Deer farmers in vicious circle

Deer farmers who send too much stock to the works in the face of poorer returns risk the future stability of the industry, says Deer Industry New Zealand.

Production for the year to September was up 12 per cent on the previous year at 762,427 deer, as farmers continued to reduce their exposure in the face of low returns.

However, industry chief executive Mark O'Connor said the 70 per cent increase in deer supply during the past three years had not been driven by market demand.

The industry was in a vicious circle where farmers reduced stock because of low prices, which increased supply and drove prices down.

But O'Connor believed that farmer prospects would improve as the present supply was cleared through export markets and production levels were reduced.

Production is expected to fall this year to about 650,000 deer.

However, of particular concern has been the continued increase in the hind kill, which now accounts for 52 per cent of the total.

It means the breeding herd is diminishing, which might impact on the size of future herds and kills.

"What we don't want to happen is that producers kill so many deer that numbers available get so low that the market is shorted and prices skyrocket again and we go into another roller-coaster," O'Connor said.

Prices move during each season and are now $3.45 a kilogram. Ideally, O'Connor would like to see the price come back towards the 10-year average of $5.03.

On a positive note, the additional supply has been selling through, with total export earnings, including venison and velvet, of $263 million for the year to September - an 11 per cent increase on the year before.

O'Connor said this year's European game season had suffered a slow start but importers were not sitting on large stocks, and anecdotal evidence was that sales had been good.

The industry now faced a choice between remaining a relatively small supplier or investing in product promotion, developing demand in high-value markets and raising production efficiency.

Venison traditionally sells through hotels and catering establishments.

"Having more retail business would balance that out and there is an opportunity to be selling venison outside that game season," O'Connor said.

An agreed strategy to develop retail and out-of-season sales and improve efficiency has got the industry moving in the same direction.

Demand has also grown in Australia, Korea and Taiwan, but not for high-value meat.

"So the majority of that business is not business for the future," O'Connor said. "It's good to have at the moment when volumes are high and product has to move but they are very much based on price."

Exports account for at least 95 per cent of production, which has left farmers exposed to the high value of the dollar, particularly against the euro - Europe alone accounts for 80 per cent of exports.

"It [the exchange rate] has come back a little bit since Christmas but it's still at historically high levels and that makes a real difference to exporters," O'Connor said.

Apart from developing high-value markets, the industry needed to increase productivity, raise the weight of meat on the hook and improve the survival rate of young deer.

Meanwhile, submissions made last year on proposed new regulations for deer farmers will be discussed by key stakeholders this week.

The Department of Conservation's proposed new regulations included a post height of 2m, which was a small increase on the 1969 requirement of 6.5 feet (1.98m).

Andy Mitchell, spokesman for the NZ Deer Farmers Association, NZ Game Estates Association and the Game and Forest Foundation, had raised concerns that fences considered adequate by farmers would have to be replaced at a potential cost of $100 million.

But DoC national spokesman Don McKenzie said it would be an extreme measure to recommend that fences were pulled up.

"We just wouldn't do it," he said. "But if somebody is keeping deer behind one wire or something like that and they are escaping, then they are not meeting the regs."

Generally, updating fencing to meet new regulations would be done during maintenance work and McKenzie said any new regulations should be treated with common sense.

"It would be crazy to think that somebody's fence doesn't pass because its [posts are] 5.1m [apart] instead of 5m."

O'Connor said the farming industry did not present a significant risk of deer escaping into the wild.

"It's potentially a big issue if DoC tried to go ahead with putting in place draconian and unreasonable measures. But we've got a fairly reasonable dialogue with all parties so we're working to find a reasonable solution."

After discussions with stakeholders, DoC will draw up draft recommendations for the Government next month.


Deer industry

* 5078 deer farms.
* 762,427 deer killed.
* $263 million of export earnings.
* 38 per cent of venison exported to Germany.
* 59 per cent of velvet exported to Korea.
* 366,000 hides and 198,000sq m of leather.