New Year ProspectsSunday, Jan 6, 2002
There is mounting evidence that the welcome upturn in rural returns has peaked and may now be sliding
faster in the downward part of the commodity cycle much faster than farmers would wish.
Sure there will be lags in the speed with which the reduced prices arrive within the farm gate but it
does seem inevitable that there will be some decline in the major farm product prices this year.
An abundance of feed over virtually all the country has slowed the flow of stock for slaughter causing
the works to continue to offer premiums to attract some stock from farmers who are struggling to
keep excess feed under some control.
But what may be the situation in six to twelve weeks time?
The feed surplus if not managed will have become less suitable for fattening stock.
Unless the meat companies are hell bent on another non profit year the premiums will come off.
The current predictors of stable exchange rates are the same fellows who a predicted a sharp increase
12 months ago, an increase that did not materialise.
It is clear that meat and wool producers who will feel the early effects of a new cycle but the even
the dairy industry cannot be shielded from the effects of increased market restitutions by the northern
This being an election year in NZ it can be certain the politicians will be focussed on the welfare
consumers rather than producers as they play their re election games.
Not a good scenario relative to the excellence of past two years for farmers.