Venison returns have improved over the past 12 months and returns for many deer farmers are now comparable with other land-use options.
“But while on a pathway to better returns, we are still some way from returns that would move the industry from competitive to thriving,” farm consultant Wayne Allan said.
Allan conducted independent modelling for Deer Industry New Zealand (DINZ) in March 2022.
The aim of the modelling was to provide benchmarking around what comparative returns were required for venison farming operations to achieve parity with other enterprises, and then what would be required for industry to thrive.
At the time, his figures suggested a season average of $9.50-$10.25/kg carcase weight was needed for venison breeding and finishing to be competitive with alternative land-use options.
This season’s deer weaner market suggests prices are going under the hammer between $4.50-$5.20/kg carcase weight.
These are “more than competitive” with current sheep returns and heading towards the $5.50/kg or more breeders need to out-compete other land uses.
Allan calculated weaner prices needed to be between $5.30-$5.50/kg to compete with the then-thriving sheep industry.
With this year’s 20% drop in sheep returns, the competitive deer weaner price has correspondingly dropped to $4.00-$4.50/kg.
Still, having talked with several deer finishers who had already purchased weaners at on-farm sales through livestock agents, Allan reported the early season prices were sitting between $4.50-$5.20/kg, up around 50c-70c/kg on last season, which means deer breeders have made some gains.
These levels have also been reflected with a higher top end in the first sale of 500 weaners at Mt Arrowsmith, Mid-Canterbury in late March.
“The prices are now more than competitive with sheep farmers and hopefully heading towards the $5.50/kg or more they need to thrive, though the total venison pie will need to grow in value to achieve this,” Allan said.
Deer finishing operations need to manage accordingly to make their margins.
The competing land-use options – lamb and beef finishing, dairy grazing and velvet operations – often generate well over 30c/kg dry matter (DM) and in some cases more than 40c/kg DM.
To compete with other finishing options at 30c/kg DM, Allan’s figures show a return of about $250 per weaner required by the finisher.
Over the past year, some finishers would have managed to achieve the $250/head margin, but it was largely due to the post-chilled prices holding up better than forecast.
“Given the weak gallery at one of the recent on-farm auctions, perhaps other finishers did not come close to $250/head margins and have decided there is less risk in pursuing other options,” Allan said.
PGG Wrightson deer livestock specialist Ron Schroeder said weaner prices are generally falling in the $4.50-$5.20/kg band for mainly hybrid stock, with reds achieving lower prices.
Deer breeders and finishers are meeting in the middle in their weaner negotiations, with breeders coming off the back of two hard years now connecting with a softer finishing market.
Schroeder said early weaner sales this year have bucked the trend with “much higher” prices in the North Island than the South.
Currently negotiating sales of weaners to several finishers is Canterbury deer breeder High Peak, which runs 1,800 hinds, 800 velveting stags and about 550 replacement weaners.
High Peak operations manager Hamish Guild said prices in discussion are firmly in the middle of the $4.50-5.20/kg.
Ideally, Guild would like to see $5.50-6.00/kg, with costs adjusted for the stock classes, yielding farmgate prices for finishers of $11-12/kg further down the value chain.
With less finishing power in the industry, for the first time in many years High Peak made the call this year to can its autumn weaner auction, at which it historically sells up to 1,000 weaners, instead selling independently.
Guild said the deer breeder wears the uncertainty and at current prices breeders are not making enough.
“If the trend continues, we’re probably going to have to make some decisions about our breeding system.”