Organic Lamb Prices Continue To Attract Premium

17 November 2008

Organic Lamb Prices Continue To Attract Premium

Growing international retail demand for healthier food options, combined with a low volume sheep and lamb cycle is propelling contract prices for organic lamb to new highs, with Silver Fern Farms’ indicative prices for heavier weight organic lambs up by 15 percent year on year despite the global financial downturn.

Demand is largely underpinned by major European retail chains such as Tesco and Marks & Spencer which view organics as being an integral part of their premium chilled lamb category, targeting health and environmentally conscious consumers who represent an increasingly important customer demographic.

Nor is it likely to be a passing fad. Globally, certified organic products are commanding premium prices in a high value, discerning market. Organic NZ lamb, for instance, is currently trading at a 20 percent premium over Silver Fern Farms’ Euro Lamb Partnership.

Figures quoted by Organics Aotearoa New Zealand places a market value on global organics of more than $60 billion, growing at between 10 – 20 percent annually. This growth has been underpinned by belief in the health benefits of going organic. And while the jury is still out on the nutritional or flavour benefits, there is no denying that consumers are acutely aware of food safety issues and are prepared to pay a premium for the assurance.

As the name implies, organically grown animals are raised without the aid of antibiotics, drenching for anti-parasite or other drugs. It is also commonly accepted that sheep are among the most challenging organic enterprises, with organically reared stock subject to rotational grazing schedules, mineral balancing and the cultivation of diverse pasture sward so they can tailor diets according to changing nutritional needs.

Grant Howie, Silver Fern Farms’ Livestock Marketing Manager says the continued high prices reflect a shortage of supply at key times during the year. “It’s a niche business, representing a tiny segment of the overall market in New Zealand. Consistency of supply has therefore been a longstanding
issue, and certainly has an impact on pricing particularly moving into later months of March and April.

“Our organic programme represents a long term approach. Our aim is to establish partnerships with organic lamb suppliers over time. The launch of our Backbone Organic Lamb Partnership signals that intention.”

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