down. US shipments were down 17.4 per cent (-3,100 

tonnes), Canada 8.5 per cent (-800 tonnes) and 

 

Within North Asia, China accounted for almost 80 per 

cent of lamb shipments to this region with the volumes 

 

the price per tonne of lamb shipped to China was 

 

product mix of lamb shipped. 

Table 10 



For the year ended 30 September 2012, lamb export 

receipts provisionally decrease 7.1 per cent to $2.64 

billion on the previous year. 

The export price per tonne for lamb decreases 7.3 

per cent on the previous year which more than 

offsets the 1.8 per cent increase in the volume of 

lamb shipped. 

 

increased 37 per cent compared with the same 9 

 

For 2012-13 total lamb FOB receipts under the USD 

0.80 exchange rate scenario totals $2.4 billion, a 

decrease of 8.7 per cent on the previous year’s 

provisional result. While the lamb meat tonnage 

shipped is up 4.1 per cent this is largely offset by a 

12.4 per cent decrease in the price per tonne. The 

 

NZD, especially against the Euro and in-market prices 

easing back from their record high level. 

 

expectations of a larger lamb crop compared 

 

conditions for 2012. 

For 2012-13, co-product receipts are estimated to 

decrease 8.7 per cent. 


Lamb – International 

Situation 

 

As China and US economy slow, and as Europe 

buckles under austerity, the outlook for global 

 

downgraded for 2012-13 and the risks of more serious 

downturn remain substantial. 

The above coupled with a continuing strong NZD 

scenario for 2012-13 is expected to moderate export 

 

from Australia and New Zealand further moderate 

prices from their recent high level. 

 

 

linked to growing middle class wealth which along 

with urbanisation adds demand for lamb meat as a 

protein source. 

The US market for lamb is expected to be similar to 

 

Australia 

In its latest forecast, the Australian Bureau of 

Agricultural and Resource Economics and Sciences 

(ABARES) reports that their 2012-13 lamb slaughter 

is forecast to increase (4.5%) to 19.6 million head. 

In 2010-11 responding to the improved seasonal 

 

leading to an estimated 9 per cent rise in ewe 

 

forecast to increase by 8.4 per cent to just over 35 

million head in 2012-13, the highest lamb marking 

since 2004-05. 

The sheep slaughter is forecast to increase 6.4 million 

head in 2012-13, an increase of 23.6 per cent from 

an estimated recent low 5.2 million head in 2011-12. 

Australia lamb export volumes are forecast to 

increase by 4.7 per cent to 180,000 tonnes in 2012-13, 

following an estimated lift of 9.9 per cent in 2011-12. 

The increase in 2011-12 saw higher export volumes to 

 

China. 

Lamb exports to US are forecast to rise by 11.8 per 

cent due to a decline in domestic production, 

 

in recent years. The Australian sheep slaughter is 

 

producers increase sheep turn-off. The volume of 

mutton exports is forecast to be around 106,000 

tonnes a rise of 20.5 per cent from an estimated 

88,000 tonnes in 2011-12. 

© Beef + Lamb New Zealand Economic Service | New Season Outlook 2012-13 | P12022| PAGE 12 

EU 

 

 

Spain (-8%). Nevertheless, EU sheepmeat production 

is expected to remain stable in 2012 and then to 

decline by 1.5 per cent in 2013. 

Although the situation in the sheep sector might look 

precarious due to drought in the Iberian Peninsula, 

high feed costs and weak demand, producer prices 

are expected to remain at high levels. 

Consumption is projected to decline by around 1 per 

cent in 2012 and for 2013. 

The situation is a bit different in the UK where 

production in the sheep sector is forecast to increase 

on 2012 and 2013 as a consequence of increased 

 

and heavier carcase weights. 

The strong performance of UK sheep meat export is 

also set to continue helped by increased domestic 

production. Imports are expected to continue fall 7.7 

per cent for 2012, with some stabilisation expected in 

2013 according to EBLEX 1 . 

UK production of sheepmeat is expected to 

increase 2.0 per cent to 300,000 tonnes in 2013, with 

consumption remaining the same as 2012 (282,900 

tonnes). 

Other Markets 

With pressure likely to remain on New Zealand’s 

traditional sheepmeat export markets (Europe 

and North America) it increases the importance of 

emerging markets such as China, and will renew 

 

destination. Within this expected shift, it is anticipated 

that New Zealand will face more competition from 

Australian products. 

1 English Beef and Lamb Executive industry organisation.

Lamb Price – Farm Gate 

Figure 5 


Lamb 

Figure 5 shows the monthly trend for the All Grades 

 

weighted average season price depicted by the 

 

The outlook for 2012-13 is given for three exchange 

rate scenarios because of the exchange rate 

volatility. The three scenarios use annual average 

exchange rates of USD 0.70 (low), 0.80(mid) and 0.90 

(high) and their associated cross rates against the 

GBP and EUR. 

An average lamb weight of 18.3 kg is expected in 

2012-13 if ‘normal’ climatic conditions prevail. 

At the mid exchange rate of USD 0.80, the per 

head lamb price at $95.00 is down 16 per cent on 

the 2011-12 provisional lamb price of $113.50 per 

head. The 2010-11 per head season average price 

at $117.64 per head holds a 53-year record as the 

highest price in nominal and real terms. 

The three exchange rate scenarios shown in Table 11 

highlight the leveraged effect of the exchange rate 

on the New Zealand export lamb price to farmers. 

Table 11 

Exchange Rate 

USD 0.70 $112 

GBP 0.45 

EUR 0.54 

 

USD 0.80 $95 

GBP 0.51 

EUR 0.63 

 

USD 0.90 $83 

GBP 0.57 

EUR 0.71 

© Beef + Lamb New Zealand Economic Service | New Season Outlook 2012-13 | P12022| PAGE 13 

High 

Mid 

 

If the high scenario NZD exchange rate at USD 0.90 

prevails for 2012-13 then the per head lamb price 

estimate falls to $83.00. Alternatively if the exchange 

rate scenario falls to USD 0.70 then the per head 

lamb price would lift to $112.00. 

Procurement pressure for lamb is expected to remain 

strong in 2012-13 despite the 6.4 per cent expected 

recovery in lamb supply. Even then this will be the 

third lowest export lamb slaughter since the turn of 

the century with only 2010-11 and 2011-12 lower. 

Mutton 

At the mid exchange rate of USD 0.80 the estimated 

per head mutton price for 2012-13 decreases 18 

per cent to $76.50. Provisionally, season average 

mutton prices reached a record $93.00 for 2011- 

12 largely from strong procurement pressure within 

 

of $115.85 per head in November 2011 to around

Lamb Production 

Table 12 



 

Lamb 2012-13e 

The estimate for the year to 30 September 2013 is for 

the export lamb slaughter to increase 6.1 per cent to 

20.4 million. From the scanning results, expectations 

are that the lamb crop will be ahead of last year by 

 

performance measured by lambing per centage 

to 122.0 per cent which is near to the record of 

123.2 per cent achieved in 2009-10. Depending on 

spring conditions there is potential to exceed this 

performance level. Each 1 percentage point change 

in lambing percentage equates to 205,000 lambs. 

Export lamb production on a carcase weight basis 

for 2012-13 lifts on last season 4.1 per cent to 372,200 

tonnes. With the slaughter up 6.1 per cent the offset 

is expected lower average carcase weights (-1.9%). 

 

crop and the expectation of a “normal” season to 

grow prime lambs. Even then lamb carcase weights 

at 18.27 kilograms will be the second highest on 

record, only 2011-12 was higher provisionally at 18.62 

kilograms. 

Mutton 2012-13e 

The export sheep slaughter estimated for the meat 

export year ending 30 September 2013 increases 

by 0.4 million to 3.79 million (+11.7%) on the previous 

export year. 

 

Lamb 2011-12p 

The 2011 spring lamb crop was up 1.7 per cent 

on the previous spring because of good weather 

during peak lambing. A return to normal weather 

conditions during peak lambing (despite a brief 

snow event in mid August) was the main reason 

for this increase in lamb numbers compared with 

 

South Island experienced mild weather during 

lambing except in Southland where conditions 

were persistently wet and cold. 

The export lamb slaughter for 2011-12 is 

provisionally almost unchanged (-0.3%) on the 

previous year at 19.2 million head. This will be 

the second year in a row the lowest export lamb 

slaughter in 51 years. Provisionally, North Island 

export lamb slaughter increases 1.4 per cent while 

the South Island decreases 1.6 per cent. 

At the time of going to print the latest data for 

the export lamb slaughter for the 11 month period 

to the end of August 2012 was 18.2 million. The 

export lamb slaughter for the month of September 

2012 is likely to be in the range of 0.7 to 0.8 million. 

This indicates that the provisional 2011-12 export 

lamb slaughter of 19.2 million could be overstated 

 

of September and the September-ending year is 

awaited with interest. 

Mutton 2011-12p 

The adult sheep slaughter provisionally at 3.4 

million for 2011-12 was down 22.7 per cent on the 

previous year. Provisionally this is the lowest export 

mutton slaughter in 46 years. 

This follows the 4.39 million head slaughter of 

2010-11 which was up 19.8 per cent on the 

previous year. This high 2010-11 mutton kill 

was partly driven by strong mutton prices that 

encouraged a higher than normal cull of poor 

performing ewes. 


Beef & Veal Exports 

Figure 6 



North America accounted for 51 per cent and 

47 per cent of beef export volume and value 

 

to this market are dominated by processing beef. 

North Asia, the next largest market accounted for 

26 per cent of both beef export volume and value 

 

 

Korea (8%), Taiwan (6%) and Hong Kong (2%). 

Shipments to this region include a larger component 

of high-value beef compared with beef shipments to 

North America. 

South Asia export volumes decreased (-3.3%) to 

 

volumes to Indonesia accounting for much of 

this decrease (-21.8%). This follows the Indonesian 

government reducing its boxed beef import quota 

from over 90,000 tonnes for 2011 to 34,000 tonnes 

 

local beef production by 2014. 

Beef export volumes to the EU decreased (-7.4%) 

 

contributed 3.5 per cent and 7.0 per cent to beef 

export volumes and values. The EU is a market for 

high value beef. 

Table 13 



For 2012-13, FOB receipts for NZ beef (including 

co-products) under the USD 0.80 exchange rate 

scenario increase 7.5 per cent to an estimated $2.64 

billion. Increased export volumes (+4.9%) and a lift 

in price per tonne (+2.4%) contribute to this increase 

despite the exchange rate expected to remain 

strong and similar to last year against the US dollar. 

Co-product export receipts increase 7.5 per cent to 

an estimated $502 million for 2012-13. 

Provisionally, for 2011-12, FOB receipts for NZ beef 

(including co-products) decreased 3.6 per cent to 

$2.46 billion. This was due to a 3.7 per cent decrease 

in export volumes to 343,000 tonnes. This decrease 

largely came from a low dairy cull cow slaughter 

due to a favourable year and a carry-over of older 

cows into the 2012-13. With fewer cull cows than the 

previous year in the slaughter plus a good pastoral 

season, average export cattle slaughter weights 

lifted (+4.1%) compared with the previous year. 

Hides made up 53 per cent of co-product export 

 


Beef Price 

– International Situation 

Figure 7 


Figure 7 shows the US beef price quotation for 

 

the same price converted to NZD by month from 

 

In 2011-12, the annual average in-market US beef 

price increased 7.7 per cent compared with the 

previous year while the same price in NZD increased 

6.2 per cent. This difference was driven by the 

slightly stronger on average USD (+1.6%) to the NZD 

compared with the previous year. 

The NZD:USD exchange rate averaged 0.81 cents in 

2011-12 compared with an average of 0.79 cents for 

the previous year. 

In 2012-13 US in-market prices are expected to 

remain at a high level relative to recent years. 

 

Following more than two years of strong growth, 

commodity prices peaked in early 2011 and then 

declined on the concerns of the global economy 

and slowing demand in emerging markets, 

especially China. 

The recovery in prices in 2010-11 was due to 

strong economic growth in China and India plus 

a number of supply constraints. Adverse weather 

conditions, including drought and heavy rains that 

affected most agricultural markets pushed prices to 

annual highs. 

United States 

 

years, according to the US Department of Agriculture, 

due to a drought in more than half of US that has 

forced ranchers to cull hundreds of thousands of 

cattle. 

All cattle and calves in the United States as at 1 

 

 

lowest mid-winter inventory since 1952. 

 

has had a big impact on expected production and 

prices of corn in the US while domestic cattle prices 

have begun to drift lower. 

The US became a net beef exporter in 2011 though 

imports were up 20 per cent in the 6 months to 

 

Imports are forecast to rise a further 16 per cent in 

2013, while beef exports, primarily of items not used 

in human consumption in the US are expected to rise 

about 10 per cent. 

Australia 

ABARES reports the Australian cattle slaughter is 

forecast to increase by 2.0 per cent to 8.1 million 

head in 2012-13 and will underpin a forecast 3.0 per 

cent increase in beef production to 2.2 million tonnes. 

Average carcass weights in 2012-13 are expected to 

remain close to the record highs achieved in 2011-12. 

Total Australian beef exports are forecast to increase 

by 2.0 per cent in 2012-13 to 970,000 tonnes with 

shipments to the US forecast to rise 7.3 per cent while 

 

3.1 per cent and 2.4 per cent respectively. 

North Asia 

 

its recovery in 2013 with increased US beef imports 

facilitating a forecast rise in consumption. 

High feed costs and subdued carcase prices, 

combined with food safety concerns, continue 

 

numbers falling 1.6 per cent year-on-year, to 4.13 

 

The sustained tough trading conditions in the 

 

numbers to 65,200 as at 1 February 2012, down six per 

cent year-on-year. 


European Union 

The EU cattle herd has been decreasing on average 

1.1 per cent per year since 2008 and this trend is 

expected to continue in the near future. 

Beef Prices – Farm Gate 

Figure 8 


Figure 9 


EU beef production is forecast to decrease 3.5 per 

cent in 2012 and then remain almost unchanged 

in 2013 (+0.1%). Tight supply and increased prices 

are expected to soften beef consumption in the EU 

over the next two years. 

 

and P Steer and Heifer (270-295kg) schedule price to 

 

Three exchange rate scenarios are used in the 

outlook for 2012-13 because of the exchange rate 

volatility in recent years. The three scenarios use 

annual average exchange rates of USD 0.70, 0.80 

and 0.90 and the associated cross rates against the 

GBP and EUR. At USD 0.80, the estimated average 

price for Bull is 417 cents per kilogram (+2.5%) and for 

Steer and Heifer 425 cents per kilogram (+2.5%). 

The three exchange rate scenarios shown in the 

charts highlight the comparison with last year’s prices 

and the changes in the leveraged effect the USD 

has on the New Zealand beef price to farmers, i.e. 

moving from USD 0.80 to USD 0.70 (-12.5%) increases 

the beef price 11.2 per cent. 

The majority of New Zealand beef exports are traded 

in USD. In 2011-12 the average exchange rate was 

USD 0.81 against the NZD. 


Table 14 


 

Cattle Overall 

The outlook for 2012-13 is for a 7.8 per cent increase 

in export slaughter numbers to 2.27 million head. 

This comes from increased cow and heifer slaughter 

numbers, up 14.9 and 11.8 per cent respectively, 

linked to the carry-over of cull dairy cattle from the 

previous year. 

Export slaughter numbers for 2011-12 decreased 

(-7.5%) to 2.11 million. This was due to declines in cull 

cow (-14.3%) and heifer (-7.5%) slaughter compared 

with 2010-11. The decline was due to an excellent 

season and a higher rate of cows and heifers in-calf 

than in most years, particularly in the North Island. 

Table 15 


 

Cattle Weights 

For 2012-13, cattle carcase weights are forecast to 

decrease 2.6 per cent to 254.5 kilograms per head 

with decreases for all classes of cattle. 

Last season was exceptionally good allowing high 

carcase weights and a lower cull cow slaughter 

which helped lift the overall average carcase weight 

to 261.4 kilograms (+4.1%). Slaughter weights for 

2011-12 were up for all classes of cattle. 

Steer 

The 2012-13 steer slaughter numbers are estimated to 

increase (+1.0%) to 0.559 million head. This increase 

 

2010-11 (+2.0%) followed by an increase in beef 

weaners on hand from the previous year (+7.6%). 

The 2011-12 steer slaughter numbers decreased 4.1 

per cent to 0.554 million head. Contributing to this 

decline was the earlier decline in beef breeding 

 

decreased -11.4 per cent following consecutive 

years of drought in some North Island regions. 

Heifer 

For 2012-13 heifer slaughter numbers increase an 

estimated 11.8 per cent to 0.423 million. This largely 

 

cull heifers from the expanding dairy herd. 

In 2011-12 the heifer slaughter decreased (-7.5%) to 

0.379 million head. 

 

In 2012-13 the cow slaughter is estimated to increase 

14.9 per cent to 0.843 million head largely from the 

expanding dairy herd and carry-over of cull cows 

from the previous year. 

The 2011-12 cow slaughter decreased 14.3 per cent 

to 0.734 million head. This was largely due to good 

climate which resulted in more in-calf cows being 

carried over in the milking herd for another season, 

particularly in the North Island which contains 65 per 

cent of the milking herd. 

© Beef + Lamb New Zealand Economic Service | New Season Outlook 2012-13 | P12022| PAGE 18 

Bull 

For 2012-13 export bull slaughter remains almost static 

(+0.9%) at 0.443 million compared with 2011-12. 

The 2011-12 bull slaughter lifted (+1.3%) compared 

 

reasonable returns for beef this season, continued 

dairy herd expansion, and a 4.0 per centage point lift 

in the dairy calving per centage for 2010-11 on the 

previous year.

Figure 10 

Source: NIWA 

Autumn 2012 - Dry and record sunny 

over South Island. 

Temperature: North and eastern parts of the South 

Island have had below average temperatures 

including most North Island areas south of Taupo. 

Rainfall: Northland, Hawke’s Bay and south 

Wairarapa coast with above normal rainfall, while 

 

South Island. 

Sunshine: The South Island and western regions of 

the North Island recorded record sunshine, with 

more normal levels for Northland and the east 

coast of the North Island. 

Outlook August to October 2012 - 

On the brink of El Nino. 

Air temperatures expected to be near and above 

average for early spring across all regions. Rainfall 

likely to be at or above average for north of the 

North Island, and below normal for eastern parts of 

the South Island. 

 

to be at or above normal in far north regions, but 

below normal for eastern parts of the South Island. 

Indications are for El Nino to develop during early 

spring. El Nino is typically associated with stronger 

than normal west and south west winds. However, 

weaker westerly winds are expected for the early 

spring period. 


Table 16 

Source: Beef + Lamb New Zealand Economic Service, Sheep and Beef Farm Survey 


Revenue 

Total gross farm revenue for 2012-13 under an 

exchange rate scenario of USD 0.80 is estimated 

to decrease 10.9 per cent on the previous year for 

the All Classes average Sheep and Beef Farm. 

This is primarily driven by decreased revenue 

from sheep and wool accounts. Wool revenue 

decreases 23.7 per cent to $41,900 driven by a 25.1 

per cent decrease in wool price while the volume 

of shorn wool sold per farm increases slightly to 

provide a small offset to the lower price. 

Sheep revenue decreases 15.6 per cent due to 

lower prime lamb prices (-16.3%) and lower export 

mutton prices (-17.7%). The improved lamb crop 

expected this spring compared with last spring 

provides some offset to these price decreases from 

increased prime lamb sales (+4.8%). 

Cattle revenue remains almost static at $95,100 

(-0.6%) for 2012-13. While prime steer and heifer 

prices per kilogram are estimated to increase 2.5 

per cent on 2011-12, cattle weights are expected 

to be slightly lower from a more “normal” season. 

This leaves beef cattle revenue almost static. 

Cash cropping revenue decreases an estimated 

7.9 per cent to $45,700 for 2012-13 compared 

with the previous year which was up 18.5 per cent 

on 2010-11. This is due to decreases in both cash 

cropping area and per hectare production. 

 

per cent to $23,000 due to a 6.3 per cent increase 

 

 

An estimated 120 new dairy conversions took 

 

are estimated to make up 13.5 per cent of total 

cattle numbers on sheep and beef farms, and 

contribute 5.2 per cent to gross farm revenue for 

2012-13. 

In aggregate Sheep and Beef Farm revenue at 

the farm-gate for 2012-13 is expected to total an 

estimated $5.42 billion, down 11.7 per cent on the 

previous year. Gross farm revenue is spent buying 

on-farm goods and services, taxation, and then 

any debt reduction and personal living. 

Expenditure 

Total Expenditure is estimated to decrease 1.2 per 

cent for 2012-13 to $341,600 per farm. 

 

expenditure on interest decreasing 6.7 per cent. 

This decrease comes from lower interest rates 

and some retirement of debt built up during low 

income years. Interest payments make up 11.9 per 

cent of total expenditure. 

Fertiliser, and repairs & maintenance expenditure 

decrease 2.4 per cent and 8.7 per cent 

respectively for 2012-13. While fertiliser expenditure 

decreases from reduced tonnage, decreased 

expenditure in both areas follows two years of 

reasonable incomes that enable some catch up 

on deferred spending in these areas. 

Other farm expenditure increases 1.4 per 

cent. Within this, fuel increases 4.1 per cent, 

 

 

expenditure was high due to an exceptionally 

good season. This resulted in a high expenditure 

conserving surplus pasture into hay and silage. 

Prices paid for on-farm goods and services 

increase an estimated 2.2 per cent for 2012-13 

and is similar to the previous year’s 2.4 per cent 

increase. With prices paid for on-farm goods and 

services up 2.2 per cent and expenditure down 

1.2 per cent, this implies the overall volume of farm 

inputs purchased is down 3.3 per cent for 2012-13 

compared with 2011-12. 


Figure 11 


Sheep and Beef Farm Survey 

Three scenarios in nominal dollars are shown to the 

left at different exchange rates for 2012-13. 

1. At the “estimated” exchange rate (USD 0.80) 

 

 

 

 

 

$77,400 per farm (-35.1%). 

2. In the lower exchange rate scenario (USD 0.70) 

 

cent up on 2011-12. 

3. If the exchange rate is high throughout 2012-13 

 

a 68.2 per cent decrease on 2011-12. In this 

 

driven by a 12.5 per cent decrease in gross farm 

revenue. In addition a large component of farm 

 

 

 

adjusted short term reductions in expenditure 

have been fertiliser and repairs & maintenance. 


Table 17 

Source: Beef + Lamb New Zealand Economic Service, Sheep and Beef Farm Survey 

North Island Summary 

Under the USD 0.80 scenario, North Island Sheep 

 

decreases 30.5 per cent to $81,200 per farm. This 

 

and total expenditure softening 1.9 per cent on 


This outlook is underpinned by commodity prices 

softening for 2012-13 which is slightly compensated 

by an estimated lift in production compared with 


 

results for the 2012-13 season compared with the 

 

favourable climatic conditions at tupping for most 

regions. 

Sheep and wool accounts make up 59 per cent 

and 30 per cent respectively of gross farm revenue 

for North Island Sheep and Beef Farms. 

 

73 per cent of the beef herd and 64 per cent of 

the dairy herd. 

South Island Summary 

Under the USD 0.80 scenario, South Island Sheep 

 

decreases 36.5 per cent to $114,500 per farm. 

 

with expenditure remaining almost static (-0.4%) 

compared with the previous year. 

 

to $180,200 for 2011-12. This was underpinned by 

price and volume effects contributing to total gross 

revenue particularly for those businesses which 

were able to capitalise on strong prices early in the 

season. 

For 2011-12 early signs of drought in parts of 

Southland saw large numbers of store lambs head 

 

dairy industry continues, particularly within the 

 

been continued decline in sheep and beef cattle 

due to land use change. 

 

27 per cent of the beef herd and 36 per cent of 

the dairy herd. 


Northland-Waikato-Bay of Plenty 

Gross farm revenue for 2012-13 decreases 7.7 per 

cent to $310,100. This is driven a decrease in the 

sheep account from lower prices for lamb and 

mutton, offset partly by an expected lift in lambs 

born, assuming normal climatic conditions, and 

higher lamb sales numbers than last year. 

Sheep revenue is estimated to decrease 12.8 per 

cent to $123,200 (-$18,100) for 2012-13 compared 

with the previous year. The sheep account 

contributes 40 per cent of gross farm revenue for 

this region. 

Cattle revenue remains almost static at $112,700 

(-0.4%) on the previous year due to a decrease in 

the average sale price of cattle in this region which 

offsets a 3.1 per cent lift in the number of cattle 

traded. The cattle account contributes 36 per cent 

to gross farm revenue. 

Normal weather conditions at lambing this spring 

coupled with good ewe condition at tupping and 

a lift in scanning per centage on last year indicate 

an increase in lambing per centage for 2012-13 on 

2011-12. There has also been an increase in ewe 

hoggets mated, with early hogget scanning results 

also up on the previous year. 

Total farm expenditure for 2012-13 is estimated to 

decrease 2.3 per cent to $241,300. Expenditure 

on fertiliser, repairs & maintenance, and interest 

decrease 7.6 per cent, 8.4 per cent, and 8.1 per 

cent respectively. Fertiliser tonnage for 2011-12 is 

estimated to decrease 10.1 per cent to 75.5 tonnes 

per farm following a 13.4 per cent increase to 84.0 

tonnes for 2011-12. Interest expenditure decreases 

from lower average term interest rates and some 

debt reduction. 

 

$68,800 for 2012-13 compared with the previous 

year. Sheep and beef farms in the region average 

3,300 stock units and 346 effective hectares at the 

start of 2012-13. Stock units wintered per farm at 1 

 

East Coast 

Gross farm revenue decreases 8.7 per cent to 

$418,000 for 2012-13. Sheep revenue decreases 

11.7 per cent to $231,800 from lower lamb prices 

buffered slightly by a lift in production. Cattle 

revenue increases 2.9 per cent to $118,100 largely 

due to higher cattle prices linked to the age mix of 

sale cattle which offset slightly lower sales. 

The region’s lambing per centage is estimated to 

increase 4.0 per centage points on last spring to 

 

at tupping. There were also more ewe hoggets 

run with the ram in 2012, with lambs from hoggets 

expected to be up 34 per cent on last spring. 

Total farm expenditure for 2012-13 is expected 

to decrease 1.7 per cent. Fertiliser expenditure 

decreases 3.3 per cent and follows from the 

decrease in gross revenue. Interest expenditure 

decreases 10.9 per cent due to lower average term 

interest rates and some retirement of debt built up in 

previous years. 

 

year to $90,900 for 2012-13. 

Sheep and beef farms in the region averaged 4,900 

stock units and 578 effective hectares at the start of 

 

 

 

Gross farm revenue for the region decreases 15.5 

per cent to 381,000 for 2012-13. Sheep revenue 

decreases 17.3 per cent to $205,300 from a decrease 

in prime and store lamb prices with a small offset 

from increased sale numbers than last year. Cattle 

revenue decreases 11.4 per cent on last year to 

$96,500. 

 

gross farm revenue but is estimated to be down 5.6 

per cent on 2011-12. This is due to a decrease in dairy 

 

dairy support land being sold to dairying. 

The region’s ewe lambing per centage is estimated 

to increase 2.0 per centage points on last spring to 

 

mating following good climatic conditions. 

Total farm expenditure decreases to $296,000 (-1.6%) 

for 2012-13. Expenditure on fertiliser and repairs & 

maintenance decreases 15.4 per cent and 1.9 per 

cent respectively from the expected decrease in 

gross farm revenue for 2012-13. Interest expenditure 

decreases 4.0 per cent due to lower average term 

interest rates and some retirement of debt. 

 

for 2012-13 compared with the previous year. Sheep 

and beef farms in the region average 4,600 stock 

units and 501 effective hectares at the start of 

 

 


Marlborough-Canterbury 


cent to $592,600 on the previous year. This decrease 

largely comes from sheep and cropping. Sheep 

(including wool) and crop contribute 42 per cent 

and 26 per cent respectively to gross farm revenue 

for sheep and beef farms in this region. 

Sheep revenue decreases to $198,100 (-16.2%) for 

2012-13. Prime lamb and hogget price decreases 

contribute this while a lift from last season’s lambs 

 

soften the decrease. 

Cattle revenue increases 1.5 per cent to $99,500 on 

last year for 2012-13 due to stronger sale prices per 

head which offsets to some extent increased cattle 

purchase numbers, particularly in weaner bulls. 

The region’s lambing per centage is estimated to 

reach 128 per cent, indicated by high scanning 

results and excellent ewe condition. Excellent 

hogget growth rates have driven up hogget mating 

from 21 per cent last year to an estimated 36 per 

cent of ewe hoggets this year. 

On farm expenditure is estimated to increase to 

$499,300 (+0.8%) for 2012-13. Fertiliser expenditure 

increases 3.6 per cent due to price increases while 

the fertiliser tonnage remains unchanged on the 

previous year. Lower interest rates on term debt are 

expected to decrease interest expenditure 9.4 per 

cent on the previous year. 

 

for 2012-13. 

Sheep and beef farms in the region average 4,000 

stock units and 935 effective hectares. Stock units 

 

 

Note extensive High Country farms and Foot Hill 

 

the region. Class 6 South Island Finishing-Breeding 

farms in this region average 415 hectares while High 

Country runs average 10,460 hectares. 

Otago-Southland 


cent to $424,400 compared with 2011-12. Sheep 

revenue decreases 18.0 per cent from lower prime 

 

Revenue from sheep and wool contributes 77 per 

cent of gross farm revenue for farms in this region. 

Cattle revenue decreases 1.7 per cent on last year 

to $46,900. This decrease is due the combined 

effect of a lift in purchases and a slight decrease 

 

comparatively better prospects for beef. 

The lambing per centage is estimated to increase 

2.3 per centage points on last year to 131 per 

cent for the region. Ewe condition in traditionally 

drier parts of Otago is excellent, and Southland is 

equivalent to last year. Lambing was affected by 

adverse weather during the previous two seasons. 

Expectations and hope is for more benign weather 

conditions this lambing. 

Total farm expenditure decreases 3.0 per cent 

on last year to $291,700 for 2012-13. Fertiliser 

expenditure remains almost static. Higher on 

ground prices results in a slight decrease (-2.2%) 

in tonnage. Interest expenditure is estimated to 

decrease 7.6 per cent due to lower term interest 

rates and continued retirement of debt built up in 

recent years. 

 

last year to $132,700 for 2012-13. 

Sheep and beef farms in the region average 4,000 

stock units and 757 effective hectares. Stock units 

 

 

 

 

in the region average 6,330 hectares whereas 

Intensive Finishing Breeding farms average 250 

hectares. 


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