Reduced volatility critical for long-term sheepmeat sector

20 August 2013

Reduced volatility critical for long-term sheepmeat sector viability

Representatives of the sheepmeat sectors from the United Kingdom, France and New Zealand met last week and have agreed that the volatility of returns is negatively impacting the long term viability of their respective sheepmeat sectors.

They agreed that the roller coaster ride of good years followed by poor years saps the confidence of sheepmeat producers, resulting in a decline in production in most sheep producing countries and a sector that has difficulty attracting and retaining good young people.

A cross-sector group from the UK and France came to New Zealand on a fact-finding mission to better understand the current outlook for New Zealand sheep farmers and to identify and discuss common challenges. They met with representatives from key industry organisations, farming groups and the meat processing and exporting companies.

Beef + Lamb New Zealand Chairman, Mike Petersen said all of the producer organisations agree that sheepmeat supplies from the northern and southern hemispheres are complementary and vital to ensure that lamb is available on supermarket shelves in European markets throughout the year.

Uncontrollable factors like climate conditions or exchange rate movements can sometimes disrupt orderly marketing programmes and this results in unexpected volatility in pricing.

Petersen said while there is currently every sign that returns will improve over the medium term, the organisations consider that there is an opportunity over the next six months for sheepmeat producers, processors and exporters on both sides of the world to better understand market dynamics and to consider how more stable returns might be able to be generated in the future, and in doing so, improving the long-term viability of the sheepmeat sector.

Farming leaders from the groups agreed that they should continue to work together in areas of common interest and on how farmers deal with the level of volatility facing the sector.

“We’ll be working with others in the supply chain to encourage better returns for farmers and a more profitable and vibrant industry,” Petersen said.

It was agreed that the Global Sheepmeat Forum to be held in Brussels later this year could provide another opportunity to continue this work.

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