Off the menu. Export lamb rack prices have fallen as the world's restaurants have suffered from Covid-9 lockdowns, but the NZ meat trade has largely weathered the storm created by the pandemic. Photo / Supplied
Off the menu. Export lamb rack prices have fallen as the world's restaurants have suffered from Covid-9 lockdowns, but the NZ meat trade has largely weathered the storm created by the pandemic. Photo / Supplied
New Zealand's export meat prices are running at above five-year averages, despite demand from the world's restaurant trade being hit hard by Covid-19 lockdowns.
While the sector successfully weathered last year's pandemic-driven disruption, Alliance Group general manager Shane Kingston said the stronger New Zealand dollar and ongoing constraints in foodservice were significant headwinds.
But he said Alliance - New Zealand's biggest sheepmeat exporter - 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 Covid-19 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 five year averages and in some cases ahead of last year," Kingston told the Herald.
Beef export prices into North America were up 10 per cent on five year averages but were down on last year.
Key lamb products into China were up almost 20 per cent on their five year average and up six per cent on last year.
On the flip side, the price for lamb racks - a restaurant staple - were down 30 per cent on their five year average with little immediate signs of recovery. Low lamb rack prices were impacting on overall carcase returns.
"Quick service and fine dining restaurants in Asia are getting back to about 80 per cent of pre-covid levels but the mainstream, high capacity restaurants are not because people are fearful of dining in big groups," Kingston said.
"But people are still consuming high quality 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.
Kingston said there port congestion in China, as the authorities check cargo for Covid-19, 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.
Kingston said the effective cost of that shift in the currency was $155 per head for cattle beasts and $13 a head for lamb.
New Zealand meat exporters have benefited from improved demand from China. Photo / File
Sirma Karapeeva, chief executive of the Meat Industry Association, said the sector had emerged from the challenges posed by Covid-19 in reasonable shape.
"In the top 10 markets, the value of our exports held firm, if not increased a little bit," Karapeeva said.
Domestically, she felt that the industry's "social licence to operate" changed for the better.
"Covid-19 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," Karapeeva said.
"The foodservice 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 are expected to soften further as New Zealand heads 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," Kilsby said.
China remained a bright spot as its economy was recovering quicker than other parts of the world.
Further lockdowns remain the key risk for demand for high-end meat cuts that are typically consumed at restaurants, Kilsby said.
"International prices for New Zealand beef and lamb have generally stabilised but the strong NZ dollar is taking the edge off farmgate prices," she said.
