Mick Calder writes you might have been as surprised as he was to read that the national sheep flock has declined dramatically – again.
Statistics New Zealand’s Agricultural Production Survey 2016 indicates that the total sheep numbers in the country at 27.6 million, a drop of 1.5 million since June 2015. This brought forth all sorts of useless comparisons about the number of sheep per head of the human population. There was a time in the days of Supplementary Minimum Prices when there were 22 sheep for every human; the number is now about six – if that means anything.
More to the point the sheep numbers dropped by nearly 12 million head, or more than 30 per cent in the last decade. The agricultural production statistics indicate that the total sheep numbers at June 30 had plateaued at around 40 million head in the first five years of the 21st century; since then the rot set in.
There used to be some comfort taken in improvements in sheep and lamb productivity due to the combination of increasing lambing percentages and higher carcase weights, but even that movement has tapered off in recent years.
All of which leads to the depressing conclusion that the sheepmeat processing and marketing sector face some hard decisions about further reductions in processing capacity or the whole system will spiral ever downwards and the lamb kill is going to come to a shuddering stop in the very near future.
And it is all very well announcing a breakthrough with new markets, new products or brands, but if the prospects for improving volumes are slim to non-existent, and the new venture can only proceed at the expense of reducing sales in established markets, then the breakthrough celebrations may have a bit of a hollow ring to them.
But maybe the reports on the sheepmeat industry should be less about the decline in the number of sheep per head of the human population and more about the effect on export earnings, and what if anything is being done to reverse this alarming trend. Where are the industry leaders with a strategy for the future growth in production and, more particularly, improve returns to the producers.
The trouble is that there are few signs emanating from the various industry associations or the meat companies themselves encouraging sheep farmers to take action to reverse the declining trend. The industry gives the impression of acquiescence and/or resignation to the inevitable downward trend.
By the way, what has happened to the much heralded Red Meat Sector Strategy announced in 2011 by Beef + Lamb NZ and the Meat Industry Association? Its aim was “to identify ways in which the profitability of the red meat sector can be increased.” Three areas with the greatest potential to sustainably increase profitability were identified at the time of the strategy’s release, which were “in-market coordination, aligned procurement and sector best practice” but with the rather intriguing rider that the aim was to put “other long-held beliefs about known issues, including processor over-capacity and stock transport, into perspective.”
In the five years since the announcement there has been some progress with Primary Growth Partnership projects for individual companies most of which aim at the production inside the farm gate and the processing side of the industry. The recently announced B+LNZ new market development strategy developing a red meat sector story targeting new and emerging markets is a move to address the activities in export markets. But there has been very little activity that might be construed as being the result of the strategic co-ordination of activities of all the players in the sector.
The decline in sheep numbers and production is attributed to the switch to dairying, the progenitors of which can be traced back to the late 1980s when the agricultural subsidies were removed and the spectre of overcapacity first loomed over the meat companies. However, the splurge in centre-pivot irrigation systems pushed up dairy conversions and numbers in the last 15 years, but even that trend has flattened out.
Such irrigation systems and the dairy milking facilities are expensive, so it seems that dairying was flavour of the month with bankers and investors with everyone jumping on the money-go-round. But dairy cow numbers have stuck at around 6.5 million for the last five years, which suggests that slump in prices and the slow recovery to the $6.00 per kg of milk solids may have dampened some of the euphoria. Bankers and investors can usually be regarded as fair weather friends.
If the NZ lamb export sector is to be revived perhaps the stakeholders should refer back to the words of their 2011 strategy regarding co-ordinated market behaviour. This advocated “Creating a strong brand position in premium markets”, and “Acting with scale through greater co-ordination of exports in target markets”. But it will need actions rather than words.
Former secretary for the New Zealand Meat Board and the NZ Lamb Company, Mick Calder was co-author, with Janet Tyson, of Meat Acts, a history of the New Zealand meat industry from 1972 to 1997, which makes fascinating reading (Published 1999: ISBN: 0-9582052-2-1). He has written countless other reports, newsletters and articles for magazines and newspapers. He also maintains his own blog, Agriphile.