A farmgate price recovery as high as $11 a kilogram is needed to get the struggling venison sector back on track.
Deer Industry New Zealand venison markets manager Nick Taylor says while May showed improvement, it is still in recovery mode.
Despite the logistics challenges, the market diversification programme away from restaurants in Europe to retail markets in the United States and China continues and is making headway.
“Companies are looking to build those markets with a long-term view.”
Continuing challenges around covid-19 lockdowns in Shanghai and last-minute shipping delays and schedule changes, compounded by the war in Ukraine, have caused headaches for exporters who now face risks in getting chilled product to market, especially in Europe.
In China, where promotion activities have had to be delayed or adjusted due to lockdowns, exports of venison lifted to around 340 tonnes in April – 750% more than April 2020.
There have also been increases in the number of high-value products heading to the US and Europe.
American diners have been reluctant to eat out but numbers are now approaching pre-covid levels and export value has picked up since February, though still not to where it was pre-covid.
With the continued expansion of new high-value products going into Europe, lower tonnages of venison exports to the region are seen as a positive signal that value is growing, Taylor said.
In a series of road trip meetings around the country DINZ chief executive Innes Moffat told farmers the industry’s top priority is to assist with the recovery in venison prices.
“It is absolutely acknowledged that the venison price is not where it needs to be and everybody is working hard on encouraging more consumption and demand for NZ venison.”
To provide some examples of a venison schedule that is needed, DINZ engaged an agricultural consultant to do some comparative profitability analysis on South Island moderate country to put to venison marketers.
This put the venison farmgate price on a $10.50-$11 track to equate with recent high lamb prices.
“This is obviously significantly higher than the current schedule, but that didn’t scare the marketers.
“If we carry on with adding value, through getting away from the commodity end of the business, it’s within reach.”
Closing the gap a lot more between frozen and chilled prices will help, as will the sector’s market diversification strategy that is working to lift prices.
Moffat says creating market diversification, particularly in China, is the next priority for the DINZ executive.
Venison companies continue to invest in the new markets, which are growing and will need to be supported to provide longer-term sustainable and superior returns.
“For velvet, we need to develop a new market channel in China so we can recreate similar growth and demand in new product forms as we’ve seen in Korea.
“That way we expect demand will continue to keep ahead of production which is continuing to increase in NZ.”
Covid-19 disruption and constraints caused by environmental compliance are combining to affect production for the deer industry.
Moffat says this is affecting DINZ’s 2022-23 budgets now being drawn up, which assume a reduction in the venison levy and an increase in velvet production and consequent lift in income.
“We had built up some reserves because of higher than budgeted venison production over the past couple of years.”
In the future we will see a closer balance between venison and velvet with more farmers focusing on velvet than venison, which will need to be reflected in the activities that we do, he said.