New Zealand market snapshot released
08 August 2018
Australia and New Zealand (NZ) are the two leading global sheepmeat exporters, particularly with respect to the prime lamb trade. However, with increasing global demand for sheepmeat set to exceed the production capacity of both nations, growing the value of exports in premium markets will play an even more prominent role for both suppliers.
Since 2007, NZ sheepmeat (lamb and mutton) production has failed to surpass 500,000 tonnes carcase weight (cwt), underpinned by a contraction of the sheep flock from 2007-2014 (23%), resulting from an expansion of the dairy herd (27%),
On-farm productivity gains, specifically through improved lambing rates and increased carcase weights, have provided some support to sheepmeat production but not enough to mitigate the decline in the sheep. NZ sheepmeat exports have remained stable in recent years, after a period of growth from 2011 to 2014, albeit at the expense of the domestic market.
Traditionally, NZ sheepmeat exports have been destined for the European Union (EU) and while this remains a prominent market for NZ sheepmeat, the development of exports to China has been robust.
NZ, like Australia, has emerged as a dominant supplier of sheepmeat to China, with consumption growth underpinned by rising disposable incomes in China and an inability for domestic production to keep pace with demand. Preferential free trade agreements (FTA) have also supported the trade, with NZ lamb exports to China in 2017 totalling 107,000 tonnes shipped weight (swt) and mutton reaching 47,000 tonnes swt.
As highlighted last week, current export demand has seen lamb prices surge and, in light of supply limitations, growing the value of sheepmeat exports will increasingly become a focus for the NZ sheep industry as a means of differentiating itself as a premium supplier.
In recognition of the need to grow the value proposition of NZ sheepmeat, Beef + Lamb NZ recently launched Taste Pure Nature, a country of origin brand aimed at delivering the provenance story of NZ red meat, similar to Australia’s global brand, True Aussie.
NZ is not expected to increase production or its exportable surplus significantly, if at all. Any lift in NZ exports will be underpinned by on-farm productivity gains, specifically through improved lambing rates and increased carcase weights.
The shifting reliance on China could leave NZ exposed to economic shocks or swings in China’s domestic sheep flock. Given the price-sensitive nature of the Chinese market, a slowdown in economic growth could see demand in the region subside. Conversely, a recovery in the Chinese sheep flock could also generate a similar outcome. Any such outcomes would result in increased pressure on markets where Australia has greater market share, namely the US and Middle East, or result in a resurgence in NZ lamb entering the EU.
In the short-term, growing the value of sheepmeat exports, through programs such as Taste Pure Nature, appears to be a priority for NZ while longer-term market access opportunities could provide further benefits to the industry.
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