It’s red meat’s turn

The red meat sector has been lagging behind dairying for the best part of two decades but ANZ’s Privately Owned Business Barometer Survey says that’s about to change:

Over the past two decades red meat farmers have not enjoyed the same stellar gains as dairy farmers due to decreasing real prices, increasing costs, lack of reinvestment and an industry structure that did not encourage collaboration or economies of scale.

The ANZ survey of 779 farmers, including 374 red meat farmers and discussion groups found that most participants were planning investment in their farms to increase productivity and take advantage of rising global demand for protein.

“The survey found the sector was confident that conditions were right to regain some of the lost momentum and play a bigger role in the New Zealand economy,” said Graham Turley, Managing Director Commercial & Agri for ANZ Bank NZ.

“Farmers we spoke to had active strategies in place to take advantage of rising global demand for protein, and advances in agronomy and genetics to increase production.

“While structural issues within the industry remain unresolved, many farmers have an expectation that solutions are emerging that will lead to better integrated supply chains.”

Key findings of the ANZ Red Meat Sector Key Insights Report
65% of red meat farmers plan to increase production in next 3–5 years. Of these:
• 84% plan to invest in pasture
• 69% plan to invest in animal genetics
• 53% see benefit in getting expert help in improving farm productivity
• 63% say succession is about passing the farm to family or whanau
• 34% say the purchaser’s ability to finance is the key barrier to succession

Turley said it was likely the red-meat sector would see faster productivity gains than dairy.

“Already, many operations are achieving outstanding results way in excess of the averages.

“The top 20% of farmers are achieving productivity of around four times more than the average, irrespective of land class and location.

“They rightly have the confidence to reinvest profits to lift productivity and generate long-term wealth.”

Beef + Lamb NZ has been working with farmers to help them learn from the top operators who are doing significantly better than average.

On and off-farm research and improvements in farming practices have already led to significant improvements as this shows:

We’re producing 7% less lamb but from 46% fewer sheep which means there’s been a huge increase in productivity in the sector.

No-one should be celebrating the fall in milk prices but it might help sheep and beef farmers take a fresh look at their own sector and see opportunities for improvement.

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