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FINANCIAL LITERACY •  18 AUGUST 2025 • 4 MIN READ

Livestock valuation methods: NAMV vs NSC

A herd of cattle representing year-end livestock valuation methods in New Zealand.

When it comes to valuing livestock for end-of-year financial reporting and tax purposes, New Zealand farmers can choose from two main methods - National Average Market Value (NAMV, or sometimes called herd scheme) or National Standard Cost (NSC).

Each method has its own implications for tax, reporting, and long-term planning, so it’s important to understand the key aspects of each and how they might impact your farm’s financial position.

National Average Market Value / Herd Scheme

The NAMV (or herd scheme) is a valuation method based on the average market value of livestock as determined by Inland Revenue each year. These figures reflect actual market data and are published annually (in May) for different classes and categories of livestock.

Key features of the NAMV method

1. Livestock is valued at the market average
Each year, the IRD sets the national average market value based on a survey throughout New Zealand at 30 April. Using this method, your livestock is valued based on these set rates, not the actual amount you paid or received for each animal.

2. Livestock is treated as a capital asset
Livestock is treated like an investment. Changes in value from year to year aren’t taxable or deductible unless you sell or dispose of the animals. 

3. Tax-free natural increase in herd numbers
Any animals bred on your farm (i.e. a natural increase) are added to the scheme at the NAMV, but you don’t pay any tax when they’re introduced*. You only pay income tax when you sell the animals for more than the recorded value.

*When you first elect into the herd scheme, your current livestock is revalued from its existing book value to the NAMV. If the NAMV is higher, the difference is treated as taxable income in the year you enter the scheme.

4. Simple record-keeping
Once livestock is in this scheme, you don’t have to track individual animal costs or production expenses for valuation purposes. This makes the end-of-year accounting processes simpler.

5. Generally considered a long-term decision
Once you’ve chosen to use this method for a livestock class, the animals in that class are required to remain in this scheme. This provides consistency in how they’re valued.

Who might use the NAMV method?

The NAMV method is best suited to farmers:

  • Who breed and hold livestock long-term
  • Wanting more consistent and less volatile year-end results
  • Planning for the long-term

National Standard Cost

With the National Standard Cost (NSC) method, homebred animals are given the standard cost rates set annually by Inland Revenue for their class and age. If you’ve bought in young stock, they start off at their purchase price, and each year you add the published breeding, rearing and growing (BRG) costs as they move up through the classes. Once they hit the mature breeding stage, those annual additions stop and their value is locked in at the accumulated cost. That fixed cost then stays with the animal until it eventually leaves the herd.

Key features of the NSC method

1. Livestock is valued based on cost, not market prices
Each year the IRD sets the national standard cost based on what it typically takes to raise an animal to maturity. Once livestock reaches maturity, each animal holds its cost until sold or disposed of.

2. Livestock is treated as a trading stock
Livestock is treated similar to inventory. Changes in numbers and value from year to year are taxable/deductible, which can impact your profit.

3. Volatility
Because changes in livestock numbers and value are recognised as taxable income or deductions each year, your profit (and tax) can swing more than the NAMV method, especially if you have large numbers of mature or trading stock.

4. Can be used for more livestock classes
The NSC method can be used for livestock classes that aren’t part of the NAMV method like lambs, bobby calves or other young animals.

5. More admin
There is more detailed record-keeping involved in this method as you have to track costs and stock changes more carefully.

Who might use the NSC method?

The NSC method is best suited to farmers:

  • Who buy and sell livestock regularly
  • Managing early-stage livestock that aren’t eligible for the NAMV method
  • Wanting to maximise deductible expenses (such as decreases in livestock value)

Herd Scheme vs National Standard Cost comparison

Comparison table of NAMV and NSC livestock valuation methods

Which valuation method should you use?

Choosing between National Average Market Value and National Standard Cost is a strategic decision that depends on your farming operation and goals.

The best option will depend on how you run your farm, how long you hold your livestock, your cash flow needs, and what you want to achieve (whether that’s building long-term value, managing short-term profits or planning for succession).

Your accountant can help assess which method aligns with your business model and goals, and ensure you’re taking a tax-efficient approach that works now and for the future.

If you're not working with an accountant or looking to switch, consider Beany. Our team work fully online from all over New Zealand, giving you access to local experts without needing to leave the farm. Book a call with us to discuss your farming business and explore how we can support your accounting requirements.

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