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, notes meat industry commentator Allan Barber.
Notably, within two years China has grown from one percent to 10 percent 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 percent of all sheepmeat exports, 28 percent of lamb and 52 percent 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 $4,800 per tonne. The USA is the highest paying market at $11,500 per tonne followed by EU at $9000.
The USA remained the largest market of New Zealand beef, taking 48 percent 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 $5,800 per tonne, down 2.4 percent on the year before, while both USA and China paid an average of $5,300 per tonne.
North America represented 52 percent by volume and 48 percent by value of beef exports, with an 11 percent increase in sales to the USA but a 27 percent 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 percent of both value and tonnage, up from 26 percent a year earlier, of which China and Hong Kong’s proportion was 11 percent of the total compared with four percent the year before and one percent 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 percent of all exports was in bone-in and boneless cut form, only two percent in carcase form. Seventy percent of chilled lamb was exported to the EU, but unfortunately there was a 22 percent fall in average price compared with 19 percent 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 two million or 10 percent lower than last year, prime beef is 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.