Sheep farmers will be hoping meat companies are light with their predictions of $80 for lambs this season, with a farm consultant estimating that it would cost at least that much to produce them.
Geraldine farm consultant Peter Clarke said in an interview that in 2007 it cost $67 to produce a lamb, but soaring fuel and fertiliser costs had pushed that to $80 this year.
Fertiliser costs have risen from $6.50 a stock unit to $11.50 a stock unit before the latest price changes, and Mr Clarke said this had helped push up farm working costs from $40 a stock unit to $49 a stock unit.
In 1997 they were $26 a stock unit.
He based his calculations on a typical downland finishing country farm, but said the equation would differ on store lamb, high class finishing country or irrigated countryIt was based on a 4000 stock unit owner-operator unit with casual labour, and a 3000-ewe flock that lambed at 130% with all surplus lambs finished.
Mr Clarke said he worked on costs that were adequate but not extravagant.
Traditionally farmers have skimped on costs to take account of inadequate product prices, said Mr Clarke, but he has tried to take a more realistic approach.
Debt servicing was based on debt of $600,000, or $150 a stock unit, and a return on capital 1.8%.
If farmers were to seek a 10% return on capital, Mr Clarke said the price of lamb would need to be $183.
Labour and market rates of management were estimated at $15 a stock unit.
Using these figures, he said his model farm would break even, but that bottom line result would also be impacted by returns for wool, cull ewes and beef.
He said farmers should not view $60 or $65 a lamb as satisfactory.
"Some people are saying that, but it's not. It is inadequate to cover costs and to give a reasonable return."
At less than $80 a lamb, his model farm would return cash deficits, he said.
Meat companies have estimated mid-season lamb prices this year at between $70 and $80 but a more favourable exchange rate would push them over $80.