Meat returns holding up during Covid
AUCKLAND: New Zealand’s export meat prices are running above fiveyear averages, despite demand from the world’s restaurant trade being hit hard by Covid19 lockdowns.
While the sector successfully weathered last year’s pandemicdriven disruption, Alliance Group general manager Shane Kingston said the stronger New Zealand dollar and ongoing constraints in food service were significant headwinds.
But he said Alliance was starting to see a recovery in Asia, led by China and Taiwan.
‘‘We are also starting to see a strong performance in North America, Europe and in UK retail,’’ he said.
The Covid19 dynamic of higher retail demand, partly offsetting reduced demand in the food service sector, had remained.
‘‘Food service remains very, very challenged,’’ he said.
‘‘But broadly, a recovery is happening and demand is strong and across a number of items pricing is strong ahead of fiveyear averages and in some cases ahead of last year,’’ Mr Kingston said.
Beef export prices into North America were up 10% on fiveyear averages but were down on last year.
Key lamb products into China were up almost 20% on their fiveyear average and up 6% on last year.
On the flip side, the price for lamb racks, a restaurant staple, was down 30% on its fiveyear average, with little immediate sign of recovery. Low lamb rack prices were impacting on overall carcass returns.
‘‘Quick service and fine dining restaurants in Asia are getting back to about 80% of precovid levels but the mainstream, high capacity restaurants are not, because people are fearful of dining in big groups,’’ Mr Kingston said.
‘‘But people are still consuming highquality protein and there is demand for it through the retail or home delivery services.’’
African swine fever, which has decimated the pig population in China since it broke out there in 2018, has been a factor in greater demand for beef, but it’s becoming less so as the pig population rebuilds and as the People’s ’s Republic opens more doors for pork imports.
Mr Kingston said port congestion in China, as the authorities check cargo for Covid19, had created a backlog, but said Alliance was still landing goods there comfortably.
Currency concerns were starting to be an issue, he said.
The New Zealand dollar last traded at US72c, up from US66c this time last year.
Mr Kingston said the effective cost of that shift in the currency was $155 per head for cattle beasts and $13 a head for lamb.
Sirma Karapeeva, chief executive of the Meat Industry Association, said the sector had emerged from the challenges posed by Covid19 in reasonable shape.
‘‘In the top 10 markets, the value of our exports held firm, if not increased a little bit,’’ Ms Karapeeva said.
Domestically, she felt that the industry’s ‘‘social licence to operate’’ changed for the better.
‘‘Covid19 and the fact that the agriculture sector as a whole kept going and propped up the economy, has changed people’s mindset a little bit,’’ she said.
‘‘The food service sector has been disrupted, so we have made some inroads into the retail space, and that seems to be going really strongly, and there are positive signals that it will continue that way.’’
She was optimistic about the year ahead, despite the challenges.
‘‘We have continued to export and have continued to contribute to the New Zealand economy,’’ she said.
‘‘We have kind of proved that when the going gets tough, the tough get going.’’
ANZ agriculture economist Susan Kilsby, in a report, said farmgate prices for lamb and beef were expected to soften further as New Zealand headed into the peak processing months.
‘‘Winter returns were lower than normal, but aligned with our previous expectations, as lockdowns limited demand for dining out opportunities,’’ Ms Kilsby said. — The New Zealand Herald