NZ farmer confidence plummets

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Federated Farmers has found that farmer confidence has plummetted in its latest Farm Confidence Survey.

In January, the mid-way point for the 2011/2012 season, farmer confidence in their profitability was strong. The 2011/2012 season was probably one of the best in recent times for meat, wool and dairy and would be difficult to top, says Federated Farmers‘ president Bruce Wills. However, this has gone fully into reverse gear with most farmers now expecting farm profitability will worsen over the coming year, he says.

“The past few months have seen large falls in commodity prices, with the June 2012 ANZ World Commodity Price Index down 12.3 percent from January. The exchange rate has not fallen to the same extent so has eaten into farmgate returns.”

The $64,000 question for all farmers at the start of the 2012/2013 season is whether prices will fall further. “We are all keeping a wary eye on the global economy and, frankly, we don’t like what we are seeing,” says Wills. “That New Zealand is ‘less bad’ when compared to Europe and North America, provides cold comfort when our dollar is kept artificially high because of it.”

The survey showed farmers continue to believe that prudent fiscal policy should be the Government’s highest priority – which is reducing government spending, balancing the books and reducing government debt.

Some headline results from the survey are:

  • A net 38.7 percent of respondents expect general economic conditions to worsen over the next 12 months.
  • A net 30.4 percent of respondents expect to increase production over the next 12 months (down from a net 47.7 percent in January).
  • A net 13 percent of respondents found it harder to find skilled and motivated staff (up 1.8 points from January).
  • Respondents’ biggest single concern is the level of commodity prices and/or farmgate prices, cited by 20.2 percent of respondents.

Production boom confirmed by MPI

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The production boom, alluded to by several at the Red Meat Sector Conference, has been confirmed in the Ministry for Primary Industries (MPI)’s latest primary industry statistics released today. They show increased production of beef and sheepmeat, corresponding with growth in the export volumes for the meats, but falls in export revenue earned from lamb and venison.

‘Primary Industries Production and Trade‘ for the March quarter 2012 is the first release of a new combined primary industry quarterly report, comprising production and trade statistics for the meat, dairy, wool, forestry and seafood industries. It replaces separate quarterly reports for forestry and seafood that were previously released by the Ministry.

The report shows that the primary sector continued to be an economic driver, with total primary sector exports accounting for 71 percent of all merchandise exports in the year to March 2012.

MPI reports favourable climatic conditions led to a continuation of better-than-usual pasture growth during the March 2012 quarter. As a result, farmers achieved near-record carcase weights for slaughtered livestock and an 11.5 percent increase in milk solids’ production, compared with the same quarter in 2011.

However, the stronger New Zealand dollar coupled with easing international dairy prices meant that overall primary sector export revenue for the quarter was down 2.4 percent on the previous year, at $8.3 billion.

At the same time, total export revenue for the year to March 2012 was up 6.2 percent on the previous year at $32.3 billion.

In the year to the end of March 2012, exports of New Zealand’s beef and veal, lamb and mutton, venison and other meats, earned revenue of $5.6 billion, while hides, leather and dressed skins added a further $591 million to the export pot. This made a total of $6.233 billion, accounting for 13.6 percent of total NZ merchandise exports.

According to the report, beef production increased by 1.4 percent in the March 2012 quarter (compared with the March 2011 quarter), due to increased carcase weights, the highest since 2006. This was despite lower adult cattle slaughter numbers. Lamb production was up 2.4 percent because of increased slaughter numbers and a record average carcase weight of 17.6 kg.

The volume of beef and veal exported increased 1.3 percent to 98,450 tonnes in the March quarter, in the March quarter, while export value decreased 4.5 percent to $570 million because of the strong New Zealand dollar. Beef and veal exports to New Zealand’s major export market, the US, increased 9.3 percent by volume and 5.3 percent by value because of stronger demand.

Export volumes of lamb increased 4.7 percent to 79,000 tonnes, while export values decreased 1.3 percent to $722 million. Lamb exports to New Zealand’s main market, the European Union, decreased 9.1 percent by volume and 9.6 percent by value, which the report says was due to a decrease in frozen export volumes and increased export sales to China and OPEC.

Revenue earned from venison exports fell slightly by 0.4 percent at the end of March 2012, compared to the previous year, though volume had dropped by 4.3 percent.

A pdf copy of the report can be downloaded by clicking the link below or at the MPI website (search on ‘Primary Industries Production and Trade’).

MPI-Prod&Trade-March2012 quarter

The future is bright

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The future looks bright for New Zealand’s red meat export business, if you go by the presentations at the recent Red Meat Sector Conference in Queenstown.

Over 250 delegates, drawn from processing, farmers, service companies, shippers, economists, and government officials, crammed into the Rydges Lakeland Resort hotel on Monday 16 July for an absolutely packed itinerary of presentations from 17 excellent speakers – several of them from overseas – all with inspirational and thought-provoking messages.

The veritable smorgabord of information, mustered back into its time slots by some able session chairmen, revealed recurrent themes of massive potential for New Zealand meat in emerging markets in Asia, especially China, water issues, the need to engage in best practice, to tell the industry’s story to the public and the rapid, mind-boggling change the emergence of social media has wrought on getting those messages out there.

The first early shoots of progress on the Red Meat Sector Strategy (RMSS) were evident too, not as fast as some would  like, but it’s a start. Nearly a quarter of billion dollars of industry-government money is being spent on re-shaping and vertically integrating some parts of the red meat chain over the next seven years through Primary Growth Partnerships (PGP) programmes. These are alone forecast to add somewhere in the region of $3 billion to the country’s GDP by the mid-2020s. Meanwhile B+LNZ Economic Service’s team, under the guidance of Rob Davidson, have been developing a natty set of matrices that will enable industry to see how it is progressing along the Strategy’s path (more of that later).

Delegates will be picking out of it what they need. They were certainly upbeat and eager to hear more right to the last speaker of the business sessions, Nigel Latta, who talked about behavioural change and how to make it.

There is no doubt that more is bound to come from discussions at conference and later. Well done to the joint organisers, the Meat Industry Association and Beef+Lamb NZ Ltd.

A more full report will appear in Food NZ August/September 2012 magazine in early August and MeatExportNZ will be covering other items emanating from the conference over the coming week or so. You can find most of the presentations already up online at the MIA website, along with the programme.

 


Recommended reading

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Red Meat Sector Conference presenters recommended a number of books to check out:

  • Purple Cow: Transform Your Business by Being Remarkable (ISBN 978-1-59184-317-7), Seth Rodin, published 2009 by Portfolio . Recommended by Rick Stott, Agri Beef.
  • The Tipping Point: How Little Things Can Make a Big Difference (ISBN 0-316-31696-2), Malcolm Gladwell, first published by Little Brown in 2000. Also recommended by Rick Stott.
  • Thinking, Fast and Slow (ISBN 9781429969352) , Daniel Kahneman, published Farrar, Straus and Giroux, 2011. Recommended by Nigel Latta.

Separately, Tiger Head, Snake Tails (ISBN 978 1 84737 393 9), Jonathan Fenby, 2012 Simon and Schuster is a must-read for those wanting to understand China better.

In the news this week (2) …

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There was plenty going on at the Red Meat Sector Conference in Queenstown this week, but there were also a few other things appearing in the press. 

China eyes up top-end lamb cuts, writes Tim Cronshaw, in an article about Alliance Group sensing growing interest from its Chinese customers in some of the higher value cuts, rather than the lamb flaps traditionally used for hot pot dishes.

B+LNZ Ltd held it’s ‘Farming on the Edge of Science’ Day at Massey University on 11 July.  Dominion Post farming editor, Jon Morgan, was in attendance, alongside the farming participants. His report (Science day teaches farmers new tricks, 19 July) makes good reading and shows how farmers were shown the latest in pastures and forages, management and new technology and animal production in a series of three workshops (this is not available online as yet).

 

Farewell to a pioneer

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The New Zealand meat industry lost one of its true pioneers last weekend. It was announced at the Red Meat Sector Conference that Graeme Lowe CNZM QSM of Lowe Corporation, had passed away after a long illness. Graeme had recently been inducted into the NZ Business Hall of Fame in recognition not only of his business acumen and innovative approach to the New Zealand meat business, but also his support for Hawke’s Bay charities. Our sympathies go to his widow Jenny, son Andy and daughters Sarah and Kate and their families.

German festival-goers flock to eat New Zealand lamb and venison

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New Zealand lamb and venison were in such hot demand at Northern Europe’s biggest summer festival, the organisers had to get in extra chefs to satisfy the hungry queues.

Beef + Lamb New Zealand and Deer Industry New Zealand were invited to take part in this year’s Kieler Woche celebrations – the first time in the festival’s 130-year history New Zealand has been represented at the international market.

Cristian Hossack, seen here plating up for Kiel Woche, is the former head chef at Peter Gordon’s Providores restaurant in London. He is returning to New Zealand.

The market in Kiel’s picturesque main square is at the hub of more than 2,000 sports and cultural events which attract around three million visitors annually to a city with a population not much bigger than Hamilton’s.

Working 16 hours a day for 10 days, the Kiwi culinary team led by Marton-born chef Cristian Hossack (pictured right) served 7,000 lamb burgers, venison wraps and lamb salads, complemented by wines from Hawke’s Bay vineyard Coopers Creek.

Nick Beeby, B+LNZ Ltd manager for emerging markets and strategic projects, says it was great to be working alongside a chef of Cristian’s stature. A food critic who ‘mystery dined’ the festival rated the New Zealand offering top for food, service and value for money, stating “it was like eating at a restaurant.”

“It’s hardly surprising the food was so popular or received the plaudits it did,” Beeby says. “With a top chef and top produce, you can’t go wrong. But it’s even more impressive when you realise the chefs were juggling questions as well as pans.

“There was a constant queue of festival-goers lined up not only to taste our lamb and venison, but to find out more about its production, how to cook it and where to buy it; asking questions about everything from knife sharpening to sustainable farming practices. People loved it and we’ll definitely be going back again.”

The joint venture aimed to raise awareness of New Zealand lamb and venison in Germany, where consumers do not traditionally eat much of either.

Innes Moffat, venison marketing services manager at DINZ says the novelty was a bonus. B+LNZ and DINZ both run comprehensive marketing programmes in Germany. However the Kiwi presence at the festival for the first time generated lots of media interest and free publicity on television and radio, and in the press.

B+LNZ and DINZ attended in conjunction with a major Northern European retailer which sells New Zealand lamb and venison 12 months of the year – so festival-goers knew where to go to get it.

The two organisations will come together again in August for a three-day festival in Frankfurt, where around 40,000 visitors are expected through the New Zealand pavilion.

Photos below are courtesy of B+LNZ Ltd.

‘Best in Season’ venison

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Firstlight Foods tell us through their excellent blog that it was their turn to visit their First Venison UK counterparts in the ‘Best in Season’ fresh venison partnership with Waitrose. First Venison UK is Waitrose’s (recently re-named…) UK venison producer group. Firstlight Venison and First Venison UK together supply Waitrose with ‘Best in Season’ fresh venison.