But there’s a story hidden in the numbers and it’s not a bad one.
In fact, it’s a most remarkable story about the transformation of an industry from behind the farmgate and into the market.
The rise and rise of New Zealand sheep numbers was caused by a number of things dating back to the early 1930s.
Our dramatic expansion of farm exports started as post-war demand was strong from the home country, Britain, for meat and wool.
Through the 1960s the markets began to change. Britain joined the European Economic Community in 1973 and even though the market signals suggested otherwise, our government’s focus continued on growing agriculture and providing the incentives to do it.
By the early 1980s NZ found itself with about 70 million sheep and an extremely depressed market internationally. In this case, given the motivators, 70 million wasn’t success. It was excess.
Many will remember that in 1984 the newly-elected Labour government devalued the NZ dollar. The immediate impact was positive for exporters because it led to increased returns in NZ dollars.
However, the next six years were traumatic for farmers.
The government phased out most support for agriculture, including fertiliser subsidies, tax concessions, concessionary interest rates and help controlling rabbits and noxious weeds. Crown agencies started charging for services like meat and animal health inspections, quarantine and farm advisory services.
By 1990 the farming sector was the most deregulated in NZ and probably the world.
For me, here’s where the remarkable story begins.
Farmers became focused on what they were producing with dramatic improvements in productivity.
This is best illustrated by increased lambing percentages where we’ve gone from 100% to a 125% average. Additionally we are achieving higher lamb weights sold per ewe wintered, increasing by 93% – remarkable.
Sheep and beef farmers are using far less resources. In rough terms we’ve maintained the amount of meat produced and exported – more than 90% of the sheep meat produced is exported – from half the number of sheep.
And it’s been achieved on 23% less land as conversions to dairy have occurred and hill country has been retired or planted in trees.
Not only has the land-use footprint reduced but so have the greenhouse gas emissions.
It’s been calculated that since 1990, driven by genetic and productivity gains, greenhouse gas emissions have fallen by 19% on sheep and beef farms.
While Britain remains an important market for us, sheep meat is exported to 100 countries. In the 1960s more than 90% was sold as frozen carcases while today 18% is chilled cuts and boneless product. Frozen carcases make up 5% of our trade.
This has not only been a great effort by our processors and exporters to find these new customers but also from our farmers to adapt their farming systems to meet the demands of consumers in many different countries.
During those 20 years we have also seen a consistent trend of sheep meat prices rising in real terms. Today we have a sheep industry worth $4.6 billion annually.
Despite all of these gains farmers are facing a tough financial situation this year.
It’s been brought about by a climatically challenging two years accompanied by a facial eczema challenge not seen for 25 years.
Add to this a significant drop in prices received from Britain particularly on the back of Brexit and in just the last six months a drop of 33% in strong wool prices. And their cost structure, particularly compliance-related, continues to grow.
So, one can understand farmer confidence being down – and the obvious question is why should they be confident about the future?
One of the reasons I’m optimistic is that consumers are becoming more concerned and interested with the food they eat, what that food ate, where it comes from, how it was treated and the ethics of the whole supply chain. As an industry, and compared to our competitors, we do this stuff really well.
Here are my top 10 reasons to be confident:
Farmers have built farming systems that are well placed to respond to increasingly volatile global and climatic conditions. They are showing consistently the ability to monitor and make decisions that minimise the impacts of these variations.
Farmers will continue to drive productivity. There are still tremendous opportunities to drive sheep productivity further. They include aspects like use of the best genetics and more widespread use of hogget mating.
Our farmers are world leaders at applying knowledge and technology. The digital revolution has reached the farm and we expect this to deliver greater access for farmers to information to make better and more timely management decisions.
Farmers are now more connected to the market with minimal distortion of signals and have built a strong ability to rapidly respond to them.
The meat processing and exporting sector is in the most financially strong position for many years and it is placing more emphasis on processing efficiency, product development and marketing, then ever.
Farmers and processor exporters are united in their efforts to develop a NZ sheep meat story with farmers at its heart. I believe it’s going to be a great story and one that will resonate with consumers, be authentic and backed up by facts.
Farmers have and will continue to have a sustainable product because of their use of hill country, essentially waste land internationally, to produce high-quality food and do it with an acceptable environmental footprint.
The industry continues to find more attributes that take our product beyond a lean, healthy protein. The Omega lamb project is one such example.
The NZ industry will continue to lead the world and develop partnerships with other lamb producing countries, which will see the global industry working together to identify new customers in new markets and meet their demands.
As a trading nation we have built a government/industry partnership on trade that will not only get the best of existing markets but will continue to find new markets for our product.
As I reflect on where we are, I can understand farmers’ confidence is dented right now.
But as I look back and see what’s been achieved and look forward to the further opportunities that can and will be grasped, I’m absolutely confident in the future of our sheep meat industry.
It requires a continued partnership between all in the value chain, a supportive government and an engaged NZ public.
I’m sure our world-class industry will continue to be one New Zealanders have tremendous pride in and all share in the benefits.
