Sheep and Beef Cattle Farming

Introduction

At June 2002 there were 39.5 million sheep and 4.5 million beef cattle in New Zealand _ 10 sheep and 1.1 cattle for every New Zealander. The meat, wool and other products derived from this farming sector are worth around $6.3 billion annually, and account for approximately 22 percent of New Zealand's exports of goods.

Farms

There are over 13 000 commercial sheep and beef cattle farms in New Zealand, most of which are owned and operated by farming families. Sheep and beef farms are predominantly on hill country in New Zealand. There are a wide range of farm types and systems that vary according to land type, topography, climate, scale and farmer preference. The majority of farms have both sheep and beef cattle, which complement each other in pasture-based grazing systems. Some farms also run deer or have arable crops. This diversification reduces the business risk.

A representative Central North Island farm is 550 effective hectares, runs 3565 sheep and 402 beef cattle, and is owner-operated with the employment of casual labour and contractors. In the year ended June 2003, it produced for sale 13 900 kg of wool, 2400 lambs, 600 adult sheep and 120 cattle.

All sheep and beef farms are run on low input pasture grazing systems, sometimes supplemented with hay, silage and fodder cropping. This low cost system enables New Zealand farmers to supply high quality pasture-fed meat and wool to world markets at competitive prices.

Some features of an average farm for three distinct sheep and beef farm types

	South Island High Country	North Island Hill Country	Intensive livestock finishing farms
Number of farms	740	5100	2000
Effective area (ha)	5900	550	194
No of sheep	9070	3565	2645
No of cattle	208	402	35
Lambing %	92	121	133
Sheep breed	Merino	Mixed	Romney
Main income sources
Wool	58%	54%	21%
Sheep and lamb sales	27%	20%	72%
Cattle sales	13%	26%	6%
Other	2%	0%	1%

Source: NZMWES

Meat Processing

Meat processing is a strongly competitive industry. It includes 18 processor/exporters, six processors who process only for exporters, and 110 companies with export licences. There are a number of other companies that process for the local market only.

Four companies, however, dominate the processing sector, controlling about 80 percent of output _ the AFFCO Group, Alliance Group Ltd, Primary Producers Co-op Society Ltd (PPCS) and Richmond Ltd. Each of these companies has multiple plants and annual turnovers in the range of $1.2 billion to $1.4 billion. Many of the remaining processors are private companies.

Sheepmeat

Despite New Zealanders' eating about 12 kg of lamb (plus 12 kg of mutton) per person per year, 87 percent of our lamb production is exported. Annual production is about 402 000 tonnes of lamb and 104 000 tonnes of mutton. This total represents only about 4 percent of world production, butexports account for 47 percent of world exports. New Zealand's sheepmeat industry is very dependent on international meat prices and market access.

Since the mid-1980s, when the sheepmeat industry was heavily subsidised and the processing sector was heavily regulated, the sheep flock has fallen from 70 million to 39 million. The number of lambs slaughtered annually for export has declined from a peak of 39 million to about 25 million. At the same time, however, farm productivity has improved enormously. The national average lambing percentage has increased from 100 percent to 117 percent (that is, 117 lambs from every 100 mated ewes and ewe hoggets), and the average lamb carcass weight has gone up about 30 percent to 16.8 kg. A 57 percent decrease in sheep numbers has led to a 53 percent increase in lamb carcass weights per mated ewe and ewe hogget.

The processing and marketing companies have also responded to the changes in the market place, both in consumer requirements and in the competition from other meats and protein sources. They have progressed from exporting frozen whole carcasses, to further processing into chilled prepacked cuts and boneless products. Sales of chilled meat have continued to grow, and now make up 25 percent of lamb export value. Advances in hygiene, packaging, presentation, handling instructions and distribution have all made lamb a premium product in the higher-priced end of the market. Real returns from lamb meat have consequently improved.

Beef

Beef exports are still dominated by frozen manufacturing beef exports to North America, but other markets are growing in importance. Asian markets, in particular, are looking for young, tender, grass-fed beef. In September year 2002, New Zealand produced 565 000 tonnes, or 1 percent of the world production of beef. Around 85 percent of this production was exported, representing 7 percent of the world trade in beef.