NZ DEER INDUSTRY

Over the past 130 years, deer in New Zealand have proved to be very versatile animals, worthy of the mystique for which they are admired throughout the world.

Development of the Deer Industry (1860-1980)

Feral Deer

The first successful importation and establishment of deer into New Zealand was in 1861 in the Matai Valley, Nelson, where one stag and two hinds were liberated. By 1917, over 100 deer had been imported by private individuals, Government and Acclimatisation Societies. The liberation of New Zealand-bred stock continued until 1923, with the predominant breeds being Red and Fallow deer. Protection of most breeds lasted until 1924, then some hunting was allowed between 1924 and 1927.

Most breeds flourished, especially Red deer. It was not long before gradual over grazing of forest canopies by deer and other introduced species, such as opossums, started opening up forests and causing erosion, Legal protection was removed in 1930 and the Department of Internal Affairs was made responsible for the control of herd size,

For the next 25 years, with limited resources of men and money, the Ministry of Internal Affairs attempted to control the spread of deer. Government hunters were paid a bounty on tails. Then in 1933 this bounty was replaced by a payment for skins, which Government hoped would partially finance the cost of control. By 1955 payment was based exclusively on the number of animals killed.

In 1958, the possibility of selling venison into the European market arose. However, venison returns did not justify the cost of using helicopters to ferry hunters into the bush, and then return to pick up deer carcasses. From 1966, with the shooting of deer from helicopters, the financial return more then compensated for the cost outlay. In 1967-68 over 150,000 carcasses were recovered in the South Island alone.

Processing plants were built to handle the carcasses and hygiene standards were devised by exporters and overseas importers. Annual exports peaked at just over 4,000 tonnes in 1972 and 1973.

While such heavy culling was leading to a fall in numbers, European demand for venison and ROK demand for velvet were increasing, so the fanning of deer seemed the logical alternative. It was made legal in 1969 by an amendment to the noxious Animals Act allowing the farming of deer by license holders. There was some concern about the ability of deer to adapt to life in captivity. But deer had already shown their versatility by feeding at night to avoid the helicopter shooters. Their adaption to fanning, therefore, was relatively simple.

Factors Contributing to the Development of Farmed Deer

The factors contributing to the development of a fanned deer industry therefore were:

  1. the European market demand for venison;

  2. a falling supply of venison producing animals;

  3. the passing of legislation permitting fanning of deer by license holders;

  4. the ability to source large numbers of deer from feral stocks to rapidly establish a livestock base;

  5. the evolvement of the capture of live deer from helicopters; and

  6. a growing velvet market in the ROK.

Other Factors Contributing to Industry Growth

(a) Deer adaptability to farming (physical)

      The captured deer, though rather flighty at first, continued to thrive in their new environment. In the farmed situation, over their growing period from spring to mid-March, deer proved to be more efficient converters of dry matter to meat than either sheep or beef cattle. High prices for the sale of progeny made live capture a lucrative industry. Breeding hind prices reached $3,000 in 1979, eased to around $1,200 in the early 1980's, before peaking in 1985 at around $3,500.

      Although most farming technology had been developed from traditional farming, some new animal husbandry methods were developed. As the industry was new, this technology was implemented faster than it would have been in more traditional types of farming. Now deer are farmed on all soil types. Although the initial cost of deer fencing and the development of special handling facilities is high, returns justify the expenditure.

(b) Processing facilities

      Because deer were classified as game, the processing of the shot feral deer carcasses had to be kept separate from other meats. Therefore farmed deer required separate slaughtering plants, so special abattoirs were built alongside feral processing facilities. These small efficient plants enjoyed relatively low labour costs and good industrial relations.

      Korean entrepreneurs set up the first velvet processing facilities in New Zealand in the late 1970's. This commitment to the processing of velvet further increased the demand for it.

(c) Government aid

      Deer industry growth was assisted also by tax incentives. Entrepreneurs, along with other livestock farmers, could write off the initial high capital costs of livestock and farm development against their income.

      Hind prices fell rapidly when the livestock tax incentives were withdrawn in 1986. At the same time it was announced that the farm development scheme would be phased out over the next few years. But in spite of the high capital cost of deer fencing and handling facilities, the withdrawal of these policies had little impact on industry growth.

Industry Structure

The structure of the industry is set out in Figure 4. There are two principal sectors within the industry, the farmers and the processor/exporters. The farmers' point of view is put forward by the Deer Farmers Association, while the processors and exporters are represented by the Deer Industry Association. These groups both work together within the framework of the Game Industry Board.

NZ Deer Farmers' Association

The farmers' body, the New Zealand Deer Farmers Association (NZDFA) currently representing approximately 40% of deer farmers, is principally involved in policy issues, livestock research and farming technology.

The NZDFA executive Comprises of six representatives elected by members - three each from the North and South Islands. There are also 30 branches throughout the country and branch Presidents meet with the Executive twice a year.

Deer Industry Association

The Deer Industry Association (DIA), an amalgamation of the Game Industry Association and the Game Exporters Council, consists of exporters, slaughtering premises (DSP) and game packing houses (GPH's). All farmed deer sale for venison consumption, must by law, be slaughtered in DSP's. The carcasses are then transferred to OPH's for cutting and packaging for export. Velvet is also dried and packed at game packing houses.

Velvet processors formed the Velvet Processors Association (VPA) in 1991, which has one representative on the Game Industry Board.

As some exporters own both DSP's and OPH's, there is some vertical integration, which leads to cost savings in this segment of the industry. Some rationalisation of the industry took place in the early 1980's when venison industry throughput fell to around 1,000 tonnes. With the large increase in venison slaughter during the 1991-1993 period new processors entered the industry, and existing processors increased their respective capacities.

Game Industry Board

During the l970's, the Game Export Advisory committee, set up by exporters, had acted as an advisory group to exporters of game. In 1981 the Deer Farmers Association felt greater control of the industry was desirable. It made submissions to parliament outlining a draft proposal for the establishment of a Game Industry Board. The objective was to ensure co-ordination and co-operation between industry sectors.

As a result the Game Industry Board (GIB) was established under the Primary Producers Marketing Act Regulations of 1985. These regulations were amended in 1991 to increase the number of people with commercial exp6rtise on the board.

The GIB now comprises of ten members in all, five from the NZDFA, four from the DIA, one of whom represents the VPA, and one government member; the government member must have commercial expertise. Details of this representation are set out in Figure 4.

Figure 4: Deer Industry Structure

Fig 4

The function of the GIB is to assist in the orderly development of the game industry and the orderly marketing of game and products derived from game12. It is actively involved in pricing, promotion, distribution, the setting of quality standards and market research. The GIB is funded from levies on venison and velvet These levies are collected from DSP's and from GPH's.

In 1990, the GIB initiated a far reaching marketing strategy for deer products. To handle the implementation and monitoring of this project, the Cervena Company Ltd was formed in 1991. The objective is to control quality from farm gate through to the end consumer. Product meeting the required standards will carry either the "Cervena13" name or the "Zeal" quality mark. The first sales of venison under the "Cervena" name and "Zeal" brand were made in April of 1993 - "Cervena" in the United States and "Zeal" in Germany and Switzerland.

Supply of Major Deer Farming Outputs (1981-1993)

The New Zealand herd is made up of the following breeds, red 77%, wapiti/elk 12%, fallow 6% and other 5%.

Range of Outputs

The range of products produced within the New Zealand deer industry are shown in figure 5. Apart from breeding stock, the two main deer industry outputs are venison, the meat from stags and hinds, and velvet the antler of deer. The most important Co-products retrieved at the time of slaughter are skins, tails, pizzles, sinews and blood. Technology is being developed for the recovery of other glands and organs for which there are markets.

Figure 5:

 

Fig 5

All venison is further processed into a variety of cuts, then packed and exported under company brands. It is shipped mostly to game importers in the respective markets. There is little vertical integration of the industry after the product leaves New Zealand.

After cutting, the velvet must be cooled before it is frozen, retaining the maximum amount of blood. It is sold as an ingredient for oriental medicines either in frozen, dried, or powder form. Around 90% of velvet is dried in New Zealand. Initially the special drying facilities were owned and operated by Koreans, but it was not long before enterprising New Zealanders developed their own techniques. Now New Zealand velvet drying technology is considered to be amongst the most advanced in the world, A small amount of further processed velvet is exported in sliced and capsule form. Research is being carried out into the making of velvet extracts. In the near future processed velvet is expected to be available for export in this form,

Some skins are exported in a wet/blue form but an increasing proportion are further processed into leather before either, being exported as leather or, manufactured into garments.

In New Zealand less than ten co-products are recovered from deer at the time of slaughter, but there are markets for up to thirty. Currently it is the cost, and lack of special processing procedures that make recovery of many glands and organs unprofitable. Co-products retrieved are either dried in New Zealand for export or shipped out in their raw form mostly to Asian markets,

Industry Growth and Current Status

Breeding stock were initially sourced from feral herds, and imports of superior deer mainly from Europe. Unlike overseas countries, there was no restriction on live capture because deer were considered to be a noxious animal.

Hinds of up to twenty eight years of age have produced fawns. The length of the hind reproduction span is comparable with horses. In the longer term, when herd numbers reach an equilibrium, hind culling and replacement is expected to stabilise at around twelve years of age.

Currently there is a difference of opinion between the Deer Industry Associations' and Statistics NZ over deer numbers. After two surveys, the Deer Industry believes total farmed deer numbers are considerably higher than the official figure. In this publication we are using the official Statistics NZ figures, the most up to date of which cover the period to the 30th June 1992.

From the issue of the first licence in 1971, growth in deer farming has been rapid. On 30th June 1992 there were over 5,100 deer farms, and farmed deer numbers reached 1.14 million. This growth in deer numbers, the resulting production of venison from both hinds and stags, and the production of velvet is shown in figure 6.

Hind numbers peaked in 1991 at around 727,000 before falling back to an estimated 600,000 in 1993. Stag numbers peaked at around 433,000 in 1992 and declined to around 340,000 in 1993.

As shown in figure 6 venison production grew steadily until 1988 to reach 4,500 tonnes, declined in 1989, almost reached 6,000 tonnes in 1990, then increased rapidly to reach the highest level so far of 22,000 tonnes in 1993. The production increases for the 1991, 1992 and 1993 June years were 80%, 55% and 60% respectively.

Velvet production grew from around 20 tonnes in 1980 to reach 450 tonnes in 1993. These dramatic increases have had a significant impact oh the industry.

FIGURE 6 GROWTH IN NUMBERS AND PRODUCTION 1986-93 (1993 Numbers are a MAF Policy Estimate)

Fig 6

Factors Driving Growth

What are the factors which have driven this rapid growth to June 1993? Industry growth through until 1989 was driven by the returns from breeding hinds, velvet production and to a lesser extent venison production. The variations in these annual returns on a per stock unit basis are shown in figure 7.

Until 1990 the gross margins per stock unit from deer breeding/finishing farms and velveting herds were higher than those from sheep, beef or dairying. A summary of gross margins for deer, sheep, bull beef, and dairying is shown in appendix C. Returns from velveting continued to surpass dairying until the 1992193 season when velvet prices fell and dairying returns increased dramatically.

FIGURE 7: DEER FARMING GROSS MARGINS Nominal Returns per Stock Unit (SU)
Fig 7

After the deer, the next best returns came from bull beef. From 1991 to 1993 for the first time deer breeding/finishing returns fell below those for bull beef.

Current Status

Until 1991 few hinds had been culled and a portion of the breeding herd was ageing. This together with sharply declining breeding hind values started a hind cull, which escalated as venison prices fell. Improved velvet returns encouraged the build up of velveting herds. As prices weakened during the 1991/92 and 1992/93 seasons, heavier culling of poorer producing stags took place.

The impact on the industry of this hind and stag cull is covered in greater detail in the next section under the level of supply response. However, as a result of the heavy cull, deer numbers at 30 June 1993 are estimated to have fallen to around
950,000.

Production of venison and velvet for 1992/93 June year reached 22,200 tonnes of venison and 450 tonnes of velvet.

12 "Game", in this context means deer only.

13 The Cervena name only applies to venison.

© MAF 1994
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