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

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VenisonMarket ReportClouds loom on the venison horizon in the shape of reduced demand and an appreciating New Zealand dollar. Whileprices are expected to hold firm in main markets, a decrease in restaurant orders and supermarket sales is causing someconcern.ScheduleIn week 23, the average publishedschedule for 55-60kg AP stags was $8.73.This is $1.50 up on the same week in2008 and $3.30 above the three-yearaverage (2005 to 2008). The schedule is36% above the 10-year average.ProductionProduction in the first six months ofthe season, from October to March, of331,000 head is down 11% on the sameperiod in 2007/08. The proportion ofhinds in the national kill fell to 37% forthe first six months, down from around43% in previous years. Slaughter inApril-June is understood to be downsubstantially on previous years, with bigfalls in the hind kill, indicating both thereduction in available animals, but alsothe beginning of national herd rebuilding.ExportsExports of 17,825 tonnes in the 12months ended March 2009 were 16%less than the same period a year earlier.The total value of these exports was $305million, up 20% on the year earlier. Theaverage FOB value has increased from$12,000 to over $17,000 per tonne.New Zealand exporters are concentratingon supplying customers who will both paythe higher prices, and provide solid longtermbusiness for the future.CurrencyNZD returns are being eroded by theappreciating New Zealand dollar. It hasclimbed 8% against the USD and 9%against the Euro since the beginning of2009. With stable prices, this effectivelymeans 70 to 80 cents offthe schedule. The currency,at 0.64 USD and 0.45 Euro,$12.00is about the same as theaverages over the chilled$10.00season 2008, but as Europeanprices seem unlikely to reach$8.00the highs achieved last year,it seems unlikely that the$6.00venison schedule will exceedthe levels seen during thespring peak of 2008.$4.00Market conditionsEuropeEuropean importers haveconcerns about sales of$/kg$2.00$-expensive venison in the coming months.While the reduced volumes have meantthat manufacturers and wholesalershave snapped up cheaper cuts from thefore and hind quarter, the outlook forrestaurant sales in our main markets iscausing some concern. Consumers arereducing discretionary spending and mealsout are often not a necessity. Chicken,pork and South American beef are allcheaper than they were in 2008, so chefswill be examining their menus, seekingthe value options.Venison as a seasonal speciality is lessaffected by price elasticity of demandthan everyday commodities – consumersand chefs who are buying quality meatfor special occasions are unlikely to reallyremember what they paid last year, soare more likely to put up with the pricedifference between venison and cheaperproteins. However, if the price gap is toolarge, they won’t buy the venison.United StatesExports in the first three months of 2009are down 47% on 2008 because of weaksales to the restaurant sector. Chefs arebeing restrained by owners and managersand forced to examine every cost on everyplate. The situation is even more seriousfor chain restaurants, or restaurantsbelonging to major corporations – afteryears of chef celebrity, where chefs’whims and expectations of using only the“finest ingredients” were accommodated,the power has swung to the accountantswho are demanding the maximummargins on every serving.This bodes ill for expensive, low-turnoveritems like Cervena® venison. Venisonis an optional extra on most restaurantAverage Schedule. 55-60kg AP Stag1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51weekmenus. Chicken, pork and beef are lowercostessentials, and chefs are replacingtheir expensive exotic dishes withhigher margin, more common proteinalternatives.Food service promotionsIn order to remind chefs that New Zealandvenison is available, and is still goodvalue for money, New Zealand venisonmarketers will be implementing a shortpromotional programme in Germany,Belgium and the Netherlands this comingNorthern Hemisphere autumn. Manychefs will be familiar with New Zealandvenison as a seasonal staple, but withpressure on revenue, remembering howhigh prices got in 2008, and plenty ofcheaper protein options, they might beinclined to reduce their venison orders.In order to avert downward pressure onprices, New Zealand venison marketershave agreed that promotion to the foodservice sector is necessary. A programmelinking exporters, wholesalers andfoodservice media with purchasing chefsis currently being designed.New Zealand nutritionfocusVenison is a low-fat, nutrient-densefood, ideal as part of a healthy balanceddiet. DINZ will, over the coming months,continue to spread the word amonghealth professionals and consumerswith the production of new literature.Registered dietician Amanda Johnson haswritten two booklets on the nutritionalbenefits of venison. A consumer versioncontains easy-to-read messages and easyto-cookrecipes; a second, more detailedbooklet aimed at medicalprofessionals examines thebenefits of venison as partof a healthy diet.2005 2006 20072008 2009In addition, DINZ willonce again be presentingvenison to New Zealand’sdieticians and nutritionistsat the annual Dieticians’conference. This year,having venison productsfeaturing the National HeartFoundation Heart Tick willadd weight to the “venisonas a healthy meal” message.24Deer Industry News
Market ReportVelvetWhile the weighted average velvet price for the season will be back on last year’s average of $73.50 by at least $10, themarket finished on a positive note. Through more controlled selling, the market edged forward continuously during theseason, ending up well ahead of initial predictions. Indications from farmers and exporters are that velvet stocks arelow in New Zealand and Korea. With estimated New Zealand production potentially as low as 350 tonnes next year, acontinued strengthening of price could be possible – though much depends on a recovering global economy.New Zealand velvetproductionIndications are that there has been a largecull of velvetting animals as a result ofthe high venison schedule and low velvetprices. The best source of informationwhich Deer Industry New Zealand has isa mixture of information from StatisticsNew Zealand and Johne’s ManagementLimited (JML). The JML data have onlybeen collected since January 2007,so need to be treated with caution.However, the information indicates aslaughter of at least 30,000 older stagsmore than the previous year. StatisticsNew Zealand figures indicated a total ofaround 100,000 older stags as at 30 June2008. That would imply a drop in velvetproduction of some 30 percent. Figure 1shows the number of older farmed stagsin New Zealand since 1987 (bars) andNew Zealand velvet production (line). The2009 estimated bar shows the extent ofthe possible drop in the number of olderstags. The graph also reveals the extent ofper-stag productivity improvement.Korean economy• As with the rest of the world, Koreais still plagued by the current globaleconomic crisis. Reports vary daily,however. Some suggest that the worstis over while others say the bottom hasnot been reached yet.• The second quarter did see astrengthening of the Korean wonagainst the US dollar after a rapiddecline over the previous twoquarters. At the time of writing, theKOSPI (Korean share-market index)also experienced its strongest rally inthe past six months.• Another concern is the geopoliticalrisk associated with recent activityfrom North Korea. The market mayrespond negatively if aggressiveactivity intensifies.Korea market activity• According to major importers, deervelvet consumption through orientalmedicine clinics has decreasedconsiderably due to the pooreconomic conditions since late lastyear.• A Korean marketing company (thatNZ Stags >2 y.o.works closely with Deer Industry NewZealand) ran a promotion in the leadupto Children’s Day (5 May). Thepromotion included the launch of anew drink aimed at young children andwas packaged with the successful deervelvet drink targeting teenagers andyoung adults.• In April, representatives from two ofKorea’s leading newspapers, ChosunIlbo and Dong-a Ilbo visited NewZealand. Deer Industry New Zealandwas interviewed by these publicationsallowing the ability to promote NewZealand deer velvet to Korean readers.New Zealand/Korea FTAwatchMost exporters agree that the singlebiggest opportunity that could potentiallybenefit the New Zealand velvet industry inthe medium term is a comprehensive FreeTrade Agreement with South Korea. Withthe two preliminary rounds completedthe first official round of Free TradeNegotiations started on 8 June in Seoul.(For more on the Korea FTA negotiations,see Deer Industry Conference report onpage 21.)China market activityTwo companies that market furtherfinishedvelvet as pet and humansupplements report that sales are downdue to a weak economy, though they doacknowledge that China is not as affected250000200000150000100000500000Long range stats nz data Chart 1as the rest of the world. Work continuesto promote New Zealand deer product infurther-finished form to consumers andpet owners through internet promotion,print media advertising, mail-ordercatalogues and trade shows.In April and May, Deer Industry NewZealand hosted two delegations visitingfrom Heilongjiang and Xinjiang provinces.These delegations included seniorgovernment officials and local deerindustry representatives. The intentionwas to establish a relationship wherebya closer working understanding betweenthe industries could eventuate.Co-productsVelvet Production & Stag > 2 y.o population 1987-2009/10Exporters report that sinew sales intoHong Kong appear to be positive sincethe campaign focus on co-products earlierthis year. Deer Industry New Zealand andtwo prominent exporters are investigatingnew promotion options on the backof coverage generated by the previouscampaign. New work would be carriedout in time for the start of the traditionalselling season later in the third quarter.Stags > 2Velvet Production87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09(est)YE JuneFigure 1: Velvet production 1987–2009 and population Page 1 of stags older than 2 years.7006005004003002001000Velvet (tonnes, frozen)Issue No 36 • June 2009 25
Page 7 and 8: conferenceExporter/marketer forumFo
Page 9 and 10: conferencepeople) now receive this
Page 11 and 12: NZDFA 2009, 34th Annual General Mee
Page 13 and 14: conferenceThe amendment was CARRIED
Page 15 and 16: Hannah Hsu joins DINZ teamgeneral n
Page 17 and 18: conferenceand returns. This strateg
Page 19 and 20: Korean FTA negotiations under wayco
Page 21: industry newsFitting climate change
Page 25 and 26: general newsStrategies begin to sho
Page 27 and 28: general newsThe treated group showe
Page 29 and 30: Venison production shows healthy gr
Page 31 and 32: July technical conference draws top

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

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