Things looking up for sheep growers

Christmas is coming for food exporters, but it will be another year before they get to open the presents, according to Rabobank senior analyst Wendy Voss.

Ms Voss was particularly optimistic about sheep meat, but said the long touted pick-up in demand for all red meat was real, even though consumer sentiment in New Zealand's key markets was expected to remain subdued until the middle of next year.

The worst of the economic recession was over and there were "green shoots" appearing in the world economy, the Australian-based analyst told a New Zealand audience recently.

"There's always a chance things may improve before then, but realistically demand won't pick up until economic growth improves and unemployment rates begin to ease in key markets such as the United States and Japan."

Before the financial crisis, meat prices were rising due to tightening supply resulting from liquidated flocks and herds and a lack of profitability for several years prior.

Ms Voss said in an interview that sheep meat producers were especially lucky because supply had fallen so sharply.

"Once we do get a pick-up in demand, which I hope will come in the middle of next year, there will still be tight supply."

The sheep meat sector should enjoy exceptional growth leading to improved prices, because it was such a specialised industry and the workload meant farmers were less likely to convert to sheep farming.

While China was a looming sheepmeat export destination, Ms Voss said the country with the world's largest sheep flock was also under pressure from high input costs, small farms, poor productivity and no Government support.

This was occurring as the Chinese population became more affluent, wanted sheep meat and as a result could require greater import volumes.

India also had huge potential, she said, and it was a market potentially the size of the United States which could take 40,000 tonnes of lamb.

Sheep and goat meat were already earning premium prices.

However, it was tightly protected and Government negotiations were needed to make it accessible to New Zealand exporters.

"It's a market which prefers sheep meat. Like the US, it's a niche market which does not require the educational work you have to do in some other markets."

Ms Voss said the world's sheep meat producers needed to work more closely together to ensure consumers were aware of the product and to help educate them on how to cook and prepare it.

But as flocks decline, the ability to leverage levies to pay for such promotion would also decline.