Beef production falls as land use changes

17 December 2003

Beef production falls as land use changes

Beef production is expected to decline by two percent to the year ending September 2004 in line with falling beef cattle numbers, according to MAF's 2003 Situation and Outlook for New Zealand's Agriculture and Forestry (SONZAF) report.

The report says that total beef cattle numbers are expected to fall from 4.34 million in June 2003 to 3.91 million at June 2006 as some land is diverted from beef to dairy, deer and forestry.

Production is correspondingly projected to fall - to 618,000 tonnes in September 2004 - as a result of the fall in beef numbers, partially offset by rising numbers of cull dairy cows arising from the dairy herd's continuing expansion.

In line with this, exports of beef and veal will fall but the US market quota is expected to remain fully used over the outlook period.

In the year ended September 2003, provisional beef and veal exports were up 15 percent on the previous year to $1.59 million.

But in dollar terms, this was a nine percent drop from the previous year because of weaker international prices and a stronger New Zealand dollar.

Trade figures for the year show that the US took 58 percent of New Zealand's total beef and veal exports by volume and 54 percent by value. It also took 77 percent of manufacturing beef export volumes.

Manufacturing beef, which largely comes from the slaughter of cows and bulls of dairy cattle breeds, accounted for just over half (52 percent) of total beef and veal exports.

While beef was exported to 83 countries, the top seven destinations accounted for 90 percent of exports by volume and 83 percent by value. Of these countries, total export values to South Korea, Taiwan, Japan and Indonesia showed a rise over the previous year reflecting rising volumes dampened by price falls.

In the longer term, it is expected that the bulk of New Zealand's beef and veal export trade will remain solidly in the higher value markets of the developed countries, and in particular will rely on North Americans to continue to consume large amounts of burgers and other processed meats.

Rising incomes in developing countries are leading to increasing meat consumption but this may be met largely domestically, or by trade between developing countries at price levels that could exclude viable New Zealand export trade.

There is also potential for export growth in the higher income countries in Southeast and North Asia.

But the report says Australia will likely retain its competitive advantage in these regions because it is closer to Asia and is a significant producer of grain-fed beef that is popular in Asian countries.

The SONZAF report says that it is crucial New Zealand remains vigilant against the establishment of exotic diseases such as foot and mouth disease and it says the current major review of biosecurity policy and structure should benefit the economy in the long term.

It says there is scope to increase productivity through research and technology but the industry will be cautious about applying GM and will remain responsive to consumer preferences.

Organic beef production, is likely to grow in significance but will probably remain a niche market opportunity in New Zealand and the wealthier developed countries such as in Europe.

ENDS

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