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October 2011
INSIDE Stability the new paradigm Page 4-5 Lifetime achievement award for Sir William Gallagher
Page 15
‘Canterbury farming’ writer scores top journalism prize
Introducing your regular Guide Pages 25-29
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— or turbulent deer industry
By Hugh de lacy A utopian vision to take deer farming through to its 50th anniversary in 2025 has been predicated on something with which the industry has so far seldom been associated: medium-term stability in both the venison and velvet markets.
• Improving on-farm productivity through the integration of research and development, farm management and people into profitable farming systems;
Once notorious for the violence of its swings and roundabouts, the industry has settled into a comfortable equilibrium that allows it to look forward to steady product and market development over the next 14 years, Dear Industry New Zealand (DINZ) chairman Andrew Macfarlane told “Canterbury Farming.”
The venison strategy is accompanied by one for velvet which stresses the hightech end of pharmacology in further developing velvet as a healthy functional food product component.
The term “deer industry utopia” was coined by DINZ product manager and long-time industry stalwart Tony Pearse at a recent technical conference held under the auspices of the deer section of the New Zealand Veterinary Association. But while it’s visionary, the strategy is also pragmatic, Macfarlane said, citing the five linked venison strategies that Pearse’s paper enumerated: • Achieving a demand-led premium positioning of New Zealand venison underpinned by a differentiation strategy;
• Ensuring the industry has freedom to operate.
Providing a firm basis for both strategies is their recent record of stability in both production and returns, Macfarlane said. “Deer numbers are stable at about 750,000 hinds. “The numbers have been falling very slowly but we think they’ve stabilised and are at the bottom now. “The numbers have been falling on the lower country because of changes in land use, but they’re rising in hill and high country because they’re a better fit” with sheep and beef cattle, Macfarlane, who farms in Mid-Canterbury, said.
• Long-term commitment to product and market development;
Venison production in 2011 was almost identical to the 22,000 tonnes from 401,000 slaughtered animals produced last year.
• Encouraging farmers, processors and customers towards long-term supply commitments;
Hinds still comprise about 48% of the kill, up 1% on the previous year but sharply down on the 2004-2008 period when
the hind slaughter averaged 54%. Exports in the 12 months to June this year reached 15,628 tonnes, up 4% on 2010, with frozen product still dominating at 11,758 tonnes (up 2%), but the higher-value chilled product up 11% to 3870 tonnes. “The international market demand is mainly driven by the European hunting season, which has now been supplemented by an all-year-round supermarket supply,” Macfarlane said. New Zealand consumers are benefitting from greater availability of product in local supermarkets, with processors such as Silver Fern Farms, Anzco and Alliance working on developing the high-price niche with the same topquality product that European consumers enjoy. “It’s still a seasonal product to a significant degree, so the drivers that have spiked up the prices of lamb, and pushed up beef as a commodity product, are different to what we’re seeing with venison.” Lamb’s increase has narrowed the gap with venison but, “we’ve got stability with venison and I’m confident we’re getting incremental value gains.” Lamb’s increase, by contrast, is driven by big falls in production in New Zealand, Australia and Europe. At the production end,
there’s still a place for deer as part of integrated farming systems on intensive irrigated low lands where dairying and arable farming otherwise enjoy higher profitability levels. “Per hectare dairy’s way ahead but you’ve got to invest a hell of a lot of capital to get there. “As you move up into the harder class of country deer become more and more the best option. “On summer dry country, for example, velvet stags are a very good fit as they don’t need a lot of feed in the summer.
“There’s some very good work being done by some individual small processors in the American market, but it would also be fair to say that the Asians understand velvet and have a big demand for the product. “We see the development of western markets as being more of a long-term strategy.
“On summer cold, summer wet country, breeding hinds are a particularly good fit for the feed curve,” Macfarlane said.
“The key area of potential development is as a functional food in Asia: velvet as a component of a food product.”
Velvet’s price stability at about $90/kg at the farm gate is based on stable production at around 450 tonnes a year, and is helped by continued slow diversification away from the Korean traditional eastern pharmacy market to wider applications in China and in western markets.
Continued price stability in the short to medium term is underwritten by the low levels of carry-over stock from season to season, and no repeat of the heavy culling of velvet stags in New Zealand, Canada and China that generated a damaging production spike four years ago.
• • • • •
“Velvet’s driven by Asian demand and it’s been pretty stable for the last three years, but it’s stable as long as we keep our production within that 400-450 tonne bracket,” Macfarlane said.