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Value of Red Meat Sector to New Zealand Economy

19 March 2015

NEW ZEALAND - New Zealand’s red meat sector is contributing around NZ$8.5 billion a year to the New Zealand economy.

Responding to the Meat Industry Excellence group’s report “Red Meat Industry – Pathways to Long-Term Sustainability”, the Beef + Lamb New Zealand Chairman James Parsons (pictured) said that while average farm returns showed room for improvement, averages did not always tell the whole story.

“In reality the performance of the top 20 per cent of sheep and beef farmers is neck and neck with the top performing 20 per cent of dairy farmers.”

Mr Parsons cited a recent ANZ report, also referenced in the MIE press release yesterday.

“The report stated return on capital averaged 1.1 per cent over the last five years. It also stated the top performing 20 per cent of sheep and beef farmers were achieving returns at 4 to 7.5 per cent.

“Interestingly this has been achieved under the same market forces and industry structure.”

Mr Parsons said Beef + Lamb New Zealand was acutely aware that average farm returns needed to improve and that was why it had invested in the Red Meat Sector Strategy and most recently the Red Meat Profit Partnership to improve profitability and productivity. The goal is to lift annual export earnings to NZ$11 billion by 2025.

Mr Parsons said it was important to remember that in spite of the land use changes in recent years, the red meat sector had continued to make productivity gains and lift export revenue in an environmentally sustainable manner, with earnings now over $8 billion and up from approximately $6.5 billion a decade ago.

Mr Parsons said the MIE report identified opportunities worth exploring to further grow red meat sector exports for the benefit of all New Zealanders.

Beef + Lamb New Zealand funded the report after farmers voted in support of it at the 2014 annual meeting.

“We believe the report is a constructive document and has the potential to inform and stimulate initiatives.

“Every single sector has the opportunity to do better. Even if the savings and gains are not as significant as the report claims, they are deserving of exploration as we continue to grow the prosperity of the red meat sector and New Zealand.”

Mr Parsons said meat processing companies as the mandated commercial leaders now had the opportunity to work collaboratively together, and realise these gains, if they were real.

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