Venison prices firming this year for deer farmers

7 August 2000

Venison prices declined in 1999, but firmed this year due to higher returns from the German market and a more reliable supply and improved distribution, according to the Ministry of Agriculture and Forestry Deer Monitoring Report released today.

The continual build up in New Zealand of both the velvet and breeding herd has resulted in lower levels of production, and stocks of venison than at the same time the previous season. As a result, demand is expected to firm into 2001, providing the New Zealand supply increases consistently. Other factors influencing demand are economic growth in developed markets, the health attributes of deer products, changes in the prices of other meats, and New Zealand marketing initiatives.

However, European importers are expected to maintain low stocks while New Zealand's production is increasing and some large exporters continue to trade venison at the commodity end of the market. Prices are expected to fall to $5.68/kg for the year ending June 20001.

The deer farm monitoring report highlights the profitability of deer farming during 1999/2000, and makes forecasts for 2000/2001.

Farm monitoring is a process whereby MAF monitors the production, finance, trends, issues and sector concerns on New Zealand farms. The expectations and intentions of farmers and those servicing the sector are analysed and presented as a model farm. The views reflect those of industry, and not necessarily those of MAF.

This year there are nine monitoring reports. Five are sector reports (deer, sheep and beef, dairy, arable, and horticulture). The same information is packaged into four regional reports (North, Central North, South, and Central South).

Each model reflects farmers' expectations and intentions and the thoughts of those servicing the sector from the 1999/2000 season and previews the 2000/2001 season.

The models in the report best typify the average family deer farming operation within specific regions in New Zealand. Budget figures are therefore indicative of the average levels of income and expenditure, management, stock performance, debt, and expenditure on development and capital purchases. New borrowing and off-farm income is also averaged.

National velvet production to the year ending June 2000 is estimated around 450 tonnes and is similar to the previous seasons, reflecting the lower prices received over the 1997 and 1998 seasons. Velvet pool prices rose 243 percent during the 1999/2000 season to average $112kg following the sharp upturn in economic growth in the main market, the Republic of Korea, and a shortage in supply internationally. Prices are expected to ease slightly over the forecast period as international production increases in response to higher prices.

The major trend is the continued annual increase in deer numbers by 10-15 percent. Part of the increase is associated with rebuilding breeding hind numbers to pre-drought levels, and part due to rebuilding velveting herds after the heavy cull that followed the last drop in velvet prices.

Farmed deer numbers at June 2000 were estimated by MAF at 2,260,000, 13 percent up on the previous year's estimate. However, Statistics New Zealand Agricultural Production Survey for the year ended June 1999 gave total deer numbers in New Zealand at 1,676,788. Of these 1,069,199 (64 percent) were in the South Island, with 607,589 (36 percent) in the North Island.

The total number of deer farms in New Zealand was 1,920. Of these 1,100 (57 percent) were in the South Island and 820 (43 percent) were in the North Island.

Regionally the largest deer numbers were in Canterbury with some 470 farmers carrying 432,737 (26 percent) of New Zealand's deer, followed by 300 Southland farmers carrying 393,371 (23 percent) deer, and the Waikato with 170 farmers carrying 153,651 (9 percent) of deer. Other significant areas were Otago, Manawatu-Wanganui and Hawke's Bay.

Deer farmers gained legislative backing to have deer farmed outside a farm's boundary given the same ownership rights as cattle, pigs and sheep. This means any deer farmed outside the farm boundary is the property of the farmer, provided the animal is identified by eartags. Previously, deer found outside a farm's boundary were 'fair game'.

Deer farming in New Zealand began in the early 1970s. Its growth as an industry has not been without difficulties. Two key issues facing the industry are the control volatility of supply and reduced seasonality in venison production.

Controlling volatility needs to start by reducing dependence of the traditional Korean velvet market. The maximum volume Korea is reported to be able to consume is 450- tonnes.

On the stock unit basis, deer farming returns are placed somewhere between sheep farming and dairying. From surveys undertaken, deer farmers appear happy with their occupation and virtually never voluntarily revert back to sheep farming.

MAF Farm Monitoring Reports can be accessed from the MAF website.

For further information contact:

Chris Ward, Senior policy Analyst, Domestic Policy, MAF. Telephone: 04-474-4168

To purchase reports contact:

Tamara Finlay, MAF Information Bureau, Telephone: 04-474-4100 Ext: 8436

Contact MPI

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