Beef, lamb ex­ports head­ing for $3b

Econ­o­mist pre­dicts con­tin­ued strong over­seas sales as the New Zealand dol­lar weak­ens against green­back

The New Zealand Herald - - Business - Jamie Gray

Beef, lamb and mut­ton prices are ex­pected to re­main at his­tor­i­cally high lev­els for the sec­ond season in a row, Beef and Lamb NZ said. The farmer-funded or­gan­i­sa­tion, in its out­look for the 2018-19 ex­port season, said the beef and lamb ex­ports would each break through $3 bil­lion in ex­port sales for the pe­riod, sup­ported by a weaker kiwi dol­lar and strong ex­port de­mand.

“We fore­cast slight in­creases in farm-gate prices for lamb and mut­ton in 2018-19, as prices are ex­pected to re­main rel­a­tively steady in New Zealand’s main ex­port mar­kets and ben­e­fit from an ex­pected eas­ing of the New Zealand dol­lar,” Beef and Lamb chief econ­o­mist Andrew Burtt said.

He said that while there is po­ten­tial for in­ter­na­tional sheep­meat and beef trade to be dis­rupted in 2018-19 be­cause of geopo­lit­i­cal un­cer­tainty, large-scale droughts, and dis­ease out­breaks in com­pet­ing an­i­mal pro­teins, the out­look for New Zealand’s sec­tor was pos­i­tive.

He added the sharp fall in the kiwi dol­lar has had a large bear­ing on the sec­tor’s out­look. “The New Zealand dol­lar is ex­pected to ease as the economies of our ma­jor trad­ing part­ners strengthen in 2018-19 — prin­ci­pally against the US dol­lar in which over 70 per cent of red meat ex­ports are traded,” Burtt said.

A com­bi­na­tion of tighter mut­ton sup­ply from Aus­tralia and New Zealand, who con­trib­ute the ma­jor­ity of in­ter­na­tional sheep­meat trade, and grow­ing global de­mand is ex­pected to con­tinue to drive an in­crease in the av­er­age ex­port value of mut­ton, which in­flu­ences lamb prices.

China’s de­mand for red meat from all sources is ex­pected to con­tinue to grow, but de­mand for lamb, mut­ton, and beef is also ex­pected to re­main strong in all New Zealand’s ma­jor red meat ex­port mar­kets.

New Zealand’s ex­port lamb pro­duc­tion is fore­cast to de­crease by 1.7 per cent in 2018-19 due to a smaller lamb crop, as the re­sult of a fall in the num­ber of breed­ing ewes this year as farm­ers took ad­van­tage of high mut­ton prices.

New Zealand’s beef cat­tle herd grew by 1.9 per cent to 3.68 mil­lion head at June 30, 2018, the sec­ond small in­crease in a row af­ter de­clin­ing steadily since the 1990s.

Sus­tained strong cat­tle prices, and the lower labour re­quire­ment as­so­ci­ated with cat­tle, has en­cour­aged farm­ers to main­tain or lift herd sizes, par­tic­u­larly in the South Is­land.

As a re­sult of all th­ese fac­tors, to­tal lamb ex­ports are es­ti­mated to re­main at around $3.1b in 2018-19, af­ter break­ing the $3b mark for the first time in the 2017-18 season.

Beef ex­ports are fore­cast to be around $3.4b in 2018-19, a 4 per cent de­crease on 2017-18.

Farm ex­pen­di­ture for 2018-19 is fore­cast to in­crease over­all, but rev­enue is also ex­pected to in­crease, driven by a lift in farm-gate prices which are ex­pected to in­crease rev­enue from sheep, wool, and cash crops, Burtt said.

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