2.2 Sheep
2.2.1 Sheep meat
Production and Trade
The provisional sheep numbers from the census of 30 June 2002 were 39.2 million, down 2% on the previous year's estimate of 40.0 million. This reflects continued land use conversions to deer, forestry and dairy (particularly in the South Island), the drought conditions, and farming policy shifts from sheep to beef. Sheep numbers are expected to remain relatively stable with a projected 38.6 million by June 2007.
The estimate of lambs docked as a percentage of mated ewes and ewe hoggets was a new record at 114% in spring 2002. Sheep meat production is estimated to rise by 1.9% to 531,000 tonnes carcass weight (cw) for the year ending September 2003. Lamb production, while up slightly at 416,000 tonnes cw, has been slightly impacted by summer/autumn drought conditions. Mutton production is estimated to be up 7.3% to 115,000 tonnes cw as drought conditions have led to a higher than normal cull. The drought conditions will have flow on impacts on the spring 2003 lamb docking percentage, estimated at 112%. For year the ending September 2003, export volumes of lamb are estimated at 352,000 tonnes carcass weight equivalent (cwe) and export volumes of mutton are estimated at 89,100 tonnes cwe. In total, sheep meat export volumes are estimated at 441,000 tonnes cwe, up 2% on last year.
Over the forecast period, sheep meat production is projected to rise to 558,000 tonnes cw for the year ending September 2008, due to a continuing rise in the productivity of lamb births and lamb slaughter weights. Total sheep meat exports are projected at 464,000 tonnes cwe by year ending September 2008.
The European Union (EU) remains New Zealand's most important market for sheep meat. Lamb export statistics for the year ended September 2002 show that the EU accounts for 54% by volume and 63% by value. For mutton, the EU accounted for 53% by volume and 73% by value. Two thirds of mutton products are frozen boneless cuts - used for manufacturing purposes - with the EU accounting for 77% by volume and 86% by value. Five countries accounted for 53% of lamb exports by product weight for September year 2002 - the UK (21%), France (9%), Germany (8%), China (8%) and the US (7%). The market differentiation of lamb product cuts is shown in the average price per kg of $2.00/kg for China and $10.90/kg for the US.
The proportion of chilled lamb products grew from 14% to 17%, while frozen carcasses only made up 6% by volume for year ended September 2002. The UK took 35% of frozen lamb carcasses exported and 15% of chilled carcasses. Demand for New Zealand's lamb carcasses comes from UK butcher shops, which supply 22% of the total sheep meat purchased by the UK consumers. Of the $2.02 billion lamb export value for September year 2002, chilled lamb products contributed $0.5 billion. The increasing demand for New Zealand's chilled lamb products will lead to their increasing contribution to export value over the forecast period.
Prices
The UK meat market is used as a basis for forecasting the trend in international prices received for New Zealand lamb. Lamb prices in the UK have remained high since the eradication of the foot-and-mouth outbreak in September 2001 due to lower UK sheep meat production. New Zealand lamb PM carcass prices rose 9.6% to 206 UK pence per kg (p/kg) in the year ended September 2002. For the year ended September 2003, prices are estimated to be 196 UK p/kg, down 4.9% on the previous year. Lamb prices in the UK are projected to fall over the outlook period to 2008 because of:
- a recovery in the UK sheep flock
- rising UK sheep meat production, moderated by a recovery in exports of sheep meat and live sheep
- falling prices of competing meats.
Consequently, the average price of New Zealand lamb in the UK market is forecast at 190 UK p/kg in September year 2004 and projected at 185 UK p/kg in 2008.
The all grades average lamb price for year ended September 2002 was $70.70 per head (/hd), up 11% from $63.70/hd for the previous year. This reflects higher overseas meat returns and very favourable exchange rates. For September year 2003, the average lamb price is estimated to fall to $62.50/hd, reflecting lower UK prices and the sharp appreciation of the NZD. The NZD has appreciated against the UK pound from 0.309 in October 2002 to 0.350 in April 2002. A projected price of $60.90/hd for September year 2008 reflects lower UK prices, moderated by lower exchange rates compared to the peak assumed in 2004.
Contact for further information:
Rod Forbes
Co-ordinator, sheepmeat, livestock numbers, landuse and climate
Phone: (04) 474 4222
Email: rod.forbes@maf.govt.nz
