Worldwide shortage of lamb good news for NZ
A worldwide shortage of sheepmeat offers real potential for growing sales of New Zealand lamb, says Robin Hilson, a director of the Texel Marketing Group and owner of the One Stop Ram Shop.
The Central Hawke’s Bay farmer is just back from a trip overseas to Scotland, Sweden, Finland, Belgium and the USA. He visited supermarkets and restaurants, finding out what the market is paying for lamb, and collecting quotes.
He says 5.6 million tonnes of sheepmeat are produced each year, but only one million tonnes is exported worldwide."New Zealand and Australia dominate that and account for at least 800,000 tonnes."
He says the market potential in the United States is huge, but full of challenges. The US, Mexico and Canada operate as a single market under the North American Free Trade Agreement. In population terms, there is more than 400 million people. The US has a population of 280 million people and there is more than 100 million in Mexico and just over 30 million in Canada.
Meat NZ North America manager Andrew Burtt agrees with Hilson's views on the potential in the region but says the key challenge is lifting average consumption of lamb by Americans over its current level of just 0.5kg/capita/year.
Awareness of New Zealand lamb is surprisingly high, but any major market development would require a significant investment over a long period.
"There is a small number of companies doing a great job marketing New Zealand lamb here but there are hundreds of millions of Americans who simply don't eat lamb. The country is very diverse and would require a huge network of distributors to achieve any impact," Burtt says.
He also points to a lift in NZ lamb exports to the US in the first five months of this year, saying the tonnage is up 22% on the previous year.
Last calendar year, the US imported a total of 44,029 tonnes of lamb from NZ but Hilson estimates the US market could take 150,000 tonnes of lamb.
"We haven’t been able to get anywhere near the potential of that market. There’s nothing stopping New Zealanders putting meat into that market except for supply."
Burtt says the New Zealand lamb presence in the US market is extremely tiny in comparison to other protein sources. He's found some distributors are reluctant to stock New Zealand lamb because it's such a small component of their overall business.
"Shrinkage, product going out of its expiry date, is also a huge potential cost to distributors. There's a very fine line between, having enough product on the shelf to satisfy a consumer who does suddenly want New Zealand lamb, and having too much that you have to throw half of it away because a consumer chooses beef in that short period of time each day when the meal decision is usually made."
Hilson says the only other supplier, Australia, had run down its breeding flock and now has to contend with a drought. "The world is in total under-supply and the markets can’t get enough of it."
He thinks there will be an escalation of lamb returns, and says demand for lamb will never go away. "For my life-time sheepmeat will be in short supply."
Meat processors and exporters don’t want to say it because they don’t want to hype the industry, he says.
Lamb prices are huge overseas, ranging from NZ$66 a kilogram for lamb chops in the US, to the lowest he saw for a leg of lamb in Finland at $17.60 a kilogram.
He says the move to selling ready-prepared food items by companies like Richmond is "bang-on".
Lamb is at the top end of the market, and even the poorest cuts of lamb have moved up in price."All the people we spoke too confirmed that."
Restauranteurs he spoke to were finding it difficult to obtain sufficient supplies of New Zealand lamb, and supply is the only thing stopping the market expanding, he says.
A Belgian chef told him: "Clients always want lamb, but it is difficult to get. Australian eye chops are excellent, but impossible to find. New Zealand lamb is preferred, and we travel to Holland to get it fresh." This chef bought chops at NZ$35 a kilogram.
"The shortages at present have caught everyone unawares. The demand is consumer driven."
In Finland, farmers told him lamb meat production was twice as profitable as any other farmed meat.
He found lamb well presented in almost all cases in supermarkets, and well presented in restaurants.
A chef on a Swedish cruise boat said: "Lamb is the preferred meat all year, but especially so in autumn when it is very expensive. Swedish lamb is supplemented by New Zealand lamb."
A supervisor at Marks and Spencer in Edinburgh said: "Prices for lamb meat are rising, the quality is good, and product is moving. We will not have people serving at a meat counter soon because most lamb will be sold in a ready form, packaged, needing 10 minutes only to heat. Traceability to the farm is great."
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