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New Zealand's sheep and beef farmers are set for a tough year, with the strength of the New Zealand dollar (NZD) set to erode gate receipts and profitability.
A report from industry body Meat & Wool New Zealand said on Tuesday that average sheep and beef farm profits before tax are expected to be NZ$37,400 in the year ending June 30, 2010, down from NZ$58,800 in 2008/09.
Rob Davison, economic service director at Meat & Wool New Zealand, said despite offshore prices for sheep and beef products remaining strong, the remarkable appreciation of the NZD over 2009 will wipe off a huge chunk of the profits.
"Unfortunately for the sheep and beef sector, the NZD strength has been against the U.S. dollar, the British pound and the euro, where the majority of New Zealand's beef and lamb are sold," said Davison.
He said the exchange rate factor could erode as much as NZ$700 million from meat and wool sector receipts.
Meat & Wool New Zealand said total sheep and beef export receipts are expected to be NZ$5.4 billion in 2009/10, down 12% from the preceding year. Lamb export volume is forecast to rise 3.4% with receipts falling 10%, while beef export volume is tipped to fall 4.2% with revenue falling as much as 18%.
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