Demand drives export rise

Meat and wool export values are expected to increase.

Over the next five years meat and wool exports could rise by 22 per cent, with a large demand from Asia and high prices because of a globally constrained supply of beef and lamb.

Beef + Lamb New Zealand is riding the wave of China's growing economy and the nation's appetite for Western-style meat diets.

The Situation and Outlook Primary Industries report said rising demand for red meat was putting pressure on worldwide demand. Dairy farming expansion also continues to threaten the meat industry but productivity improvements and average carcass weights of slaughtered animals were expected to offset declining herd and flock numbers.

The report estimated meat and wool export values would reach $8.2 billion by June 2015 and increase further to $9.4 billion by 2018. Over the next five years exports were expected to increase by 22 per cent, driven by high prices from a globally constrained supply of beef and lamb and mounting demand from Asia.

China was now the most significant market for New Zealand's meat and wool exports.

Although the US remained New Zealand's largest market for beef, accounting for almost half of all exports.

In its Agricultural Long Term Projections, the US Department of Agriculture forecast Asian beef imports to more than double to 3.9 million tonnes by 2023, with most of its growth occurring in the Chinese and Hong Kong markets.

However, New Zealand would not be able to greatly lift total export volumes to take advantage of that but volumes could be diverted away from certain markets that had higher tariffs or unfavourable exchange rates compared to its competitors.

Over the next 12 months, beef export prices in US dollars are forecast to remain high because of droughts in Australia and America.

Beef + Lamb NZ chairman James Parsons said it planned to increase awareness about grass-fed beef.

Education was the key focus with its biggest customers, he said.

"We are working with local importers to target premium restaurants in key cities to run joint promotions to increase the awareness and exposure of NZ grass-fed beef with consumers.

"This includes educational workshops, cooking demonstrations, recipe development and correct handling techniques for those cuts that dominate the China market."

Local importers were targeted by premium restaurants in key cities to run joint promotions and the retail sector was utilising in-store tasting platforms alongside incentives and information on New Zealand grass-fed beef, Mr Parsons said.

Productivity was being improved behind the farm gate through breeding and selection, pasture and forages and farming systems, he said.

The People Powered Capabilities Report has suggested the red meat and wool industry would need 5100 fewer people by 2025.

In 2012, 36 per cent of the red meat and wool workforce had a formal qualification and by 2025 that was expected to increase to 55 per cent. The industry was likely to need to find an additional 32,700 trained workers to replace the natural attribution of workers.

The qualifications most likely to be in demand are likely to be in the engineering field of study, the report said.

Mr Parsons said it was never pleasing to see a decline of workers in the sector.

"The level of decline is decreasing but it's good to see that the workforce over all in the Primary sector is increasing.

"As the report shows our sector will lose over 32,000 through natural attrition, therefore we have to work with the next generation to attract, develop and retain talent. Our focus will be on ensuring qualified people are coming into the sector.

"The Red Meat Profit Partnership has a programme of work focusing on attracting, developing and retaining talent, that will roll out in the next couple of years."

Export returns from the primary sector were estimated to have hit $37.7 billion in 2013/14 but were forecast to fall to $35.8 billion in 2014/15, rising steadily over the next three years to hit $40.8 billion in 2017/18.

Dairy now accounts for 46 per cent of total primary industries export value and 35 per cent of total New Zealand merchandise export value, according to the ministry. High prices for dairy in 2013/14 were supported by other products such as logs, meat and aquaculture, but were partly offset by a higher dollar.