TL;DR:
- The outlook for red meat in 2024 shows slight improvement but remains challenging due to global economic conditions, impacting sheep and beef farmers with lower returns and higher costs.
- The US and China are pivotal markets for New Zealand’s red meat, with the US showing signs of growth and China experiencing economic difficulties, affecting consumer spending and competition levels.
- Despite global challenges, New Zealand’s diverse export strategy and the potential for trade negotiations offer some hope for the red meat sector.
The market forecast for New Zealand’s red meat in 2024 presents a modest improvement over the previous year, yet the sector continues to face significant challenges. With the global economy’s influence on meat prices, any substantial recovery hinges on a worldwide increase in consumer confidence and employment stability.
New Zealand’s meat industry excels in diversifying its market destinations, yet it remains significantly influenced by the global market’s willingness to pay. Despite a higher export tonnage of beef and sheepmeat last year, the total sales value of $10.2 billion marked an 11% decrease from the prior year, indicating that while demand remains, price sensitivity is evident among global consumers.
The “fifth quarter” of exports, including edible offals and other by-products, plays a crucial role in sustaining the industry’s returns, constituting about one-fifth of the total export value. Without these, New Zealand’s red meat returns would see a 20% reduction.
The past year’s decline in value, amounting to over a billion dollars in lost revenue for meat companies, has led to reduced payments to farmers, exemplified by Alliance’s pre-tax loss of $97.9 million for the year ended September. This situation underscores the industry’s vulnerability to market fluctuations, despite efforts to control costs and maintain efficient livestock procurement.
Looking ahead, the United States offers a glimmer of hope for the industry, with signs of economic growth and a decrease in beef production potentially benefiting New Zealand’s beef exports. In contrast, China’s economic struggles and increased competition from countries like Brazil and Australia pose challenges, particularly for sheepmeat exports, which have seen a significant price drop despite maintaining high volumes.
Australia’s competitive edge, bolstered by a free trade agreement with China that eliminates tariffs on sheepmeat, along with its agreement with the United Kingdom, could further impact New Zealand’s exports to these key markets.
While the United Kingdom remains an important market for New Zealand, its significance has waned compared to the US and China, with the latter’s economic downturn disproportionately affecting the red meat sector, especially sheepmeat.
New Zealand’s farmers and exporters continue to navigate these complex global dynamics, striving to maximise returns from a wide array of products and markets.
However, the path to securing more favourable trade agreements remains challenging, with significant potential deals still out of reach.
The industry’s resilience and adaptability will be crucial in 2024, as it faces an uncertain global economic landscape and the ongoing need for strategic market diversification and negotiation efforts.
