Friday, March 29, 2024

Deer sector ready for challenges

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After several seasons of strong export returns New Zealand’s venison farmers are well positioned to overcome the severe trade disruptions of covid-19, Rabobank animal proteins analyst Blake Holgate says.
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But the industry and venison marketers make no attempt to sugar-coat the difficult situation they are dealing with.

Holgate said venison producers have enjoyed a good run benefitting from healthy export sales into both established and new markets. 

“In the last five years we’ve seen significant export growth in the United States, partly due to increased demand for venison in pet food while we’ve also seen strong sales in long-standing European markets such as Germany and Belgium.”  

The industry has also increased sales in emerging markets like China with exports growing rapidly.

Venison prices reached an historical peak of $11.50 a kilo in 2018 and while prices drifted lower in 2019 the industry is in a healthy position. 

“Many in the industry started this year with strong, resilient businesses and this will be important as the industry navigates what is now likely to be a challenging next 12 months.” 

Holgate said the covid-19 impact on global food service hit venison demand hard. 

Exporters are running into additional challenges with the Chinese government in January declaring a ban on consumption of wild animals that originally included farmed deer products. 

Since then many deer species have been reclassified as special livestock, exempting them from the ban but there is still concern confusion about the status of deer products might cause some disruption once the product arrives in China. 

Exporters want assurances the exemption for deer is well understood and consistently applied by Chinese regional authorities, Holgate said.

He expects the real challenges from covid-19 will evolve as the year progresses. 

Despite the likelihood of considerably lower demand for venison, sales of manufacturing venison and the European game season will help ensure a base level of demand. 

“Venison sales to manufacturing remain stable and in coming months we expect demand for these products is likely to fare better as more consumers are shopping and preparing meals in their own homes. 

“The well-entrenched game season in the northern hemisphere autumn remains an important sales window for NZ exporters and at this stage we anticipate the worst of the covid-19 related disruptions may be behind us by then.” 

The industry’s diversity across markets will benefit exporters, letting them switch exports to the markets that recover earliest, Holgate said. 

NZ farm-raised venison marketers are making a concerted push to build sales through online outlets and gourmet retailers. 

Deer Industry NZ chief executive Innes Moffat said covid-related restaurant shut-downs created a crisis for food service suppliers and the farmers who supply them.

“Covid-19 has had a much greater impact on current and forward sales of venison than for other red meats.”

So Dinz has reviewed and prioritised its market support and development programme including restoring access to China and supporting venison companies and their market partners to develop new sales channels and backing. 

“Fortunately, our venison export marketers and some overseas partners already had small retail and online marketing programmes and they are now putting a lot of energy into generating more sales through these channels while looking out for the green shoots of recovery in food service,” Moffat said.

That is a shift in priorities from developing new markets offering year-round demand at premium prices for a wider range of venison cuts, a strategy where the industry is having considerable success. 

“In response processors have reduced the schedule prices they offer farmers for their deer with some now processing deer on the understanding that the market risk will be shared by the marketer and the producer.” 

But online and retail are not quick fixes because new consumer-ready products need to be developed, Moffat said.

“Retail is very price-competitive and needs significant promotional support but when we put the pandemic behind us we will have stronger retail and online sales programmes in place, making the industry better equipped to handle whatever the future holds.

“We expect the next 12-18 months will be difficult for everyone in the food service supply chain including the farmers who supply them.”    

Dinz is working with the Ministry for Primary Industries and the Ministry of Foreign Affairs and Trade regarding NZ farmed venison versus wild animal status.

“We expect we will have formal confirmation later this month that NZ farmed venison is an approved meat. 

“In preparation for this we are now preparing new material in Mandarin to highlight to the trade and consumers the safety of NZ farm-raised venison.”

Marketers, including Alliance, Duncan, Silver Fern Farms and Firstlight, confirm demand is still there.

“We just need to be able to access it,” Moffat said.

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