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Rural Insight: Deer a profit option in hill country

Tags: Rural Rural Insight

Despite challenges around competing land uses and a shrinkage in the national herd, the deer industry is well positioned to fulfil New Zealand’s goal to provide high quality protein products to the world’s most well-heeled consumers.

An ANZ agri-report produced this winter highlighted the industry’s continuing tight supply of livestock and growing global demand for venison as a red meat product. Both were pushing the sector towards returns approaching all-time highs for the 2017-18 year, now cracking the $9/kg schedule price.

Deer Industry New Zealand reports the sector is moving through one of its most stable supply periods ever experienced. This comes after the tumultuous surge in returns and numbers over 10 years ago, followed by a rapid drop in the farmed population, and a spike in farmer returns in 2008 driven by the weaker value of the New Zealand dollar.

Over that time the sector has managed to achieve something rarely seen in the red-meat sector, a level of stability that has the average schedule price at $7.40 a kg.

In the past decade the number of breeding hinds in the sector have declined almost every year, and are now at half their 800,000 peak. Similarly total slaughter numbers are levelling off at about 300,000 and unlikely to pick back up to nearer 400,000 until 2019-20.

Bayleys rural agent Ben Turner in Canterbury says he has a regular stream of buyers interested specifically in deer units.

“However the challenge for us is finding enough deer units to meet that interest.”

He said Canterbury is more suited than ever to an industry that is showing signs of maturing with steadier, high level returns justifying the investment in infrastructure like fencing and yards on land ideal for deer fattening.

“It is quite possible that some of that hill country where sheep have typically been stocked may prove to deliver a better return in deer, and it’s well suited for that.”

He said with farmers also increasingly challenged over nitrogen losses in Canterbury, deer may also prove a useful additional land use that does not face the same challenges as traditional livestock.

Dan Coup, DeerNZ chief executive says the deer industry has had an ill deserved reputation for price volatility, when in fact the past decade has delivered relatively steady returns, despite variability within the year on schedule prices.

Deer may prove a useful additional land use that does not face the same challenges as traditional livestock.

“We are now at a point where the schedule is at $9.00/kg, and that is before our usual seasonal spring price peak.”

The supply side tension coincides with growing consumption outside of traditional season and markets has done much to put the product in a “sweet spot” for high, sustained returns.

A concerted effort by New Zealand marketers in the field overseas has helped deliver longer term, more sustainable returns to farmers here.

These include wealthier parts of Asia, Scandinavia and North America, with the United States showing the strongest growth to date.

That market’s total volume share stands at 30%, with a value share of 25%, overtaking Germany. While coming off a small base, Canada and Austria have also demonstrated strong growth.

ANZ analysts have reported the success of venison matches the trend for consumers seeking natural grass fed, high quality proteins that are not genetically modified, have no hormone treatments and no antibiotics used.

Being the largest farm source of venison in the world, New Zealand is well placed to meet this with most markets relying otherwise upon sporadic and unreliable sources of wild game over their main consumption periods.

Being the largest farm source of venison in the word, New Zealand is well placed to meet changing consumer trends towards high quality proteins.

Dan Coup says the sector’s livestock supply is likely to remain tight for a couple of seasons yet, as the higher prices encourage farmers to retain stock and build breeding herd numbers.

“We have been through a period where country that may have had deer on it has had them replaced with dairy support units.”

He says there are still a number of farms in Canterbury and Southland hill country with deer farm infrastructure including fences that have gone to sheep and beef in the past.

“As the tone has got more positive for deer farming, the option is there to buy a unit with the fences and facilities there. This may prove cheaper than converting a farm into deer.”

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