Situation and outlook for New Zealand agriculture and forestry (August 2007)
14 Lamb
Farm-gate prices for lamb producers during the 2006/07 slaughter season have been poor. In inflation-adjusted terms these are the worst prices since 1996. These poor returns have been driven by a strong New Zealand dollar and static prices received for lamb in New Zealand’s key European and United States (US) markets. Falls in international prices for lamb pelts have also hit lamb schedule prices.
Prices received for frozen and chilled New Zealand lamb in the European Union (EU) declined in early 2006, and have remained at lower levels since then. EU farms have increased their slaughter rates due to the effects of the 2003 reform of the Common Agriculture Policy, which decoupled subsidy payments from production.
Prices for New Zealand lamb in the EU are expected to increase in the second half of 2007 as domestic lambs available for slaughter fall in number in line with declines in breeding ewe numbers. New Zealand exporters used a large proportion of New Zealand’s 2007 lamb quota to the EU in the March quarter, so supplies of New Zealand lamb to the EU must decline in the final three-quarters of 2007.
By the time the next slaughter season is in full swing in the first half of 2008, prices for New Zealand lamb in the EU and US are forecast to have increased gradually due to the lower production of lamb from domestic EU producers and Australian producers, who will be rebuilding their flocks after the drought. This will have little impact on farm-gate prices, since the exchange rate is not expected to have depreciated by this time.
Exports
During the year ended 31 March 2007, 334 000 tonnes of lamb were exported (see Table 14.1). This earned $2253 million dollars (see Figure 14.1). Both the volume and value of lamb exported were 13 percent higher than in the previous year, although much of this increase was due to the very large volume shipped in the recent March 2007 quarter.
Table 14.1: Lamb prices and volumes
| Actual | Forecast | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | ||
| Lamb schedule price1 (cents/kg) | 372 | 389 | 333 | 321 | 341 | 377 | 407 | 416 | |
| Export volume2 (000 t) | 298 | 292 | 295 | 334 | 302 | 304 | 299 | 297 | |
Notes
1. Year to 30 June.
2. Year to 31 March.
Source Meat and Wool New Zealand, Statistics New Zealand, and MAF.
New Zealand’s EU lamb quota is filled on a calendar year basis. Therefore, since a larger than usual proportion of the quota was filled during the March quarter of 2007, the volume of lamb exported during the remaining three-quarters of 2007 is forecast to be lower than normal.
In the year ending 31 March 2008, New Zealand lamb exports are forecast to earn $2020 million dollars, down 13 percent on the previous year.
Figure 14.1: Lamb export destinations, by value, year ended 31 March 2007
Source Statistics New Zealand.
Production
Lambing percentages in the spring of 2006 were good, and the past two years have seen gradual increases in breeding ewe numbers. Therefore, the total number of lambs available in New Zealand in the 2006/07 season is expected to be slightly up on the number in the 2005/06 season.
In the year ended 30 June 2006, breeding ewe and hogget numbers were at 29.9 million, up 1.3 percent on the previous year. Total sheep numbers increased in the North Island, but decreased slightly in the South Island.
From the year ending 31 March 2008, dairy expansion will take land out of sheep farming, and, despite continuing improvements in lambing percentages, the volumes of lamb processed are forecast to decline. Breeding ewe numbers are forecast to decline over the same period.
Figure 14.2: Monthly lamb slaughter
Source MAF.
Contact for Enquiries
Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
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