Red-meat sector set to strengthen
The planets are lining up for red-meat farmers to put decades of low profits and lack of reinvestment behind them.
New Zealand’s red-meat sector shows signs of regaining a starring role in the economy, in a survey by the ANZ bank.
During the past two decades, red-meat farmers have missed out on the same gains as dairy farmers. This was because of decreasing real prices, increasing costs, lack of reinvestment and an industry structure that discouraged collaboration and making the most of economies of scale.
The bank survey of 779 farmers found that most were planning to invest in their farms to increase productivity and to take advantage of rising global demand for protein.
ANZ commercial and agriculture managing director Graham Turley said the survey found the sector was confident that conditions were right to regain some of the lost momentum and play a bigger role in the economy.
‘‘Farmers we spoke to had active strategies in place to take advantage of rising global demand for protein, and advances in agronomy and genetics to increase production,’’ Turley said.
Structural issues within the industry remained unresolved.
However, many farmers believed solutions were emerging that would lead to more integrated supply chains.
Turley said red meat was likely to experience faster productivity gains than dairy in the years ahead.
The top 20 per cent of farmers were achieving productivity about four times more than the average, irrespective of land class and location.
They had the confidence to reinvest profits to lift productivity and generate long- term wealth, he said.
The survey was part of the bank’s support for Beef+Lamb New Zealand’s Red Meat Profit Partnership initiative.