Meat exports steady, but no silver bullet in sight

Meat industry exports for 2012/13 were virtually the same as the year before at $4.4 billion, but there were some significant differences in how the total was made up. Notably within two years China has grown from 1% to 10% of total red meat volumes. Sheepmeat sales were slightly higher in value than beef at $2.3 billion compared with $2.1 billion.


China surged to become the biggest single destination by volume for sheepmeat, taking 33% of all sheepmeat exports, 28% of lamb and 52% of mutton. The EU as a whole remains the largest market for lamb and commands a much higher proportion of revenue at nearly twice the Chinese figure of $4800 per tonne. The USA is the highest paying market at $11500 per tonne followed by EU at $9000.


The USA remained the largest market of New Zealand beef, taking 48% of export tonnage with higher volumes being offset by a fall in average price because of the high New Zealand dollar. The average beef price was $5800 per tonne, down 2.4% on the year before, while both USA and China paid an average of $5300 per tonne.


North America represented 52% by volume and 48% by value of beef exports, with an 11% increase in sales to the USA but a 27% drop in Canada’s share. Most of the beef shipped to North America is used in further processing, including grinding beef for the hamburger trade. North Asia’s share of exports was 31% of both value and tonnage, up from 26% a year earlier, of which China and Hong Kong’s proportion was 11% of the total compared with 4% the year before and 1% two years ago.


In strong contradiction of the traditional perception that New Zealand’s lamb exports are made up mainly of carcase sales, in the most recent 12 month period chilled lamb contributed nearly a quarter of the total and 98% of all exports was in bone-in and boneless cut form, only 2% in carcase form. 70% of chilled lamb was exported to the EU, but unfortunately there was a 22% fall in average price compared with 19% decline for frozen lamb.


Exports of sheepmeat to China are at a lower value because there is less further processing involved and the average specification is broader than sales to the USA (mainly middles, including racks) and the EU. The Chinese buyers generally look for product which can be further processed in China, therefore require less value added in this country. The impact of this trend has been signalled by Silver Fern Farms’ announcement that its lamb cutting facility at Silverstream near Mosgiel will almost certainly close this season.


It is very difficult to see how the red meat sector will be able to meet the Government’s target of doubling exports by 2025. Sales revenues have hardly varied over the last five years, even declining slightly from their peak two years ago. However the longer term threat is from changing land use with lambs forecast to be 2 million or 10% lower than last year, prime beef also lower and the only livestock category to increase being dairy cows which eventually find their way to the meat processors.


It is even harder to see how the sheep and prime cattle breeding numbers can possibly increase any time soon if ever. The combination of poor returns from sheep and beef farming and increasing access to irrigation provide more options for farmers to pursue alternative types of agriculture, not just dairy.


It will take a concerted exercise in forward thinking, willpower, investment and a fair degree of good luck to turn the fortunes of the red meat sector round, if it is to retain its status in New Zealand’s economy.

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One Response to “Meat exports steady, but no silver bullet in sight”

  1. Rural round-up | Homepaddock Says:

    […] Meat exports steady, but no silver bullet in sight – Allan Barber: […]

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