Thursday, April 25, 2024

Venison returns buck up deer outlook

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Deer sector still somewhat subdued, but venison emerged from pandemic in better shape than other red meats.
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The venison market rounded out 2023 in a rather subdued fashion, but still majorly improved on previous years. Despite this, deer numbers are forecast to drop. Logistic issues through the pandemic limited supply available to global markets, and a change of consumer tastes to more accessible proteins dropped demand and hurt pricing.

Venison farmers reconsidered their farming practices and some shied away from deer. Farm sales to forestry and rules and regulations also contributed. Last year, there were at least 20,000 fewer breeding hinds on farms, coming after a similar drop in supply the year prior. 

But, for those that have stuck it out, venison has shown resilience and has emerged from the pandemic in better shape than alternative red meats. Relative to lamb, slaughter pricing is almost $3/kg better. 

Most processors are paying around $8.70/kgCW, excluding premiums. Prices are currently stable and, all things being equal, the expectation is that 2024’s pricing will track similarly to last year’s. However, it is a bit too early to say with confidence. 

The five-year average shows that schedules traditionally drop 60c/kg from the beginning of the season, but this season they have eased only 5-15c/kg. This is partly due to the decreased deer numbers, but a focus on market diversification has also meant that New Zealand isn’t as dependent on seasonal European demand. 

While a drop in supply usually puts upward pressure on pricing, reduced numbers can reduce processing capacity while fixed overheads remain the same. This means that a larger portion of the costs are dispersed over the small numbers and puts a cap on what schedules can offer. 

As the main part of the European chilled season has ended, buyers look to invest in next season’s stock. New season contracts will be released in the latter part of summer, but early on-farm deer sales suggest there is some confidence and positivity.

Strong demand for venison from North America has counteracted European markets that were perhaps not as strong as they usually would be – in particular, North America’s demand for larger cuts of venison. 

Last year, there was no game season in North America and meat companies paid a premium for elk meat. This has supported high prices for elk and wapiti at recent South Island sales, and Tikana Wapiti Stud averaged $10,700 for its wapiti bulls, the highest on their records.

While China is still a fairly new market for NZ venison, this market has had strong growth in the last two to three years. Volumes into the market have stabilised, with China importing similar volumes to the United States.

It is worth noting that although the venison market has made a good recovery from the pandemic, it is not all smooth sailing. As with all exports, the supply chain may come under further pressure from shipping restrictions through the Panama Canal, which continues to suffer from its lowest water level ever.

The export of deer velvet into China continues to be a work in progress. Late last year, China announced it would no longer accept frozen velvet for use in traditional Chinese medicine from next season. As of May 1, all countries exporting velvet will need to send it to China in a dried state, rather than frozen. Deer Industry New Zealand is introducing changes to accommodate the regulations but the pathway into China is now quite complex. 

By value, China is our largest buyer of velvet and related products with a market share ranging between 60% and 80% since the start of 2017, according to StatsNZ. The NZ and Chinese governments are liaising to try to restore access of frozen velvet into China. While the short-term future is uncertain, the long-term goal is that access into China will be clearer and more secure and will add value to the already high-quality product.

This article was written by AgriHQ analyst Sara Hillhorst. Subscribe to AgriHQ reports here.

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