Gold– a precious yellow metallic element, highly malleable and ductile, and not subject to oxidation or corrosion; an alloy of this; a quantity of gold coins; a monetary standard based on this metal; money; wealth; riches; something that is precious, beautiful, brilliant or superior; deep lustrous yellow or yellow-brown color; fiftieth event in a series or anniversary; the bull’s eye of a target, scoring nine points in archery; the ultimate goal, target or reward; medal for first place.
8/10 in the NBR’s Biz Quiz (I think the questions about the rich list and fibre were in alst week’s too).
Sheep and beef cattle numbers increased by 2.6% and 1% respectively in the year to the end of June.
Beef + Lamb New Zealand Economic Service director Rob Davison says this compensated for the 4.4 per cent decline in sheep and 2.6 per cent decline in beef cattle the previous year.
B+LNZ’s annual stock number survey, which establishes the productive base of livestock for 2012-13, shows that while sheep numbers were up 2.6 per cent most of this increase will be stock carried over for slaughter in July-September.
“Breeding ewe numbers at 20.61 million are almost static (+0.6%) on the previous June when ewe numbers fell 6.0% per cent to a low of 20.49 million. Strong mutton prices earlier in the year encouraged a high slaughter of cull ewes for the second year in a row. The offset to this was a high retention of ewe hoggets (+10%) last July which by 30 June 2012 were mature first time in lamb ewes.
“Ewe condition is good across the country. Scanning results for most regions show in-lamb ewes are carrying more multiple lambs with the general comment that scanning percentages are up 5 to 10 per cent on last year.
“All we need now is an excellent spring to ensure high survival of the lambs born.”
Davison said the scanning results lead to expectations that the 2012 lamb crop could be up on last spring by 1.0 million lambs (+4%). This outcome would lift the ewe flock performance measured by lambing percentage to around the highest achieved, which in 2009-10 was 123 per cent. There is potential to exceed this performance level. Each 1 percentage point change in lambing percentage equates to 200,000 lambs.
Beef cattle numbers increased 1.0 per cent to 3.88 million and partly reversed the 2.6 per cent decline for the previous year. North Island beef cattle numbers increased 3.6 per cent with increases in both the beef cow herd and weaner cattle numbers.
The South Island beef herd in contrast decreased 5.7 per cent. This decrease came from earlier slaughter due to good seasonal conditions so that fewer cattle were on hand at 30 June 2012, coupled to pressure from alternative land uses that include dairy grazing.
Davison says the Economic Service estimates the dairy herd increased 3.2 per cent with part of this increase a carry-over of older cows in the North Island due to excellent growing conditions.
Numbers might be holding but demand might not a report from Rabobank says:
While New Zealand sheepmeat producers have been enjoying a ‘full cup’ in recent times – with strong farmgate returns – a ‘steady hand’ will be required to balance future production levels with demand uncertainty across European markets, Rabobank reports.
In its recently-released report Sheepmeat – full cup, steady hand, the global agribusiness banking specialist says the New Zealand sheepmeat sector has been enjoying strong farmgate returns in the past two seasons as a result of retail price increases and limited supply availability.
However, the report cautions, a ‘steady hand’ will be required to manage the sector’s immediate future due to demand uncertainty across European markets as consumers feel the pressure of rising food costs against wage stagnation.
Report co-author Rabobank senior analyst Hayley Moynihan says global sheepmeat supplies are forecast to increase from 2013, off a low production base, although this volume growth is expected to be modest and availability will not fully recover 2010 levels until 2015.
“While sheepmeat demand has softened in developed markets, we expect retail prices will normalise at new levels – typically 10 per cent higher than the three-year average for most regions,” she says.
“For New Zealand producers, a positive outlook will persist in export markets as the economic outlook improves and the market balance remains tipped in their favour.”
That confidence in the future is reassuring because prices dropped throughout last season and the wise are not budgeting on any increase in the coming one.
However, she cautions that problems in Europe pose challenges.
In real terms, Ms Moynihan says, the increased cost of living for the average EU consumer is likely to exceed any growth in income – at least for the next 12 to 24 months.
“Added to this, annual food price inflation is running at three per cent and has been above total inflation since November 2011,” she says.
“Meat price inflation has led the charge, averaging 4.5 per cent year-on-year, with eastern European countries experiencing increases as high as 10 per cent in 2011.
These factors can be expected to weigh heavily on sheepmeat demand and to limit growth prospects.”
When we were in England in June we visited several supermarkets. The least expensive lamb we saw was about 8 pound a kilo – and that was marked down to half price. It was sitting beside pork and chicken which were about half that price again.
We can’t compete with those alternative sources of protein on price, we have to compete on quality. But as the European economies stutter fewer people will be able to go for quality rather than price.
The economic outlook for developed economies is for a slow recovery through to the end of 2013, Ms Moynihan says.
“Consumers in these markets will have to contend with protracted low real wage growth, which will limit sheepmeat demand growth and the potential for extracting further value gains,” she says.
“Emerging markets will continue to grow, albeit slightly below the rate of previous years, and offer opportunities for sheepmeat demand growth.”
The Rabobank report says retail prices will also be influenced by continued strength of competing meat prices; the impact of lower beef production from the US and EU on global supplies; and the rising beef production costs from Brazil, China and Australia.
“These factors are likely to mean that retail price movements for lower-value cuts will continue to rise faster than high-end cuts. This will be particularly evident across emerging economies and consequently will only provide limited upward pressure on farmgate returns for exporters,” it says.
People in some emerging economies were demand for sheepmeat is growing have a preference for lower value cuts.
We visited a packing house in England where they had responded to tougher times by packaging meat for human consumption from cuts which in better times had been used for pet food.
Ms Moynihan says by 2015, sheepmeat production from key exporting regions is expected to lift by an additional 135,000 tonnes per annum, which would bring global export supply back to 2010 levels.
“With potential economic growth in Asia and the Middle East, continued pressure on flocks in continental Europe and economic recovery in the EU, a bust in prices is not likely,” she says.
“With the cup of farmgate returns for sheepmeat in Oceania above half full, a steady hand will be required to ensure production grows in line with global market requirements.”
The next season or two might be difficult but it is reassuring to see a brighter forecast for the medium term.
Finance Minister Bill English has welcomed Standard and Poors’ reaffirmation of New Zealand’s foreign currency AA rating with a stable outlook.
“This is welcome news and confirms New Zealand is heading in the right direction – and it is better placed than many other countries,” Finance Minister Bill English says.
“Standard & Poor’s notes that New Zealand has favourable prospects for sustained growth while there remains strong demand for agricultural exports.”
New Zealand is one of only nine countries with the highest possible Aaa rating and a stable outlook with Moody’s, and it has an AA rating with Fitch.
In its report today, Standard & Poor’s notes the Government is making progress in getting its own deficits and debt under control, and that it is on track for a modest fiscal surplus in the 2014/15 year.
“However, as the ratings agency points out, New Zealand’s high level of private sector external debt remains its largest vulnerability.
“The Government is aware of this longstanding problem and that is why it is focused on building a more productive and competitive economy based on more savings and productive investment.
“New Zealand’s household savings are positive for the first time since 2000 and household debt has fallen. However, private sector debt levels remain high and we will continue to encourage savings, business investment and growth through our economic programme,” Mr English says.
The turn around in private savings while small is significant given how long New Zealanders have been spending more than they’ve been saving.
People have got the message that was second-nature to my parents’ generation – too much debt is dangerous; if you can’t afford something you save for it until you can.
But personal debt is still far higher than is safe at any time let along now when the global economic situation is so uncertain.
More than 20 years ago then Finance Minister Ruth Richardson produced graphs which clearly showed that the tax take had increased after tax rates were reduced.
Higher economic growth might have had something to do with the higher tax take but lower rates were also a factor.
People decided the rates were fair and put their energies into making money rather than avoiding tax.
Now Treasury research shows that the higher tax rate imposed by Labour in 2001 resulted in a lower tax take from the wealthy:
Far from its intended purpose of increasing the contribution by wealthy people to the cost of running the government, the 2001 tax increase spurred the highest income earners to find ways of avoiding tax, the “Elasticity of Taxable Income in New Zealand” paper found.
Published on the Treasury website, the research paper tracks the proportion of income tax paid by different income bands between 1994 and 2008, and finds the top 10 percent of income earners had begun to pay an increasing share of total income tax in the years immediately preceding the tax rate increase and peaked at 38.9 percent at the time the tax rate increase was announced.
“However, following introduction of the 39 percent rate, it fell to 33.9 percent in 2001,” the report says. “Between 2001 and 2009, the share of taxable income obtained by the top decile fluctuated between 33.7 percent in 2008 and 34.6 percent in 2005.”
Treasury warned the results should be treated with caution, but that it showed “the elasticity of taxable income is substantially higher for the highest income groups”, meaning the higher the income bracket, the more capacity that group of earners has to manipulate declared income.
Adherents to politics of envy liked the higher tax rate on upper income earners, at least in theory. Accountants and lawyers who got a lot more work from people looking for ways to minimise their tax liability did too.
But the tax increase was motivated by politics and, just as its critics foretold, it didn’t work in practice – the higher rate resulted in a lower take.