13 Sep 2010

Exchange rate could hit meat producers in pocket

1:17 pm on 13 September 2010

Beef + Lamb New Zealand's economic service says the exchange rate could cost sheep and beef farmers tens of thousand of dollars in income if it stays at its current high level.

In its new-season oulook, the service is predicting a 1.6% drop in beef and lamb export returns for 2010-11.

That's mainly because of a forecast 3.5% drop in meat shipments to world markets over the next year.

The expectation is that lamb prices will hold but beef prices will lift, due to tighter global supply (the US cattle herd is at its smallest since 1949).

The service's executive director, Rob Davison, says, however, that how that translates back to farm income will be heavily influenced by the exchange rate - especially between November and June, when most of the beef and lamb produced on farms is sold.