Alliance Group has released its farmgate price forecast through until December, with chief executive Willie Wiese saying it wanted to provide an appropriate range for farmers “that will provide some certainty in a very volatile trading environment”.
Its forecast for lamb through until December is $6.80-$7.30/kg and, for mutton, $3-$3.50/kg, with potential upside based on impacts of China and Australian pricing.
Prime cattle is at $5.30-$6/kg, cow $3.60 to early $4/kg; bull $5 to early $6/kg and venison $10 to $10.30/kg chilled and $8.70-$9.20/kg post the chilled programme.
The forecast prices are on a par with those unveiled last week by Silver Fern Farms.
Wiese told suppliers in a newsletter that consumer discretionary spending around the world remains subdued due to persistently high inflation.
“Although it seems that the market price has bottomed, consumer disposable income continues to be under pressure and consumers remain cautious due a recession looming in many of our key markets.
“Our insights show fewer people are eating out in restaurants, and people are swapping higher priced red meat proteins such as lamb for less expensive red and white meats in their weekly grocery shop.
“There are high levels of inventory across all proteins in various markets, particularly low-cost Australian red meat which is driving demand for fresh product down, and this impacts all New Zealand processors.”
The company’s in-market Chinese partner Grand Farm has committed to expanding the co-operative’s grass-fed lamb, mutton, beef and venison across China.
However, information out of China suggests the current slowdown in demand will continue through the short to medium term. To mitigate risk, the company is diversifying some products into other markets.
Wiese said Alliance takes it responsibility to process its farmer shareholder animals seriously, which means it must continue to operate as effectively and efficiently as possible.
“We are taking a long-term strategic view of the current situation and how we organise the business for future success.
“While we need to balance costs to weather market conditions, it’s important we continue to deliver to a high standard, and develop value-add opportunities that will benefit the co-operative as a whole.
Earlier this month Alliance announced it was reviewing its operating model, which could result in staff changes, re-deployment and redundancies.
Wiese said the proposal is unsettling and tough on everyone.
“Where we can, we will retain valuable skills and experience, and redeploy impacted employees into vacant roles.”