New Zealand Livestock and Products
CY 2009 total slaughter is forecast at 3.895 million head, down slightly from last year, but up from the 3.65 million head originally forecasted, according to the USDA Foreign Agricultural Service.
28 March 2009
6 minute read
Executive Summary
The downturn in global dairy commodity prices has made dairy farming less profitable and tempered production. However, the surge in dairy production over the past several years means that beef production is increasingly derived from the dairy herd. Based on expected slaughter rates and updated estimates for average carcass weights, total CY 2009 beef production is forecast at 633 thousand metric tons (TMTs), up 33 TMTs from the initial forecast, but down slightly from last year. New Zealand beef and veal exports are forecast at 525 TMTs (CWE), which is higher than originally forecast but down slightly from last year. The upward revision is due to an increase in the cow and bobby calf slaughter and a return to more traditional animal carcass weights.
During CY 2008, New Zealand’s exports to the more established markets were fairly static or declined slightly, while exports to Russia, continental Europe and the United Kingdom were up significantly. In CY 2009, New Zealand exporters are expected to increase their focus on the U.S. market. New Zealand’s manufacturing beef exports to the U.S. market are forecast to increase this year by 14 to 21 TMTs (CWE) reaching 245 to 266 TMTs (CWE). The U.S. quota for New Zealand beef stands at approximately 299 TMT (CWE).
New Zealand beef exporters have benefited from the depreciation of the New Zealand dollar. After reaching a peak of just over 81 U.S. cents in February 2008 - its highest level since it was floated in 1985 – the New Zealand dollar now stands at approximately 50 U.S. cents. The New Zealand dollar has varied between 39 and 81 US cents since 2000.
After four years of negotiations, New Zealand, Australia and the Association of Southeast Asian Nations (ASEAN) signed an free trade agreement (FTA) in February 2009. The FTA will eventually eliminate tariffs on 99% of New Zealand’s current exports to the four key ASEAN markets of Indonesia, Malaysia, the Philippines and Vietnam. On full implementation, this is estimated to equate to an annual duty savings of approximately NZ $50 million based on current trade. Indonesia is New Zealand’s largest beef export market among ASEAN countries.
Section III. Narrative on Supply and Demand, Policy and Marketing
Cattle Slaughter
Revised Forecast for CY 2009
CY 2009 total slaughter is forecast at 3.895 million head, down slightly from last year, but up from the 3.65 million head originally forecasted.
The downturn in global dairy commodity prices has made dairy farming less profitable, which has tempered production. Conversions from sheep and beef farms to dairy farms have slowed, as has the tendency to increase stocking rates. However, the previously planned dairy conversions that are still taking place in 2009 will need to be stocked and a small amount of herd rebuilding is expected in the beef cow sector. In light of these factors, post is forecasting cow slaughter at 775,000 head, which is up from the previous estimate but still on the low end of what would be expected. (Note: Since 1986, the dairy cow herd has grown at 2% per annum. Assuming a total cow herd of 5.6 million head growing between 1 and 2% a year, between 775,000 and 850,000 cows would be culled each year.) Weekly figures published by the Ministry of Agriculture and Forestry (MAF) indicate that the cow slaughter rate for the first 19 weeks of the 2008/09 season (October 1/September 30) is 45% ahead of the previous year.
Post is revising the calf kill forecast upward to 1.55 million head, or 100,000 head higher than the previous forecast. It is unlikely that there will be demand to rear the calves generated by dairy farming for either dairy or beef herd replacements.
Post is forecasting other cattle slaughter during CY 2009 at 1.57 million head, an 8.6% drop from last year but up from the 1.5 million head originally forecast. This estimate is in line with forecasts provided by Meat and Wool New Zealand, which has access to survey data regarding on-farm livestock numbers and farmer intentions.
Update for CY 2008
According to the Ministry of Agriculture and Forestry (MAF) and Statistics New Zealand, the total slaughter for CY 2008 was 3.91 million head, which is 6% higher than our previous estimate of 3.68 million head.
Cow slaughter was 701,000 head in CY 2008, up 9.5% from our previous estimate of 640,000 head. The larger than expected increase in cow kill is primarily attributable to tight pasture supplies during the spring of 2008 (August – October) – a legacy from the drought earlier in the year. Also, some farmers took the opportunity to cull cows while prices were relatively high.
CY 2008 calf slaughter was 1.49 million head, a 10% increase over the previous estimate. The difference is attributable to a combination of factors, including fewer calves being reared for both dairy and beef herds, and an overall increase in the total number of cows calving (approximately 130,000 head).
Post has revised the CY 2008 other slaughter figure to 1.72 million head, up from the 1.69 million head in our August 2008 report. Again, the lingering effects of the drought forced farmers to sell livestock because of low pasture supplies. In addition, high slaughter prices during the August to October 2008 period encouraged farmers to sell any cattle that could be sold as prime.
Production
Revised Forecast for CY 2009
Based on expected slaughter rates and updated estimates for average carcass weights, total beef production is forecast at 633 thousand metric tons (TMTs), up 33 TMTs from the initial forecast. Historically, average cow slaughter weight drops when a higher proportion of dairy cows are killed. In view of this, post is using a figure of 199 kilograms per cow, down from the 203 to 204 kilograms used over the past two years. Based on historical averages, calf slaughter weight is estimated at 16.9 kilograms. For other adult cattle, post is using a figure of 288 kilograms for the average carcass weight. Average weights fell to 277 kilograms in 2008, down from a long-term average in the range of 286 to 288 kilograms. However, improved pasture conditions and lower stocking rates suggest a return to 288 kilograms.
Update for CY 2008
As a result of the higher than expected slaughter rate, total beef production reached 644 TMTs (CWE) as compared to a previous estimate of 618 TMTs (CWE). After hovering between 286 and 288 kilograms from 2005 to 2007, average slaughter weights for other adult cattle fell to 277 kilograms - a direct consequence of the drought.
Source: FAS PSD Data
Further Reading
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