Seasonality drives the red meat industries

[This post was first published in the Fairfax NZ Sunday Star Times on October 26 2014.]

I have previously described the challenges that seasonality creates for the dairy industry. For New Zealand’s red meat industries, those issues are even more constraining. It is a key part of the reason why restructuring the meat industry is so challenging.

Sheep are designed by nature to give birth in the spring, and their fertility is much reduced at all other times of the year. Given that the market predominantly wants carcasses of 17 – 20 kg, this means that most lambs are ready for slaughter between December and April, with the peak slaughter in a shorter period from January to March. Continue reading

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The rising star of beef

[This post was first published in the Fairfax NZ Sunday Star Times on 19 October 2014]

With so much focus on the current dairy downturn, it is easy to miss the rising star of beef. This year beef prices have been hitting record highs, both in US and NZ dollars. Young steers and bulls are fetching anywhere between $1100 and $1600 at slaughter, depending on weight and category.

The key driver has been demand for hamburger beef from the United States. Demand from China has also been increasing. Continue reading

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Riding out the dairy downturn

[This post was first published in the Fairfax NZ Sunday Star Times on 12 October 2014]

The latest Global Dairy trade auction of 1 October has placed a new complexion on the current dairy downturn. There is now widespread concern that the downturn is going to be longer and deeper than almost everyone had expected.

Rabobank’s latest quarterly report on global dairy prospects is also just published and there is no good news in that. Rabobank is suggesting it could be the later part of 2015 before there is a substantial turnaround.

European and American production are both increasing. New Zealand production is also buoyant. On the demand side, Russia has shut the gates on dairy imports from Europe because of the Ukrainian crisis. The Chinese are still buying but not fast enough. The dollar is high and may stay that way, despite efforts by the Reserve Bank to nudge it down. Continue reading

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With a free trade deal Australia can win China’s dairy market

[This post was written primarily for Australian readers at the request of 'The Conversation', an online daily newsletter. It was published in 'The Conversation' on 8 October 2014 and from there published elsewhere in Australia under a Creative Commons license. For the original article go to:

https://theconversation.com/with-a-free-trade-deal-australia-can-win-chinas-dairy-market-31681.

For further information about 'The Conversation' go to:
 https://theconversation.com/au/who-we-are ]

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Global demand for internationally traded dairy products is now dominated by China. Although Australia has benefited from this, with annual dairy exports to China now worth over A$500 million, the growth has been much slower than what New Zealand has achieved.

Latest New Zealand statistics to June 2014 show annual dairy exports to China of A$5.05 billion (NZ$6.05 billion). These exports have increased more than tenfold since 2008. Continue reading

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The challenges of dairy seasonality

[This post was first published in the Fairfax NZ Sunday Star Times on 5 October 2014]

This last week I have been analysing the opportunities for the Australian dairy industry arising from an FTA (free trade agreement) with China. The FTA is still being negotiated, but the chances of an agreement in the coming months are good. A key insight has been that Australia will then have a clear competitive advantage relative to New Zealand in relation to fast moving consumer goods such as UHT milk, ice cream, soft cheeses and dairy desserts.

It all comes down to issues of seasonality. New Zealand is the only developed country in the world where the dairy industry is predominantly seasonal. [A correction and apology to my Irish friends. Ireland has a dairy industry, about one quarter the size of the New Zealand industry which is also predominantly seasonal. They focus on butter, hard cheeses and other products which have long shelf lives.] Continue reading

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The commercial risks of infant formula

[This post was first published in the Fairfax NZ Sunday Star Times on 28 September 2014]

In the last six years the Chinese infant formula market has grown threefold to about $NZ18 billion. Some projections suggest it could double again within the next six or so years. So the challenge is not the size of the market. Rather, the challenge is that everyone is trying to get a slice of it. Continue reading

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New Zealand’s dairy opportunities in China

This is the fourth in the ‘China series’ of articles written for the journal  Primary Industry Management by Xiaomeng (Sharon) Lucock and myself. It was published in September 2013.

As with other products to China, the statistics have moved on in the last year but the drivers of change are similar.

In the last year since the Primary Industry Management paper was written,  New Zealand’s total dairy exports to China have increased from $NZ2.9 billion for the 12 months ending 30 June 2013, to NZ6.05 billion for the 12 months ending 30 June 2014. These numbers will almost certainly decline in coming months, not because of a decline in volume, but from the current major downturn in prices.

The latest prices from our industry sources in China indicate that local farm gate prices for milk are still exceptionally high. Average quality milk is being purchased by processors for about 4.3 RMB per litre. That equates to over $NZ 13 per kg milksolids. Good quality milk  is close to $NZ16 per kg milksolds. Continue reading

Posted in Agribusiness, China | 2 Comments