Deer Industry News #36 June 2009 - Deer Industry New Zealand

conferenceDeer Industry New Zealand Formal General Meeting:It’s all about balance and confidenceStability, consistency, balance and confidence were key themes throughout the Deer Industry New Zealand (DINZ) FormalGeneral Meeting at Palmerston North on 27 May.Not a bad time for production dipGiven the contraction in the economies of our main markets,it is not a bad time for New Zealand venison production tobe also reducing, said DINZ Chairman, John Scurr, in hisopening address. While the food and beverage sectors werefaring better than industries like automobile manufacturers, itwas nonetheless a good time to reduce risk by cutting costs,retiring debt and improving productivity.He said the balancing of supply and demand by venisonprocessor/exporters is being matched by careful managementof DINZ finances in the face of sharply declining levyincome. This is forecast at $4.1 million for the year toSeptember 2009, down from $5.2 million the previous year.In order to partly offset the effects of much lower production,the venison levy for the next financial year will rise from12 cents to 14 cents per kg hot carcass weight in October2009. This means a 1 cent increase to producers and a 1cent increase to processors. Before deciding to increase thevenison levy, DINZ first undertook a review to reduce its owncosts. Over time it is aiming to reduce administration costsby 20 percent and has reduced investment in other areas.The velvet levy will not change.John noted this was the first levy increase since 2002 andthat further levy changes may be required as events unfold.Progress on the reviewed velvet and venison industriesstatements of strategic intent was very pleasing, he said.“We’ve worked well together on this as producers, processorsand marketers.”Fundamentals are goodThe historically high schedule for this time of year was notjust a quirk of supply and exchange rate, said DINZ ChiefExecutive, Mark O’Connor, in his report. Gross marginanalyses showed deer continued to perform well as aninvestment.In a light-hearted play on statistics, he displayed a graphshowing that a rise in the venison schedule coincided with adrop in the number of remits at the NZDFA’s AGM.On a more serious note he said it was important to keepa close watch on market signals. He said confidence isimportant and can be fickle. Venison production wascurrently forecast to keep falling, bottoming out at 360,000next year before climbing back to present levels by 2013.Velvet production was likely to continue falling, and DINZexpenditure on some velvet-related activities would also needto contract – this could be by as much as 50 percent. Thevelvet levy was already high compared to other species andwould not be changed.DINZ would be working hard to ensure it adapts to changingneeds and remains “fit for purpose” he said. This willinclude reducing administration costs on such items as office18accommodation and publishing the annual report – nowdone electronically.He said DINZ remains firmly in support of animalidentification and traceability.“It won’t solve or prevent all problems, but it will helpreduce the impacts [of adverse events]. We only have lookat how chronic wasting disease (CWD) has decimated theCanadian deer industry to see the value of traceability. Somecustomers now expect animal identification and traceabilityas a matter of course.“New Zealand has a great story to tell consumers, whichis being pushed aside by the current ‘buy local’ trend. Themore we can strengthen links right along the value chain, thestronger we will be.”Mark acknowledged there are issues around direct-toslaughterand capital stock, but said farmers needed to beon the inside with developments around NAIT and continueto negotiate the most workable, cost-effective and practicalsystem for deer.Venison: good progress over thepast five yearsThings have been rocky at times, but there’s been goodprogress in achieving the goals of the 2005–2010 VenisonIndustry Strategic Intent, said DINZ Venison Market ServicesManager, Innes Moffat. The strategy was based on buildingnon-traditional markets, improving consumption outside thetraditional game season and managing supply through herdgrowth.The percentage of frozen venison exports to Germanyhas fallen from 43 percent to 34 percent over five yearsas industry strategies and company promotion diversifiedthe markets, and a focus on retail has helped widen theconsumption season.Innes said market research had shown the joint marketinginitiatives had been having an effect by raising awarenessof the New Zealand product. There has been an 88 percentimprovement in willingness to buy venison in a supermarket,and volumes of out-of-season chilled exports had risen by600 tonnes, or 3 million meal equivalents.He said a drop in the price of other proteins had left venisonexposed, but New Zealand exporters and importers in Europehad responded quickly and well, by providing confidencethat the core European market would not be oversupplied.“Importers seek reassurance of price stability.”Recently beef prices in Europe have fallen quickly, whichagain leaves venison vulnerable. “The impact of the recessionon consumer behaviour remains a challenge for us. We’ve gotto ensure people continue to demand New Zealand venison.”Innes said the theme for the Strategic Intent 2009–2014 wasimproving the linkages, with better assurances about supplyDeer Industry News