Decline in sheep numbers expected to continue

18 December 2002

The national breeding flock is estimated to be down three percent for the 2002/03 season compared to the previous season, but a record fertility rate of 116 percent per mated ewe and ewe hogget is estimated.

The latest Ministry of Agriculture forecasting report, the December 2002 Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF), shows sheep numbers have continued to decline due to land use changes to deer, forestry, dairy (particularly in the South Island) and beef cattle farming in recent years.

The author of the SONZAF section on sheep meat, Senior Policy Analyst Rod Forbes, says sheepmeat production will, however, be sustained by increasing productivity in terms of lambs per ewe and rising lamb carcass weights.

The schedule price for all grades of lamb for the September years 2003 to 2006 is expected to average $59.10, down from $63.70 in 2001 and the high of $70.00 in 2002.

However the average price for the years 1997 to 2000 was $43.80.

Looking at the current 2001/02 season, the report makes the following observations: · The national breeding flock was estimated at 31.1 million as at 30 June 2001 - down five percent on the previous year.

  • Inspected lamb production for the September year 2002 was 414,000 tonnes carcass weight - down five percent on the previous year. This was due to a six percent fall in lamb kill and a one percent rise in the mean carcass weight to a record 16.8 kilograms.
  • For the year ending September 2002, exports of lamb and mutton were provisionally 350,000 tonnes carcass weight equivalent (cwe) - down one percent on last year.
  • The export of higher value chilled lamb products increased by 21 percent to 49,300 tonnes. These chilled lamb products generated $500 million, or 25 percent of total lamb export revenue, coming from the equivalent of 17 percent of lambs processed and exported.
  • China has emerged over the past two years as a significant buyer of lower priced lamb products.
  • Lamb prices in the UK were up nine percent on the previous season at 206 pence per kilogram - reflecting a supply shortage of UK domestic lamb due to the foot and mouth disease outbreak and prohibitive tariff rates for imports above quota levels from non-EU countries.

The outlook through to 2006 is for continuing land use changes resulting in declining sheep numbers. The breeding flock is estimated to have fallen by three percent to 30.1 million as at June 2002.

The report says lamb production will, however, remain profitable to farmers due to productivity gains in fertility rates and lamb carcass weights.

For the period 2002/03 through to 2005/06, the report projects the following trends:

Assuming that the UK sheep flock is rebuilt following the FMD eradication and that production rises in line with this, the wholesale price for New Zealand's PM grade lamb carcass is expected to decrease to 187p/kg in the year ended September 2006. This is a representative market price and reflects movements in market returns for bone-in lamb products.

Total sheep meat exports are projected to rise to 423,000 tonnes cew in the year ending September 2006.

The trend in the export of higher value chilled products is expected to continue to expand.

Growth of exports to the higher value German and French markets is expected to continue.

Rod Forbes says the big challenge facing lamb marketers in the longer term is to increase demand for the product amongst a wider group of people.

"Currently most of the demand for lamb in developed countries comes from middle-aged or older people on higher than average incomes and from people of Middle Eastern origin," he says.

In the longer term, the report projects market prices for lamb may fall but an overall increase in trade value to New Zealand can be expected. "A successful conclusion to the WTO Doha Trade Round will help to lower trade barriers to agricultural products. This will provide opportunities to expand trade quantities into high value markets."

For further information contact:

Rod Forbes, Senior Policy Analyst, Email: rod.forbes@maf.govt.nz

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