NEW Zealand’s sheep meat, wool and beef export receipts are expected to decline in 2020-21, according to Beef + Lamb New Zealand’s New Season Outlook 2020–21.
The outlook has forecasted lamb export receipts to decline by almost 15 percent and sheep meat co-products to decline by around 8pc, compared to the 2019–20 season.
The outlook said average wool export FOB (free on board) receipts are expected to decrease 34pc to $3700 per tonne. Total wool receipts are forecast to drop 36pc on the previous year, estimated at $276 million. The estimate for the overall auction wool price is down 20.4 per cent on 2019-20.
As in Australia, wool inventories are building in New Zealand, driven by weak export demand, low export volumes through the COVID-19 lockdown period in New Zealand, and the seasonal pre-lamb shear.
Beef and veal export revenue is forecast to decline by 9 percent on 2019–20.
B+LNZ’s chief economist Andrew Burtt said the uncertainty in the export market will be reflected in farm-gate prices and subsequent farm profitability.
The outlook predicts that the average farm profit before tax on sheep and beef farms in New Zealand will fall 26pc to average $115,100 this season.
B+LNZ’s chief insights officer Jeremy Baker said the uncertain global picture reinforces the need for stable and predictable domestic regulation to avoid putting further pressure on the red meat sector at a time when its export receipts are critical to the New Zealand economic recovery.
“Despite the challenges, red meat exports are predicted to be greater than $9 billion and will represent more than 17pc of New Zealand’s total export receipts,” Mr Baker said.
Mr Burtt said much of the predicted profit decline is a result of COVID-19, with the drought of 2020 impacting production and increasing competitiveness in key beef export markets.
“This outlook sets the scene for a challenging year.
“Farmers will tightly control expenditure and focus on what can be optimised behind the farm gate to make the most of the season and be best placed for the next,” he said.
“While there is uncertainly, there are solid underlying market fundamentals that will continue to support demand for New Zealand sheep meat and beef exports.
“Average export values are expected to be supported by the positive market fundamentals, and are forecast at similar levels, or slightly above, five-year averages,” Mr Burtt said.
“China’s demand for meat protein continues to be fuelled by pork shortages that have resulted from African Swine Fever (ASF), and there is growing demand for high quality, nutritionally rich proteins.
“A shifting consumer preference towards food safety will also support demand for New Zealand sheep meat and beef,” he said.
Click here to read Beef + Lamb New Zealand’s New Season Outlook 2020-21.