New Zealand Cattle And Beef Semi-Annual Report 2011

Beef production in New Zealand is forecast to fall by nine per cent in 2011, reflecting an expected decline in slaughter rates during the first half of the year, according to the USDA Foreign Agricultural Service.

4 April 2011

3 minute read

Executive Summary

Dry weather and drought concerns during the fourth quarter of 2010 helped boost cattle slaughter. Total slaughter hit 3.991 million head, which is five per cent more than the previous forecast and up four per cent from the previous year. The spike in slaughter translated into an unexpected increase in both production and exports. At 643,000 tons carcase weight equivalent (CWE), production was four per cent higher than previously forecast and up three per cent over the previous year. Exports finished the year at 530,000 tons (CWE), four per cent ahead of the previous forecast and 3.1 per cent up from the previous year.

Beef production is forecast to be three per cent less than originally forecast in 2011, reflecting an expected decline in slaughter rates during the first half of the year. This puts forecast beef production at 8.75 per cent less than in 2010 and three per cent lower than the previous forecast. Likewise, exports are forecast at 478,000 tons (CWE) in CY 2011, which is four per cent less than the previous forecast and 10 per cent lower than 2010 export volumes. The decline is primarily driven by the on-going reduction in the size of the beef herd and the spike in slaughter during the last quarter of CY 2010.

While originally forecast to remain stable, exports to the US market fell 6 per cent to 222,000 tons (CWE) in 2010 and are forecast to fall further in 2011 to 205,000 tons (CWE), due partly to the sharp decline in cow beef production and the ongoing decline in bull beef production, which are the basic components of exports to the US market. While still the largest market for New Zealand beef, the US share of total New Zealand exports has been trending downward. It currently stands at approximately 42 per cent.

Indonesia became New Zealand’s second largest beef market, on a quantity basis, in 2010. Exports jumped 41 per cent to 36,940 tons (PWE). Exports to the Korean market reversed a downward trend in CY 2010 jumping seven per cent to 34,292 tons (PWE). Exporters report a spike in demand from the Korean market due in part to the Australian floods in Queensland and the FMD outbreak in Korea.

New Zealand is aggressively negotiating Free Trade Agreements (FTAs). While exporters report that FTAs do not necessarily drive business decisions, they do provide a framework to work out trade-related issues, especially SPS and non-tariff barriers, and, in some cases, significant market access gains. For instance, in the New Zealand - China FTA, tariffs, which ranged from 12 to 25 per cent when the agreement was signed, will be eliminated by 2016. New Zealand beef exports to China have increased from 5,300 tons (PWE) in 2008, the year the agreement went into force, to 8,022 tons in 2010, a 51 per cent increase.