Jamie Mackay: The Country host on the tough economic climate impacting Kiwi sheep farmers

Kiwi sheep famers will have to brace themselves for another tough earnings season.

Beef and Lamb New Zealand’s new season outlook says farm profit margins were being hit by high costs, especially interest payments, reaching low levels similar to those seen in the 1980s and 1990s.

The Country's Jamie Mackay explains the issue further.

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Episode Transcript

Speaker 1 (00:00):
With us now as Jamie mckaye, Host of the Country,
he Jamie, hello cousin here that oh mate, It's tough
to be a sheep farmer, isn't it. Yeah? Wow, Maybe
I dodged a bullet there, because if the Rural Bank
had lent me ninety grand way back in about nineteen
eighty nine or ninety when I wanted to buy one
hundred acres forty hectares of the neighboring block to expand

(00:21):
my farming operation, if they'd lent me the money heither,
I'd probably still be a sheep farmer, and I might
be a bit bitter and twisted about doing that because
the returns are abysmal. Wait for this stat Southern sheep farmers.
That's me if I'd stayed down in Riversdale, and I
know you've been to the home farm there. They have
to be they're getting a six point nine percent increase

(00:42):
in propit And while that sounds wonderful, guess how much
they're earning for their whole year's work. Twenty thousand, two
hundred dollars. And that's before that's before they wouldn't even
pay you. You and barries like dinner. Well, I mean
ideas Ponsonby Road that is not far off like a
big family. That's the grocery bill, oh and more, I

(01:05):
would have thought, to be honest. So from your twenty thousand,
two hundred dollars, you've got to pay for your drawings obviously,
you've got to live, and on top of that, your tax,
your principal repayments, capital expenditure obviously, and really tough times.
Not much of that happens, but it is really tough
for sheep farmers. And the further south you go probably

(01:26):
the worst off they are in some ways. And because
this is the new season outlook from Beef and lamb
New Zealand and it's talking about sheep and beef, and
the further south you go, the more proportion of sheep
as opposed to beef. So these are the lowest recorded
profits on record, inflation adjusted, and that goes back to

(01:47):
the nineteen eighties when we had rogenomics. So really, really
tough times and they're not being helped much Heather by
the banks. I did a totally unscientific poll today on
the country and you know, it makes me almost makes
you want to cry. Some of the lending rates and
mortgage rates and OD rates these farmers are paying. I

(02:08):
had a contract milker who was paying thirteen and a
half percent of an overdraft fee. This guy's getting up
every morning milking two thousand cows, employing ten full time staff,
four casuals. He's spending four months of his twelve months
of the year in overdraft. It's killing his operation. These
are the people we should be encouraging, you know, to

(02:30):
drive the economy. The floating rates, to go by my
unscientific poll for farmers, between seven and eleven percent. But
the OD rates, the overdraft rates are the real killers
there between nine which is a pretty good deal probably,
and up to fourteen or fifteen percent. Look, federated farmers
are on the warpath. I'm on the warpath too, because

(02:52):
I reckon the banks are having us on. Is that?
How much higher is that than what you would be
paying as a towny with a residential loan. Well, heather,
as fate would have it. I went on to my
own personal bank website and looked at that I could get.
I could get a floating deal with my bank at
eight point three nine percent. But no one's literally no, no,
no one's literally doing it. I can go out and

(03:12):
borrow for eighteen months at five point nine to nine percent.
I had the example today of a very well established
farmer's worth. His equity would be in the tens of
millions and he has just helped his son in Dunedin
into a house. This guy has been with the same
bank for thirty years and believe it or not, the

(03:34):
son who's got bugger or equity, dad's helped him into
the house, got a two percent lower deal than this
guy has, who's probably one of the leading clients for
his bank. You know, we've got something, We've got something
wrong here. We just need to we need to encourage
the productive sector. Yeah, Jamie, I think you're onto something man.
Thank you so much, appreciate it. Jamie McKay, Host of

(03:55):
the Country. For more from Heather Duplessy Allen Drave, listen
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