High value and increased volumes behind lift in 2017-2018 meat export season

Andrew Burtt
Andrew Burtt, B+LNZ chief economist.

Sustained high value per tonne and increased volume for lamb, mutton and beef, were behind a lift in New Zealand’s red exports (excluding veal and co-products) by $1.2 billion (21 percent) to over $6.7 billion in the 2017-2018 meat export season, according to the latest figures from Beef + Lamb NZ Economic Service.

“While the highlights of the season were record high average values per tonne for lamb and mutton, the average value of beef exports remained high since the marked increase in 2014-15,” says B+LNZ’s chief economist Andrew Burtt.

“Good farm-gate prices and strong average values per tonne for exports occurred throughout the season, even during the fast start to the processing season driven by the dry conditions in December 2017.”

Lamb exports over $3.1 billion

Total lamb exports were over $3.1 billion, up 25 per cent on 2016-17 and 28 percent higher than the five-year average, with the average value of lamb exports staying over $10,000 per tonne for the entire season. While these levels were reached on occasion in 2010-11 and 2011-12, it was not sustained across the entire season.

The average value of lamb was up 17 percent on 2016-2017 to $10,460 per tonne (NZ$10.46 a kg), and up 26 percent on the five-year average. The increases were spread across lamb categories, the Economic Service reports.

Mutton average value up 23 percent

BLNZ New Season Outlook 2018-2019Total mutton exports benefited from limited international supply and strong demand to reach $618 million, up 46 percent on 2016-17.

The average value of mutton exports was $6,580, up 23 percent on 2016-2017 and 30 percent on the five-year average, which fed through to higher farm-gate prices.

Strong prices and early summer conditions lifted the number of adult sheep processed and increased the total mutton exports in 2017-2018 to94,000 tonnes across the season, up 19 percent on 2016-2017 and up 11 percent on the five-year average.

Increasing demand for sheepmeat from China, particularly mutton, and tight supply from Australia and New Zealand, increased competition for New Zealand’s sheepmeat. Limited international availability of mutton drove improved value for sub-primal cuts of lamb, which began in mid-2016-17, and lifted the overall average value of lamb exports.

B+LNZ’s New Season Outlook 2018-2019 forecasts a 17 percent reduction of mutton exports due to limited availability after the surge in 2017-2018 and confidence in sheep production remains high, evidenced by the increased number of ewe hoggets being retained, it says.

Beef exceeded $3 billion

In comparison with lamb and mutton, increases in the volume and value of beef exports this season may seem subdued, but total beef exports exceeded $3 billion, up 14 percent on 2016-17 and up 17 percent on the five-year average.

The Economic Service says the amount of beef exported was up by seven percent – largely driven by more bulls and cows being processed in 2017-2018. The higher number of cows processed mainly resulted from New Zealand’s dairy herd maturing and more being culled for age after herds contracted in 2014-2015 and 2015-2016 in response to weaker farm-gate milk prices, which created a younger herd on average.

The average value of beef exports has remained steady and strong since the 2014-15 season, driven by demand from the US for lean manufacturing beef, giving confidence for producers and increasing the number of bull calves that were born in the dairy sector being raised in the beef sector.

Despite increased global beef production and trade, the average value of New Zealand’s beef exports improved moderately – by two percent – to $7,320 per tonne to remain historically strong.

China became New Zealand’s top red meat market

However, in 2017-18 China overtook the US as New Zealand’s largest red meat export market by value and volume, the figures show.

China accounted for one-third of New Zealand’s red meat exports as the trend of an increasing share of New Zealand’s beef exports continued, combined with lifts in the share of lamb and mutton exported.

In the past, China’s increased imports of New Zealand beef were mostly secondary cuts, such as shanks and knuckles, but in 2017-18 this category was surpassed by manufacturing beef.

While the average value for New Zealand’s manufacturing beef exports to the US increased slightly (+1 percent), product sent to China rose by seven percent to $6,590 per tonne, five percent higher than manufacturing beef sent to the US.

The US remains New Zealand’s largest beef export market, but the total share of beef decreased two percentage points to 47 percent, B+LNZ’s Economic Service says.

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