Strong demand for beef, lamb, apples

China's demand for beef has increased following an outbreak of swine flu in their pork industry. Photo: Yvonne O'Hara
China's demand for beef has increased following an outbreak of swine flu in their pork industry. Photo: Yvonne O'Hara
There is a strong demand for New Zealand's beef, lamb and apples by China, and that means better returns for Otago and Southland farmers and orchardists, says ANZ rural economist Susan Kilsby.

However, that also means the agriculture and horticulture sectors were more at risk, should the demand from China drop as it accounted for 24% of New Zealand's exports.

ANZ Research released its two-monthly Agri Focus ''Growth Mindset'' report for New Zealand primary sectors recently.

''Sheep and beef are looking pretty strong but wool is one factor that is dragging things down a bit,'' Ms Kilsby said.

Susan Kilsby.
Susan Kilsby.
''About 90% of the average sheep farmer's income comes from meat with the exception of high country farmers who run merino fine wool, with prices holding up reasonably well.

''Coarse wool is really struggling and has been for some time.

''However, we have seen a surge in demand for beef from China.

''They typically eat pork and fish but their pork industry is suffering from African swine fever and that is putting a lot of consumers off.''

Venison markets looked good following the value of venison exported from October to January pricing slightly higher than the same time last year.

However, the report said the volume exported during the same time was 20% lower than the same time the previous year.

Strengthening dairy prices as a result of a reduced global supply is also positive news and with good returns many dairy farmers will be able to repay debt.

The ANZ is forecasting a milk price of $6.40/kg for the current season and lifting to $7.30/kg for the 2019/2020 season.

''Many in the dairy sector have had to borrow in the past few years, often just to keep afloat,'' she said.

''While the dairy sector is strong and expects to be even better, we will see the flow-on through to extra spending, although input costs continue to creep up across the board.''

There are indications the dairy sector [generally] is moving away from spending on lot on bought supplements.

She said some companies were encouraging their suppliers to no longer use palm kernel extract (PKE).

China is also driving demand for apples and there is expected to be a record harvest this season, both of which is good news for Central Otago growers.

The dry weather had contributed to a lower grape yield in Marlborough, although Ms Kilsby was unsure if that applied to Central Otago's grape harvest at this stage.

However, the lower yields could mean a higher quality vintage.

Issues with permanent and temporary labour supplies are affecting farming, horticulture and processing sectors.

''That is a real challenge across the whole industry.

''Some meat companies have not been able to have full labour shifts, although some of the lamb kill has been a bit slower than normal this year, which alleviates the pressure a bit.''

The animals are remaining longer on the paddocks, and gaining extra weight.

''Up to the end of February carcasses [on average] were 1kg heavier than this time last year - 18.8kg compared to 17.9kg for the season so far.''

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