- The 2002/03 season
- Fig 19: Deer industry export value by product
- Fig 20: Venison export volumes and average FOB prices for main markets
- Outlook for 2003/04 to 2006/07
- Table 7: Deer situation and outlook
- Fig 21: Venison production and prices
- Longer term outlook - a possible scenario
Deer
- Deer numbers are projected to expand over the outlook period in spite of relatively low returns.
- The venison schedule price for AP2 stag is estimated to fall to $4.74 per kg for the year ending June 2004, down from $4.77 per kg for the year to June 2003, but is projected to increase to $5.75 per kg for the year ending June 2007.
- Velvet production is estimated at 520 tonnes for the year to June 2004 and is projected to rise to 575 tonnes for the year to June 2007. Velvet pool prices are estimated at $80 per kg for the year to June 2004 and $85 per kg for the year to June 2007.
The 2002/03 season
Production
The Statistics New Zealand (SNZ) Agricultural Production Census as at 30 June 2002 put farmed deer numbers at 1.64 million. By 30 June 2003 farmed deer numbers are estimated to have risen by 4 percent to reach 1.70 million. Of this figure, hinds numbered 1.21 million. With hinds making up 71 percent of the herd, farmer decisions regarding herd build-up have a major impact on the size of the kill and herd growth.
Venison production for the year ended June 2003 rose 13 percent to 28 300 tonnes carcass weight (cw). Hinds made up 43 percent (231 000 head) of the numbers killed in 2002/03.
Velveting stag numbers have fallen by around 40 percent over the past 10 years. Velvet production for the year ended June 2003 increased 1 percent on the previous year to 528 tonnes.
Exports, markets and prices
Total New Zealand deer product exports were worth $210 million free-on-board (FOB) in the year to June 2003, 24 percent down on the previous year. Venison exports of $158 million accounted for just over three-quarters of the total value. The value of venison exports was down 26 percent on the previous season, owing to a 27 percent fall in its average price per kilogram, only slightly offset by a 1 percent rise in export volume to 16 200 tonnes product weight (pw).
Velvet export value was $28.7 million, down 24 percent on the previous year. Co-products of deer slaughter made up the remaining $23.3 million from total deer product exports.
Fig 19: Deer industry export value by product
Year ended June 2003; total: $210 million
New Zealand's position as the world's largest producer and exporter of farmed venison means that considerable changes in the quantity exported from New Zealand can impact on market prices. The European Union (EU) remained the dominant market for venison, taking 90 percent of New Zealand's exports. Germany was the main market within the EU taking 7 780 tonnes pw, amounting to 48 percent of total venison exports by volume, and earning $64.0 million FOB. The three next most important markets were the United States (US) taking 952 tonnes pw and earning $18.8 million; Belgium taking 1159 tonnes pw and earning $17.7 million; and France taking 1428 tonnes pw and earning $10.7 million.
EU market demand remained weak throughout the 2002/03 season owing to reduced beef prices, weak economic growth and lower pork prices. As a result the average New Zealand export price fell to $9.75 per kg FOB for the year ended June 2003, a decrease of 27 percent on the previous season. In real terms, this price was only 3 percent higher than the lowest price received over the last 13 years.
In the year ended June 2003, around 96 percent of velvet exports were sold into Asian markets. The Republic of Korea (South Korea) accounted for 34 percent of direct export volume and 47 percent of the FOB value. Exports to The People's Republic of China (China) and Hong Kong accounted for 42 percent of export value, though much of this product eventually finds its way onto the South Korean market. Prices received from this market are the major factor influencing New Zealand velvet pool prices. The US is the largest non-Asian market for deer velvet, and only accounted for 2 percent of the total export value for velvet in 2002/03.
Velvet prices continued to firm in the year to June 2003, owing to four main factors, all relating to South Korea:
- an upturn in South Korea's GDP;
- a relatively steady exchange rate between the New Zealand dollar (NZD) and the South Korean won;
- a growing awareness in South Korea of the quality of New Zealand velvet; and
- the continuing ban on Canadian velvet imports into South Korea, following the discovery of Chronic Wasting Disease in some Canadian Elk herds.
Fig 20: Venison export volumes and average FOB prices for main markets (in descending order of value, left to right)
Year ended June 2003
Producer prices
For the year ended June 2003, the average venison AP2 stag schedule price was $4.77 per kg, a 41 percent fall from the previous year's level. This drop is the result of low returns from EU markets and unfavourable exchange rates. Slightly firmer export velvet prices resulted in an average pool price of $99 per kg, an increase of 3 percent from the previous year.
Outlook for 2003/04 to 2006/07
Production
Deer numbers are forecast to increase to around 1.73 million by the end of June 2004. Hinds will continue to make up almost 70 percent of the herd and so will have a major impact on productive capacity and herd growth. Venison production is forecast at 30 200 tonnes cw for the year ending June 2004, and projected to be 33 200 tonnes cw for the year ending June 2007. However, in any one year, venison production will be largely determined by the number of hinds killed.
Weak venison prices in the current 2003/04 season, together with farmers' response to these prices, may have some impact on supply and market returns for this season.
Exports, markets and prices
Total venison exports are projected to increase from 21 300 tonnes pw in the year to June 2004 to 22 400 tonnes pw by 2006/07. Velvet production, linked closely with the number of stags, is projected to increase along with the size of the national herd, to reach 575 tonnes in the year ending June 2007 and return around $29.4 million FOB.
Historically, venison has been considered the meat of kings, available only during the hunting season. However, venison has a number of attributes that should continue to make it highly appealing to the increasing numbers of health conscious consumers. It is low in fat, cholesterol, sodium and saturated fatty acids, while being high in copper, iron and zinc. It has a unique flavour, is easy to prepare and, as it has a very short cooking time, it can be classified as a convenience food.
Venison prices have fallen sharply over the past year following market resistance to the extremely high prices two years ago. As a result, European importers were caught with high stocks and made substantial losses. Historically, sharp falls in venison prices that hurt importers have taken two seasons before they start to improve. Increased investment in market development by Deer Industry New Zealand (DINZ), New Zealand exporters and their in-market partners should enhance demand.
The EU, with its population of 380 million people, is expected to remain New Zealand's major venison market. If just 22 percent of this population had one meal (200 gm) of venison a year they would consume all of New Zealand's production. Considering that most of New Zealand production is consumed during the European autumn/winter there is considerable potential for increasing demand outside this period. DINZ, exporters and their in-market partners are pursuing this strategy.
The European markets demand stable pricing and consistency of product. From a quantitative analysis of factors influencing German venison prices since 1983, changes in wholesale pork prices appear to explain over half the variation. Key factors expected to determine prices for New Zealand venison over the outlook period are:
- European demand for venison, which will be driven by importer price margins, relatively stable prices and consumer perceptions of venison's quality and health attributes;
- some improvement in German wholesale pork prices, as projected by the OECD (OECD, 2003);
- an increase in New Zealand venison production during 2003/04, followed by small increases in production through to 2006/07;
- increased promotion by New Zealand exporters and German importers, supported by DINZ; and
- ·an improvement in New Zealand export FOB prices due to some depreciation of the NZD and a recovery in European economic growth.
Venison export prices are expected to remain at around $9.70 per kg FOB for 2003/04 and then to rise steadily to $10.10 per kg FOB in 2006/07.
The small rise in projected velvet production out to the year ending June 2007 is unlikely to put pressure on international market prices. Market prices will largely be influenced by:
- economic growth in South Korea;
- changes in the relative values of the South Korean won and NZD;
- an extended ban on imports into South Korea of Russian reindeer and Canadian elk velvet;
- market development through improved access of further processed velvet products to South Korea, Taiwan, the US and China; and
- stronger scientific evidence demonstrating velvet's health benefits.
Producer prices
Venison schedule prices for AP2 stags are forecast to average $4.74 per kg for 2003/04 and are projected to reach $5.75 per kg by 2006/07. As a result of increasing international production and the weak South Korean won, the velvet pool price is expected to ease over the forecast period from $80 per kg in 2003/04 to $85 per kg in 2006/07.
Reference:
OECD (2003), OECD Agricultural Outlook.
Other sources:
DINZ; Statistics New Zealand; MAF.
Table 7: Deer situation and outlook
June year |
Units |
2002 |
2003e |
2004f |
2005z |
2006z |
2007z |
Venison | |||||||
Stag kill |
000 hd |
274 |
297 |
292 |
284 |
317 |
352 |
Hind kill |
000 hd |
182 |
231 |
266 |
238 |
238 |
257 |
Total kill |
000 hd |
456 |
528 |
557 |
522 |
555 |
609 |
Production1 |
000 t |
25.0 |
28.3 |
30.2 |
28.4 |
30.3 |
33.2 |
Exports2 |
000 t |
18.3 |
16.2 |
21.3 |
21.3 |
21.0 |
22.4 |
NZ FOB |
$/kg |
13.40 |
9.75 |
9.70 |
9.95 |
10.00 |
10.10 |
Schedule price3 |
$/kg |
8.08 |
4.77 |
4.74 |
5.40 |
5.72 |
5.75 |
Velvet | |||||||
Production |
t |
522 |
528 |
520 |
544 |
564 |
575 |
Exports |
$mil |
37.7 |
28.7 |
27.7 |
29.1 |
29.5 |
29.4 |
Pool price4 |
$/kg |
96 |
99 |
80 |
90 |
88 |
86 |
Sources: DINZ, Statistics New Zealand (SNZ) and MAF
Figures may not add or reconcile due to rounding.
1 Carcass weight.
2 Product weight.
3 AP2 stag net of industry levies.
4 Average all grades.
Fig 21: Venison production and prices
Longer term outlook - a possible scenario
New Zealand is expected to remain the world's largest supplier of venison over the longer term. This is because of the small numbers of farmed deer in other countries, restrictions on live capture in most countries, and the disincentives for deer farming in countries where subsidies are paid only on other types of farming. Although New Zealand production is expected to expand, such expansion will be slower than had been forecast earlier, owing to the deer numbers recorded in the June 2002 SNZ census being lower than expected. Total export volumes of venison are still very small when compared to the volumes of other types of meat exported.
The EU is expected to remain the key market, because of its size, tradition of eating all venison cuts and opportunities for developing new market segments. Given the large distance between New Zealand and Europe, savings in freight from bulk shipping will continue to encourage reliance on, and development of, the EU market. Volumes exported will remain relatively small, but returns on promotion in this market are likely to be high, especially if New Zealand can successfully brand its quality cuts.
Significant inroads will be made into differentiating New Zealand farmed venison from feral venison. It will be sold all year round, and will be recognised as a consistent quality product. Key demand is expected to come from restaurants, hotels and retail outlets.
Demand for venison from the US will also grow, but it is expected to be smaller than from Europe, owing to costs of promotion and the US demand for high cost cuts that account for only a small proportion of the carcass.
The New Zealand market virtually remains untapped and provides opportunities for growth, especially in the hotel and restaurant trade. Visitors from overseas (who numbered two million in 2002) could alone provide a large onshore potential market for a campaign promoting high quality venison cuisine.
Asia, in particular Korea and China, is expected to continue to be the major market for deer velvet in the long term, where it has historically been incorporated into traditional medicines. New Zealand research has corroborated that which Asians have known for thousands of years: velvet consumption can strengthen the immune system, promote wound healing and enhance anti-inflammatory action. The growing recognition of these characteristics by the western world is in the longer term expected to result in increasing demand for velvet from athletes to assist in their training, and for incorporation into health foods for both human and pet animal consumption.
Sources:
DINZ; SNZ; OECD; MAF
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