Employment and unemployment up in December 1/4

February 5, 2009

Employment growth last year was concentrated in service industries, notably education, transport, storage and communications while fewer people were employed in agriculture, construction and manufacturing, government statistician Geoff Bascand says.

I’m surprised by the decrease in agriculture because the December quarter is a busy one on farms and the number of new dairy conversions last year would have created more jobs in that sector than were lost from sheep and beef farms which were converted. This is confirmed by the grapevine which is full of stories about the difficulty of finding staff.

Primary industries in Australia have also been struggling to recruit employees and a prawn fisherman we spoke to when we were there a couple of weeks ago said the announcement of 350 redundancies  at BHP’s Townsville refinery wasn’t all bad news because it might make it easier for farmers and fishermen who hadn’t been able to compete with mining when looking for workers.

The household labour survey showed the number of people unemployed in New Zealand reached 105,000 in the three months to December last year, the highest level since September 2002.

Unemployment rose by .4%, or 10,000 people, to 4.6% in the December quarter.

The number of people employed increased by 21,000 which was a .9% increase and the labour force participation rate increased by .6 percentage points to 69.3% .

On a related matter, Lindsay Mitchell compares unemployment benefits and superannuation in New Zealand and Australia.


Paying for hay because the sun shone too much

July 9, 2008

The price of hay  has tripled to up to $14 a bale in areas hardest hit by last summer and autumn’s drought and baleage has more than doubled from $70 to $160.

Agribusiness consultant David Baker said dairy farmers, who have received record payouts, could afford to pay big prices being demanded for winter feed, and had pushed cash-strapped beef and sheep farmers out of the market.

“Those with dairy cows are paying, in some cases, as much as $21 to $28 per week per head of cattle for grazing.

“Those with beef cows just can’t match that, and many are being forced to get rid of their capital stock at the freezing works because the costs just do not stack up.

“There is a real sense of greed growing out there, as those with the land available for grazing deliberately set out to get top dollar from dairying at the expense of the beef and sheep farmer.”

When does a sensible commercial decision to take the best price become greed? Those with hay are in business too and know the wisdom of making money from hay while the financial sun shines. And dairy farmers won’t pay any more than they have to because the high price for milk is being tempered by rising prices of wages, fuel, power, fertiliser, feed and other inputs.

The lack of feed and the huge prices being asked is biting into farmers’ incomes.

For the past three years, Wairarapa hill country farmer Stu McKenzie has taken a financial battering, and the crisis on the farm on the back of double droughts is far from over.

Mr McKenzie, like other sheep and beef farmers in the worst hit areas in Waikato, Taranaki, Wairarapa and Hawke’s Bay, say the escalating feed prices had eaten into any profit.

He has lost more than $300,000 a year over the past three years. “I am paying up to $8 per head per week, where $3 was once the asking price. It does impact when you are talking about hundreds of cows being sent out, and it is not easy finding somewhere for them to go as dairy farmers snap up most of what is available.”

According to the Agriculture and Forestry Ministry, the drought will take away $1.24 billion from the farm gate this financial year.

It is difficult to sustain a big loss from one season, even if it is cushioned a little by capital gain. When it happens three years in a row it will be eating into equity and will out pace the rise in the price of land.

Farmers in areas where dairy conversion or support are options are doing the figures and getting out of sheep and beef or selling up altogether, but those options aren’t possible everywhere.

Making matters worse is below average rain in many of the drought affected regions. When we drove from Auckland to the fieldays paddocks which had been bare when we passed through in February, were looking good. But locals told us it was a green drought – there had been enough rain to give a bit of green but not to provide much cover.

As recession bites the dry weather and low incomes won’t just affect farmers and their communities, it will have an impact on the national economy too. But not all sheep farmers are struggling. Four of the last five tractors sold be a machinery dealer in Gore have gone to sheep farmers.


Meat Prices Going Up

June 10, 2008

Westpac economists  predict rising prices for meat.

Lamb prices in the UK have gone up 34% in the past year and in the US beef prices have risen $21%.

Drought and dairy conversions have lowered the number of breeding sheep here and drought in Australia has also lowered the supply of lamb in international markets.

“We expect stronger world prices and forecast farmgate lamb prices to average 439c/kg over the 2008/09 season, up from an estimated 383 c/kg this season,” the bank’s economists said.

This included an average exchange rate for the NZ dollar of 0.37 pence against the pound sterling, and 0.49 euros against the EU currency through the 2008/09 season. Beef prices are also expected to rise.

“We forecast NZ bull beef prices to average 336c/kg over the 2008/09 season, up from an estimated 316c/kg this season,” the economists said.

I haven’t noticed the price of meat in supermarkets matching the low prices farmers have been receiving in the last couple of years. But rising international prices will impact on domestic prices – and what’s the bet some misguided person or party then starts calling for subsidies. 


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