Red meat export returns are projected to increase by $1.2 billion in 2024-25 — up 13% to $10.2b — by Beef + Lamb New Zealand’s (B+LNZ) mid-season update.
The industry body’s team of economists and analysts have found the red meat sector is on track for a strong rebound, as farm profitability and export returns head for a marked increase.
At this stage, weaker demand from China is being offset by more sales in the United Kingdom, European Union and the United States and Canada.
Normally, a better outlook would delight farmers going through a tough year of high costs and low farmgate prices.
However, yet to play out in this equation are the trade wars ignited by US President Donald Trump’s tariffs against China, Canada and Mexico and the retaliatory tariffs placed on US goods.
B+LNZ chairwoman Kate Acland said in a statement the improved global market conditions were encouraging, but challenges remained.
“This is a welcome turnaround for farmers following a tough 2023-24 season and a great result for New Zealand. Strong demand and a lower New Zealand dollar have lifted red meat prices. There are, however, risks on the horizon. We are keeping a very close eye on US trade policy developments, which have the potential to create global market volatility.”
Mrs Acland released the update and discussed its findings with Minister of Agriculture Todd McClay at Mount Somers Station in Mid Canterbury yesterday.
Mr McClay has sought a call with his US equivalent and the US Secretary of Commerce to talk through the nations’ trade position.
He said US exporters mainly faced lower tariffs than NZ exporters did in the US.
If the US was looking at tariffs in other parts of the world, it should leave New Zealand out because it was a good trade partner for the US, he said.
“There is no indication that the US is signalling New Zealand out or has a focus on us. If the administration decides to put tariffs on all food imports to support their farmers then, yes, we will be captured as every other country will. But it is too soon to know whether it’s country-specific or product-specific for everybody.”
Mr Trump’s social media post on tariffs made a week ago was light on detail and more would be known over the next two to three weeks, he said.
He did not know of any upsides to tariffs escalating around the world, as it harmed economies and businesses lost confidence to invest, Mr McClay said.
“However, China said it would put tariffs on US exports — they have already and said they will do more — and China imports a lot of beef from the US and they will stop doing that, [but] will still need that beef for their restaurants and supermarket shelves. They will turn to countries like New Zealand that they already trade with to buy more. So there will be opportunities around the world for New Zealand, but I do want to be clear: tariffs across the board, including New Zealand, will be harmful to exporters in that market.”
The government was not looking at retaliatory tariffs if the US placed tariffs on New Zealand goods, but it was looking at all options, Mr McClay said.
Mrs Acland said she had just returned from the US and got the impression New Zealand was not the target.
The US viewed New Zealand as a trusted trading partner, she said.
“We provide product they need, which is that lean beef trimmed to go with their hamburgers.”
New Zealand had enjoyed free and open trade access with diversified high value markets and this had helped turn around farmgate returns this season, she said.
Farmgate prices have lifted, with lamb prices forecast at $8.06 a kilogram to reach $155 per head, up 20% from last season and 9% above the five-year average.
A big mover is mutton prices, expected to rise to $90 per head — a 70% increase on last season.
Steadier cattle prices are projected to hit record levels, with an all-beef price of $6.18/kg, up 16% on last season and 20% above the five-year average.
US demand for imports of red meat continues to be strong, at a time when they have a record-low beef cattle herd.
As a result, farm profits are set to improve, the average forecast at $106,500 — nearly double last season’s $56,400, but still below the five-year average.
Mrs Acland said the lift in profitability was good news, but costs remained a concern.
“While revenue has improved, farm input costs have risen 33% over the past four years, meaning profitability is still below long-term sustainable levels.”
Regional economies are expected to win from sheep and beef farmers generating about $6.4b in income. Daily, they spend about $15 million on goods and services, with much of that staying in local communities.
The update found shifting global trade patterns played a key role in the sector’s recovery.
While China remains an important market, exporters have diversified, increasing shipments to markets where demand is stronger.
Mrs Acland said farmers were seeing positive signs for the sector, but uncertainty remained.
“Farmer confidence is slowly recovering, but regulatory uncertainty around climate change, freshwater and other policy issues continues to weigh heavily on their minds. Stability in these areas is critical for long-term confidence and investment. New Zealand’s red meat sector is resilient, and with the right policy settings, we can build on this recovery and strengthen our industry for the future.”
Falling interest rates are helping, but the speed which farmers recover from last season will depend on debt levels, how they bounce back from drought and storms as well as stock numbers they can sell to make the most of higher farmgate prices.
