Dairy farmers should expect delays in bobby calf collections this spring as the meat industry continues to be challenged by capacity and labour issues as it grapples with processing an extra 150,000-300,000 calves next season.
The extra stock is the result of the government’s decision to end live cattle exports in April and Fonterra’s new policy of having all non-replacement calves enter a value stream from June this year.
Both Federated Farmers and the Meat Industry Association (MIA) said farmers must plan for this delay by ensuring the calves have adequate feed and shelter, and keep communicating with their processor to co-ordinate pick-ups.
Fonterra announced the rule change in February last year, effectively banning on-farm euthanasia of calves without humane reasons, to make sure every calf born is accounted for.
The value streams include dairy-beef finishing and bobby calf collection for veal production and the petfood industry.
The new obligations for the 2023-24 season are foreshadowed in this year’s Terms of Supply notice issued to all suppliers.
While the processors and farms are less disrupted by covid-19 this season, labour shortages continue to be an issue, Federated Farmers dairy chair Richard McIntyre said.
“Farmers are going to have to be prepared to hold these calves for longer from a pen space, an equipment and a labour point of view.”
With calving still three to four months away, now is the time to plan for this disruption, he said.
If the farmers’ preferred processor is having issues, they should also be prepared to look to others.
“We encourage farmers to shop around to find a processor whose system best suits them.”
He sympathised with farmers having to add another job to their workload during one of the busiest times of the year.
“None of this is news that they want, but it’s better that they know now so they can plan accordingly.”
MIA manager of industrial operations and innovation Richard McColl said its modelling suggested there could be as many 150,000-300,000 extra calves to process this season.
McColl said the MIA has been in close communications with Fonterra over the past few months to plan for the industry’s ability to process these calves during its peak July-August peak period.
“The shoulders are okay, because we do have capacity, but at peak we’re clearly going to struggle for capacity.
“We still have labour constraints and capacity issues. Although this has eased somewhat it is still not back to where it was.”
Communication between the processor and farmers will be critical during the peak, particularly for those in remote areas where collection options are limited, he said.
“We are conscious that delays aren’t ideal and we will be doing our best to ensure we can expedite processing, but the best laid plans of mice and men mean there will be delays through that peak period.”
Exacerbating the pressure for processors will be the end of live cattle exports on April 30.
“We were exporting over 100,000 yearling animals annually and without that market and no corresponding domestic market, those animals will end up as bobbies. That potentially compounds the situation as well.”
McIntyre said he hopes the processing bottleneck is a shorter term problem with capacity to increase over time as potentially more migrant labour is allowed back into New Zealand.
Pan-industry work is also well underway to find longer term solutions for this issue.
One such option is creating a veal market, which would mean calves were held on farm for longer. But it also causes potential challenges around processing space.
“The reason the bobby calf processing works well now is that it’s during a quiet period for processing so the processor can divert staff.
“If we were to hold them for longer, for potentially 100 or even 200 days, they would be going into normal peak processing times for other classes of stock,” he said.
McColl said while veal has potential, it is a challenging market for NZ because of its geographical remoteness. Veal consumption is also dropping overseas.
Sexed semen use has vastly increased over the past few seasons as more farmers use this option for their replacement calves.
But it still leaves a portion of the herd to be mated with other genetics.
McIntyre said breeding a calf that is more highly valued by beef farmers is another long-term project.
“What we have got to do is get beef farmers to see the value in that and be prepared to pay enough for it to be financially viable.”
The outstanding prices seen at recent calf sales are due in part to fewer calves being reared last year because it was not financially viable for rearers.
As a result, calves that would have been reared last year for these sales were bobbied, leading to demand well exceeding supply.
Dairy farmers are also not being rewarded if they go to the trouble of purchasing a bull or bull semen with superior genetics for their non-replacement calves, he said.
“There’s very little premium available at the moment for far better-bred dairy beef animals.”
McIntyre said Fonterra has “been very clear that this is a direction of travel they are going in, but are prepared to work with farmers that are going to be affected by it and have limited options”.
In a statement, Fonterra group director for farm source Anne Douglas said the co-operative has been working closely with meat processors, transporters, petfood processors and other industry groups for many months to plan and prepare for any impacts it will have.
“The majority of Fonterra farmers won’t need to alter their current practices to meet the new requirement relating to non-replacement calves. However we understand the change may be a challenge for a small number of farmers so we are working to provide support and options to make the transition easier.
“We are also investing in R&D and exploring long-term solutions such as sexed-semen and dairy-beef partnerships.”