The past month has created an unbalanced supply and demand, slashing farmgate prices further to $5.50/kg.
Demand in key markets is weak because of the closure of restaurants. That is being matched with an unseasonably high supply of New Zealand venison.
The drought is pressuring many to offload breeding hinds and some velveting stags. Two of the five major venison companies have moved to an owner account model meaning producers will be paid the balance of the schedule price once the venison is sold.
A multitude of factors will shape any revival in market demand.
The relaxation of covid-19 restrictions and the reopening of restaurants in Europe and the United States will be a significant first step.
The NZ venison industry needs restaurant trade to resume to absorb stocks and encourage new orders. In Europe there were high volumes of European hunting venison in cold storage before covid-19. That might limit any initial upside for NZ venison.
The other concern is that economic conditions in the markets could be marred by a lengthy recession with consumers trading down to cheaper proteins.
The pet food market that boomed over the last few years as a profitable outlet for venison byproducts was already under immense pressure before covid-19 because of falling demand and weaker prices.
That market now remains in limbo with the Chinese wild-food ban. Venison bones are included in the ban but the Primary Industries Ministry is working with Chinese authorities to ensure NZ farmed deer products are taken off the list.
Red deer cuts have recently been classed as special livestock and excluded from the ban. However, some other species of deer are classified in the wild-food ban, resulting in confusion and uncertainty in the Chinese market. How different provinces interpret and enforce the ban is unknown. It has the potential to slow the recovery in the market. In the last year China grew to become NZ’s third-largest venison export market behind Germany and the US.
A return to $10/kg for venison should not be a short to medium-term goal for farmers. Early indications point to a spring peak between $6.50-$8/kg, which clearly indicates the high level of volatility in the venison market.
The restaurant market recovery, reducing cold storage stocks and improving confidence in key markets will all affect peak spring prices. A strong supply, which hints at a reduction in capital stock, combined with weak demand highlights a softer outlook despite exporters working to sell products.
Venison will recover, it always has, but the timing is still very unclear.
