Good news for sheep farmers

Rabobank animal protein analyst Rebecca Redmond has a message for New Zealand sheep farmers - stay positive and remain confident.

Ms Redmond spoke about global sheep meat price rises and the potential flow-on effects on international production and competition during a recent client focus field day at Newhaven Perendales in North Otago.

The year 2012, worldwide, was probably going to be the lowest point in terms of sheep meat production, but Ms Redmond expected that by 2015, volumes would be back to 2010 levels.

New Zealand and Australia were "pretty much" the only countries that were positioned well in terms of taking reading the market and responding with production.

But the two countries were fundamentally different.

Australia had about 74 million sheep this year - much fewer than it used to have - and half the flock was merino.

Of the 74 million, about 40 million were breeding ewes and, of those, about half would have a merino ram put over them because the Australians were still very much focused on wool production, rather than meat.

"Even though they've got quite big production numbers, we're far more focused in terms of meat production."

However, the Australians had "pretty big aspirations" and were forecasting they could increase their meat production by 5%-7%.

Discussing competing agriculture, Ms Redmond said although there had been a very strong period of competition in New Zealand from the dairy industry, that was not unique.

The Irish were in the same position, except there it was a very strong increase in cattle and a decline in sheep numbers.

Something similar had happened in Argentina, Uruguay and the United States, all with different forms of competing agriculture.

There was no indication that there was going to be "any great slump", and, if anything, New Zealand prices should start to rise because there was not enough product to meet demand.

"We think that after 2012, price signals will convert and we'll start to see production lifts."

It was "not looking very flash" on the farmgate schedule at the moment, but "on a relative scale from where we've been", it was "still OK".

There were still some very solid price signals to "continue to grow sheep meat".

Asked if quality was still important, Ms Redmond said, "Absolutely."

It was a premium product, competing with the likes of Alaskan salmon and prawns, and it was being bought by a discerning consumer.

When they were paying $US25 ($NZ32) a kg, they were looking for an "excellent" eating experience, and that was one of the key points to lamb prices staying up.

Asked about the future of the dairy industry, she said the forecast for dairy production worldwide was that it was plateauing and believed there would be moderate growth.


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