New Zealand: red meat pitfalls and potential

10-Aug-2015 - Last updated on 11-Aug-2015 at 10:31 GMT

High-performing farmers are taking advantage of global demand for New Zealand's red meat

Related tags Red meat Investment Meat New zealand Beef Lamb Pork

New Zealand red meat farmers are among the highest earners in all farming sectors, but the industry must overcome significant barriers to fuel economic growth, according to the latest research.

ANZ bank’s Privately Owned Business Barometer survey found the top performing red meat farmers were achieving returns on investment that outshone other farming sectors in New Zealand.

However, a larger number of farms were achieving more modest returns and comparatively flat growth, it indicated.

“The red meat industry is at a tipping point,” said Graham Turley, managing director for commercial and agri at ANZ. “The world wants New Zealand red meat, and high-performing farmers are taking full advantage of that with returns that are among the best of any agri-sector in the country.”

‘High performers’

“The challenge now is to narrow the range of performance across the industry. High performers have confidence in the future of the industry and they back their ability to make a difference to the productivity of their business.”

275 red meat businesses, varying in size, location and structure, completed the 2015 survey, which was followed up by focus groups throughout New Zealand.

Key findings of the survey included that 32% of red meat respondents were very optimistic about the prospects for their sector over the next three years.

Improving pasture and forage was the most popular investment to increase farm production (69%) followed by new fencing (59%), increasing fertiliser application (53%) and improved animal genetics (46%).

74% of red meat farms were family owned businesses. 10% were Maori businesses or Maori-owned businesses. 70% of respondents identified succession as an issue – higher than any other sector, including dairy (60%).

Decisions to invest

The age of the average New Zealand red meat farmer is nearing 60, the survey showed, affecting decisions to invest in the performance of the business. “For example, an investment with a seven year payback looks very different to a 60-year-old than a 40-year-old,” said Turley.

“There was also limited awareness by farmers and their advisers of the business models that can achieve greater returns.”

The survey also revealed red meat farmers face a range of new pressures that are contributing to stress and low confidence. These include increasing compliance requirements in areas such as the environment, health and safety, staff conditions and livestock welfare.

“All of these require farmers to have a more formal business management approach and, usually, greater use of technology,” Turley added.