Beef + Lamb New Zealand is doing its best to look on the bright side as numbers from its New Season Outlook point to further profit cuts for farmers.

Despite global shortages pushing demand up, Beef + Lamb predicts farmers’ before tax profit for the year will average $54,000 at a US exchange rate of 68 cents.

That’s 5 per cent down on last year, and the estimate worsens to $34,000 if the exchange rate sits at 72 per cent.

But Beef + Lamb Economic Service Director, Rob Davison, says global red meat prices are steady, or even improving.

“In regards to the exchange rate, everything is put in place a year ahead, farmers are putting their budgets in place and forecasting their expenditure, lamb crop and so on.

"The problem is the variability of the exchange rate, there is a real difficulty trying to shoot a moving target.

"The real thing is that nobody knows what it will be, if we’re honest.”

But Federated Farmers meat and fibre chair Bruce Wills says farmers with millions of dollars of assets need better profit margins to survive.

“I don’t think any sheep and cattle farmers are going to be too excited by that outlook, frankly.

"I’d describe it as a fairly ho-hum sort of outlook. It’s alright, lamb supplies are tight and that’s keeping prices high, but that of course is due to our own failures in recent years.

"It’s purely supply-demand balancing and it’s really our saving grace at the moment, but we can’t forget how vulnerable we are to currency swings.”

Mr Wills says the falling returns highlight the importance of the red meat sector strategy succeeding.