Red meat: Can it recover its glorious past?

Is time running out for New Zealand's red meat industry? Photo / FoodHQ

THREE KEY FACTS

• Red meat faces four major headwinds: Changing consumer demand, China’s slowdown, trade protectionism and new protein technologies
• New Zealand is uniquely placed to build on its grass-fed advantage to be nature-positive
• Innovation helped New Zealand farmers shift from volume to value; it can help make even more from less, as co-products from the cow become increasingly valuable

This article was first published in Future of Food, November 2024, by FoodHQ, written by Vincent Heeringa and FoodHQ chief executive Dr Victoria Hatton.

Part one of a three-part article.

Sheep and beef farming were once the core of the New Zealand economy.

In 1920, they helped make New Zealand the richest country per capita in the world. But as dry-stock farms struggle for profitability and parts of the world reach “peak meat,” can the industry recover past glories? What is required to thrive? We look at the threats and the opportunities ahead.

Two headlines, two different stories

In April, Nadia Lim and her partner Carlos Bagrie were pictured standing smiling in a warm wheat paddock in Wānaka, proud owners of the Royalburn Station, a sheep and grain farm founded in 1845.

Lim’s shift from celebrity chef and co-founder of My Food Bag to farming entrepreneur made the pages of all the major outlets, TV news and Farmers’ Weekly.

There’s a TV show too, now in its second season.

It’s a heartwarming story. Bagrie and Lim are creating the kind of regenerative farm that New Zealanders dream of.

“Bees pollinate, so clover is grown for seed production, while barley straw, wheat straw and chicken manure are used to produce compost, which was then used in the market garden,” wrote Stuff.

The pair has built an onsite abattoir to process the stock. Produce is sold direct to the public at the Royalburn Farm Shop in Arrowtown and to high-end restaurants.

They won the Primary Sector Award at the 2023 New Zealand Food Awards for their Royalburn Fine Lamb.

“We’d never move back to the city now,” Lim told The Spinoff.

“We say to our kids every dinner time ‘You boys have no idea how lucky you are that we have all our own food here’, and they just go ‘Yeah, yeah, whatever mum’.”

Five months later, newspapers carried a different story: the likely closure of the Smithfield sheep processing plant in Timaru.

Some 600 jobs are to be lost and a major asset for the region mothballed.

Some blamed the rise in forestry, encroaching on productive land. Some blamed a rise in regulation or a decline in demand. Everyone blamed high interest rates.

They’re all right.

Alliance, the farmer co-op and owner of Smithfield, posted a $97.7 million loss the previous year off the back of falling sheep numbers and a slump in overseas demand.

Forestry is growing as farmers seek alternative revenues. High interest rates, energy prices and compliance costs have hit businesses hard.

The image of farming we’d like to imagine is more like Royalburn Station – diversified, healthy, family-owned and successful.

But is it more like Smithfield – a business model that needs innovation to evolve?

Growth industry

Sheep numbers have declined in New Zealand since the 1980s. Photo / Warren Buckland

It’s no exaggeration to say that New Zealand was built off the sheep’s back.

Thanks to this glorious woolly beast, we became one of the most prosperous nations on earth, the world’s largest exporter of lamb, a global leader in wool and genetics, and home to Shrek, the world’s woolliest sheep.

There were once 22 sheep for every citizen, with numbers peaking in 1982 at 70 million, and while numbers have fallen dramatically since then, forecast to be just under 24 million by the end of 2024, we still have a record five sheep for every person.

There are 16,000 sheep and beef farms, and we remain the world’s largest exporter of lambs.

Sheep are still big business.

And even though headcount has plummeted, the total revenue for lamb has grown, reflecting an almost doubling of productivity since 1990.

That’s a result of better genetics, better farm management and smarter marketing.

It’s a story repeated by other meats.

According to FigureNZ, in the last 20 years, beef exports have grown to $4.6 billion from $1.8 billion, yet the total herd has fallen from 4.7 to 3.6 million.

Deer numbers have shrunk by a million to about 750,000, yet venison revenues have grown slightly.

The meat sector has done a credible job of generating more value from less volume.

But is it enough?

Behind those impressive numbers are worrying signs.

A report from the industry body Beef+Lamb, released in September, showed that farm profit was forecast to decrease 7.4% to an average of just $45,200 per farm. That’s a whole lot of effort for very little return.

Since then, Beef + Lamb has released its mid-season update showing profitability had improved significantly, but it was still challenging for farmers, “as our revised forecast is 7% below the five-year average. Revenue is up 11.5%, while total farm expenditure is estimated to increase 3.8%.”

A collapse in wool prices has added further economic stress.

Once a miracle fibre, fulfilling half of New Zealand’s exports, wool has been displaced by synthetic alternatives and is struggling for relevance.

Since 2004 the export value of carpets and wool products has dropped by two-thirds. Every summer we see the tragic sight of wool fleeces discarded for want of buyers.

With consumption falling among our traditional trading partners due to health and environmental concerns, can New Zealand’s red meat sector flourish again?

“I think New Zealand sheep and beef farms have got an amazing story to tell, creating incredible products and doing amazing things for the environment and for their communities,” Nick Rowe, Innovation Manager at Silver Fern Farms, said.

“But it feels like a little bit of a point of inflection at the moment.

“We have yet to prove whether we can be successful in leading change throughout the value chain to optimise core business and at the same time create significant future growth.

“All innovation carries risk. But I know if we succeed, this industry can flourish again.”

Get it right, and New Zealand could tap into a hungry market – after all, the world loves meat.

According to Coriolis, over 7.5 billion people across 195 countries eat meat, making it the sixth-largest food source by volume.

The average person consumes about 45 kg of meat per year, or roughly 123 grams per day.

“With an additional 1.5 billion consumers expected in the next 25 years, primarily in Africa and Asia, meat consumption is set to rise further.”

So, what’s the problem? And can it be overcome?

Part one of a three-part article - read part two, “Red meat challenges: Tech, environment, demand and China” tomorrow.