Friday, March 29, 2024

Deer farmers remain hopeful

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Deer farmers will be heading into spring with the long-term view that prices can only get better. Prices for venison animals during the traditional spring game season are expected to be just slightly improved on last year, when prices for limited volume contracts peaked at not much more than $7 a kilogram, a figure that’s considered unsustainable in the long-term.
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But farming is a long-term game and many farmers take the view that because prices are cyclical, it is in their interests to have a mix of species and income streams on their farms.

“History has told them that when the fortunes of one species are up, another is often down,” Deer Industry NZ (DINZ) chief executive Innes Moffat said.

Over recent years, venison prices to farmers have peaked at $11/kg, then fallen to their current level at about $5.50/kg.

“This is a much higher level of volatility than we have seen in decades and reflects the impact of covid on restaurant sales worldwide,” he said.

A small consolation for farmers is that the contracts on offer from marketers this year are likely to be for larger volumes than in 2020 and are based on guaranteed minimum prices.

Moffat says slaughter figures and Statistics NZ farm survey data shows that many farmers are culling hinds and keeping an increased number of velveting stags.

“But there are some who see a crisis as an opportunity, so we also know there are a number of farmers who are increasing their breeding hind numbers in the belief that good times lie ahead,” he said.

Arguments in favour of this strategy include the huge efforts that marketers are making to diversify markets as well as the channels within existing markets.

As indicated by one marketer at the recent deer industry conference, there’s a real risk for marketers that venison demand could exceed supply in the not-too-distant future.

“It’s easy to be wise in hindsight, but there is now universal recognition that the industry had too many eggs in the hospitality basket,” he said.

“When restaurants across the globe were closed by covid, our marketers were left with very few customers.

“Even now, restaurant demand is fragile, especially in northern Europe where the Delta variant is taking off.

Moffat says because the situation keeps changing and no one wants to be holding stock in a shutdown, prices for the chilled season are conservative.

“But because of the rapid vaccine rollout and better-than-expected demand last game season, they are being more optimistic with the volumes than they were last year,” he said.

In the last decade, the deer industry has achieved major success with the diversification of markets geographically.

Demand creation in North America led to it overtaking Germany as the largest year-round market for chilled venison.

This reduces currency risk and removes increasing quantities of venison from the volatile northern European game meat market.

“Unfortunately, successful market diversification has been no protection against covid, pandemics ignore geography,” he said.

Lesson learnt, the industry now has a major focus on building demand in channels that are covid-safe, particularly retail and online in North America and to a smaller extent, summer retail in Europe.

“In China, which has grown rapidly to become our third-largest market, we are exploring all channels, including hospitality, as well as the different cuisine styles,” he said.

He says between DINZ and the five major marketing companies, close to $1.5 million will be spent this year on market development for venison.

Marketing companies are exploring a huge range of opportunities.

“And when you look at the size of the markets they are working in, it will only take one or two successes for the industry’s fortunes to change quite dramatically,” he said.

In the meantime, Moffat says the current economics of venison production are tough for farmers with a passion for deer.

“Many of them will be reflecting on the fact that sheep, beef and velvet have also been through cycles when prices have been depressed,” he said.

“Taking a long-term view and spreading risk across several income streams is a strategy that has served many of them well over the generations.”

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