Silver Fern Farms remains upbeat despite trade disruption.
The Markets is a monthly segment on The Country where a guest takes a closer look at the red meat export markets. Recently, host Jamie Mackay spoke with Silver Fern Farms chief executive Dan Boulton about his positive outlook for the sector, trade expert Stephen Jacobi on the disruption of Donald Trump’s tariffs, and Silver Fern Farms chair Anna Nelson on exciting opportunities in Vietnam.
Recording a loss two years in a row hasn’t daunted Silver Fern Farms’ chief executive Dan Boulton, who says the future is bright for the red meat sector.
The farmer-owned co-operative side of the business recorded a net loss of $10.9 million after tax in 2024, not far off 2023’s $10.7m loss. Meanwhile, Silver Fern Farms Limited posted a $21.8m loss after tax with revenue decreasing $144m on the previous year to $2.64 billion
Boulton is philosophical about the annual results.
“Last year was a game of two halves, that’s the way I describe it,” he told The Country.
Boulton said that, back in January 2024, market pricings were still depressed, but some of that was offset by good livestock volumes and processing efficiencies in the first half of the year.
As a result, he said Silver Fern Farms was “tracking okay” by mid-year.
The rest of 2024 would bring challenges, however, with projected lower livestock volumes, particularly for beef.
“What we did underestimate is just the level of procurement tension that occurred through the back half of the last year,” Boulton said.
This meant that “all the market upside” from the last six months of 2024 was being paid out to farmers, he explained.
While the company was pleased that farmers were able to benefit from increased pricing, the procurement tension delayed investment that could generate true returns in the long run.
“Getting that balance between what you pay at farmgate and what we hold on to into our part of the business is critically important,” Boulton said.
“For processors to make money means we can invest in the market, we can invest in technology, in automation, processing efficiency, and that is all really, really important.
“So, when we don’t make money, that’s actually not good for our farmers in the long term.”
As for the future, Boulton was pleased to report that this year was shaping up nicely so far, with good returns for beef and improved prices for lamb.
Demand was also on the up, which Boulton saw as a positive.
“Demand for what we have here in New Zealand is going to outstrip supply. I think that’s going to continue to bring value back into our sector, and I think we’re in a period of a growth mindset and we need to rebuild confidence, to get our farmers back onto the land farming for the next generations.”
“I think the future is really bright for our farmers.”
While Boulton was upbeat about New Zealand’s red meat sector, global uncertainty loomed in the form of US President Donald Trump’s tariffs.
“We’re prepared for it, we have to be agile but also there’s potentially opportunities, because I think New Zealand’s well-placed compared to other nations,” he said.
Even though the tariffs were signalled early by Trump, trade expert Stephen Jacobi was still surprised by how disruptive they were.
“We didn’t actually foresee this level of uncertainty and complexity in the rollout of Trump’s tariffs,” he told Mackay.
Jacobi said that, while protectionism wasn’t new, Trump had turned it into “something of an art form,” marking a “fundamental change” in the global trade system.
“I would say, we’re going to have to get used to a different way of interacting on the global stage.”
This meant exporters needed to have a broad market presence.
“All countries, and New Zealand in particular, I would argue, do have options other than the United States, and I guess we’re going to see all of that come to fruition.”
One of those options was China, a market Jacobi said was even more important to New Zealand, considering its growing tariff tension with the US.
There were also other opportunities, as New Zealand faced less US competition for some agricultural products, because of retaliatory tariffs, he said.
“New Zealand is not without options. We have a global network of good FTAs.
“We have very strong partners around the world, and that is going to stand us in good stead, and I think probably we’ll do our best to weather the storm of these additional tariffs in the United States to the extent that we’re able to.”
One growing opportunity for New Zealand is Vietnam, where Silver Fern Farms’ Chair Anna Nelson was part of a business delegation led by Prime Minister Christopher Luxon.
She said that although Vietnam was currently a small market for New Zealand red meat, it was one that Silver Fern Farms was keeping a close eye on.
“There’s potential here,” she told Mackay.
Nelson said Vietnam had a rapidly growing middle class, which was changing the restaurant and retail trade as people’s wealth increased.
“They’re really interested in what the future of their diet looks like.”
Luxon aimed to boost trade with Vietnam, targeting $3 billion in two-way trade by next year, which Nelson said was ambitious but realistic.
As for Silver Fern Farms, challenges lie ahead, as most of Vietnam’s red meat comes from buffalo from India, and the retail and foodservice industry is currently relatively fragmented compared to other markets.
While the red meat market was currently “pretty basic”, Nelson saw opportunities as Vietnam’s economy grew.
“As the country gets wealthier, we need to think about how do we find the right partners in market?” she said.
“How do we pre-empt where the right infrastructure is going to be to help us turn up with the right people at the right time with the right products?”
She said it was a balancing act, and savvy investment was key in searching for and growing new markets.
“We’re seeing some signs here of real changes in infrastructure and investment within this country, and that wealth that we’re talking about.”