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Guy Trafford laments the ongoing decline of the NZ sheep industry, pressured by climate change and related regulations, alternative livestock systems, and forestry, all despite Article 2 of the Paris Agreement

Rural News
Guy Trafford laments the ongoing decline of the NZ sheep industry, pressured by climate change and related regulations, alternative livestock systems, and forestry, all despite Article 2 of the Paris Agreement

The news that the national sheep flock had fallen in numbers has come as no surprise. It is still disappointing to see an industry and animal that has done so much for New Zealand being whittled away.

Last year the drought in Hawkes Bay was given as the reason that region lead the reduction in numbers. This year the reasons given are more complex and perhaps longer lasting.

As with last year, hogget numbers took the greatest hit with the largest reductions being seen in Northland, the Waikato and the Bay of Plenty (-6.7%) and Southland (-7%). However, unlike last year ewe numbers had a drop this year as well.

Overall, the latest drop is -0.76% considerably less than the -2.96% experienced last year. A look at a similar report I did last year could almost be a ‘cut and paste’ job for this year. With just the actual numbers needing a bit of modification.

The high fall in hogget numbers last year meant that a fall in adult ewe numbers this year was predictable. The worrying thing for the industry is that hoggets have continued to fall so the longer-term outlook does not look healthy.

Looking at the graph below shows that since 2000 the total number of sheep in New Zealand has declined by nearly -40%, from 42.3 million to 25.8 million along with that the number of beef cattle has decreased by -5%, from 4.2 million to 4.0 million with breeding cow numbers dropping by -0.9% in the last season.

Three or four different factors have contributed to the demise of the sheep flock.

The first being the climate. The maps below show the difficulty farmers have had the last couple of seasons. While the 2020-21 was better than the previous it still was not an easy year, particularly in the traditional sheep farming regions.

Climate is likely to become more uncertain and troublesome in the future although there is some contradictory advice. However, regardless which way it goes, flexibility will be a key factor to farm survival.

The second factor is switch to more economically efficient livestock systems.  In livestock terms the winners have been in dairy beef with beef numbers showing an increase of +2.5% while at the same time beef breeding cow numbers dropped -0.9%.

The increase came mainly in the 2yr+ bracket and the B&LNZ belief is that not only are sheep being replaced by finishing cattle, but female dairy grazing mobs are also.

Finishing cattle, especially bull beef is a more flexible mob to carry at any time and in particular in times of climatic variability. And that is unlikely to change into the future.

They also have less GHG baggage to worry about with the dairy farmer having to carry the cost of the dam. As always, the increasing age of sheep farmers in particular means that the more labour-intensive sheep start looking less attractive. The lack of a viable price for wool is contributing to the lower returns from sheep and this also is unlikely to change in the future.

The third area pushing sheep decline is the shift of pastoral land into forestry.

The B&L CEO Sam McIvor is reported saying that government should place limits on how much pastoral land should be allowed to go into forestry. He quoted a B&LNZ commissioned report  by BakerAg’s that said 3,965 ha of whole sheep and beef farms were sold into forestry in 2017, increasing to 20,227 ha in 2018 and 36,824 ha in 2019. The irony of this is that elsewhere in the developing world huge tracts of land are going from rain forest into cattle ranching and palm oil production among other uses.

The Paris Agreement on Climate Change which the Government signed up to also specifically (Article 2) said that food production should not be sacrificed in order to meet climate needs.

Damian O’Connor said he was advised by officials that the amount of land planted between 2017 and 2020 was 87,200 ha, which is 37% lower than the BakerAg report. His view is reinforced by the Forest Owners Association (FOA) who have also questioned the accuracy of the BakerAg report and use the figures that the plantation forest estate has shrunk by 162,000 hectares in the past 18 years, and mostly to dairy farms. (This happened back in pre 2001 when there was a rush to clear land to beat government regulations which would have made those clearing land liable for their emissions and again when the price of carbon was driven artificially low post the 2008 GFC by the then government policies).

Whether it is sound practice to use data from 12-20 years ago to support what is happening today is debateable. Before the last election O’Connor indicated that if annual land to forestry went above 40,000 ha’s per year he would look at bringing in restrictions. However, he did not make any promises. Most farmers would point out that it is not only what the conversions are doing to land use but perhaps more importantly what it is doing to rural communities.

How long it takes before the New Zealand sheep industry starts to lose its efficiencies of scale is unknown, and technology may play an important role in staving off the day when sheep farming does reach its sunset.

Y Lamb

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43 Comments

The Green Party and most of Labour will undoubtedly be ecstatic. Neither respect nor appreciation that much of what NZ has today was earned on the backs of the pioneers that laboured hard and successfully to establish and grow the industry.

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Well, at the end of the day, we should accept that industries die. I understand the sentiments surrounding it, but other industries and their participants have experienced this. Look at what happened to Detroit for example.

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considering wool is a natural replacement for some plastic polymers I can see some upside for sheep in the future

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And in the sustainability stakes lamb is more favoured than beef and dairy..

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Perhaps, perhaps not. Wool and pelts no longer return what they used to. Lamb weights have risen on average about 3kgs to say 17.5kgs but that only delivers on yield say 3.5kg of top line ready retail or white table cuts, the rest is more or less commodity cuts and upwards of 5kgs will go to bones and waste. The labour, working on small units & cost of producing that, smaller unit packaging, & freight and associated costs of getting to market squeeze down relatively on each carcase’s net return. Beef on the other hand obviously produces much larger quality cuts and the rest is economically and readily packaged for ground meat for the hamburger trade etc. In terms of economies of scale, as far a finished meat product, beef wins hands down.

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But we need to consider emissions dont we?
Bovine equals bad, sheep equals good?
And beef mince patties are the product most susceptible to meat substitutes, arent they?
No time soon tho..

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Oh yes, but regardless of that score, if the trend continues, market forces will negate any point of any argument on that angle. The story is being told simply by the number of sheep chains being closed as opposed to new ones built this century, at least. And as well you could toss in the consideration that beef, manufacturing beef that is, is no more than a by product of dairy production.

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I do agree climate changes will be played out over a century, at the moment the global response is little more than lip service.
Edit We could consider a previous industrial upheaval such as the abolition of slavery, that took about a century

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No it didn’t. Read Exodus. Read about the Helots. Slavery abounded thousands of years BC. Even here in NZ the Maori utilised slavery, particularly in the Musket Wars. True that was an inherent innate function of tribal type lifestyle and culture, totally opposed to the, say more abhorrent, system of uprooting Africans to power industrial cotton gins on another continent on the other side of the ocean. But that type of slavery itself in the UK for example, had nothing to do with the industrial revolution that took place there. It was over the ocean and far away in the West Indies.

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There was a period of intellectualism circa 1780 about slavery, ending about the american civil war and the rebuilding of the south, 1880
It was the end of acceptance of slavery.
Still continued, without approval

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point taken but as an analogy, the survival or non survival of an industry once significant to a small newly founded and remote nation, but which is now ever decreasing, is hardly an exact comparison to what was for centuries a blight on humanity and any degree of what would now be called civilisation, in a modern sense.

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I drifted off topic, musing on how long it would take society to respond to climate change that has been discussed since the 1980’s.
My guess is a century, it is a societal change after all, like rejection of slavery.

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complicit myself, but always productive to think beyond the moment too. Enjoyed the dialogue!

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Agreed

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Most Greens would support wool as a alternative to synthetics , and the lower footprint of sheep compared to dairy/beef, so I can't see any basis for your comment.

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Fine but regardless of the Green’s support or whatever you will conjure up, the reality is like it or lump it, if a processor buys a little piggy for A, processes it for a cost of B, and sells it for a return of C, which is less than sum of A & B then that little piggy ain’t going to be going to market for all that long. idealism vs realism.

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Actually , The Greens (James Shaw in particular ) have been pointing that out for years.They have always pushed growing and marketing a high value ( obviously clean and preferably organic from their point of view), vs pumping out as much product as possible. We are at the stage they were mooting about 6 -10 years ago .

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Look I’m not trying to knock either your sincerity or interest but Mr Trafford has written well here detailing the sunset outlook from the perspective of the production base, the farm. I and Jack Lumber here, have gone to the other end to explain similar negativity in the processing sector and more importantly the market. The high value cuts you mention are not newly found. They were developed largely in the 1980s, when your expert, Mr Shaw was about ten years old, and those same specifications have been refined into excellent chilled product. But there is only so much you can do economically with a modest sized article to start off with, and despite those good enhancements in quality, the trade itself has not ceased to diminish. The greatest contributor to that is market reality. If you doubt that, go back and research the failure of Fortex who were at the forefront of exactly what you describe in terms of product.

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I was working in a freezing works at the time, and their idea of adding value , was to cut the carcass up and put it in cardboard boxes. That's not what they are meaning by adding value now, its pretty well established that most markets want the raw material , not the processing that can be done in their own country. They are talking about the likes of Tatua, making products not made elsewhere, another angle is getting a green/organic premium.For the latter , its a reduction of quantity, but increase in quality getting a premium price. There are also small companies marketing lamb overseas, with a farm to table life trace that consumers appreciate. You only have to look at Fairtrade worldwide to see the benefits for producer and consumer.

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Oh dear, in terms of the real world, you sound like a goldfish in a bowl telling a shark in the Pacific,how to swim and survive .Very interested to learn though , of your novel system to get chilled product to the market, 6 weeks transit, in terms of guaranteed shelf life, no risk of leakers, without putting the said article/cut in a carton. And yes,yes,yes there is quite a lot of smaller operators filling niche markets quite satisfactorily but that does not alter the fact, the thrust of this column that seems to completely escape you, that despite that, the industry is shrinking not growing and regardless of their best efforts, that is the reality.

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The meat put in cartons was frozen, I never mentioned chilled. I also never argued the market wasn't shrinking, my point was the need to make more money out of less higher priced product. You can throw all the insults you want, my comments are backed by practical experience in the meat, business , and farming backgrounds, not by shiny bums, as we would say at the works.

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I agree its good to do this but the reality is this alone will not save the day. Meat returns are actually very good - I have travelled a lot overseas and NZ lamb is one of the highest priced meats on menus in top restaurants so they are doing a good job on the market side.
The simple reality is even at these prices it just doesn't add up - the cost of growing, processing etc does not leave enough to make a true profit - yes you can have a lifestyle but come succession its all over. I get emails from farming friends showing far higher stock prices in Australia etc etc - why I don't know.
Mutton is now worth as much as lamb as the Chinese do not differentiate between the two.
If you think about it with a 40% decline in sheep numbers you would expect scarcity to kick in and prices rise faster - the fact is people just eat chicken or pork or veges.
Wool is the same - with lower number there will be less and less wool - you wont have enough to supply markets or be so small big retailers wont be interested - they aren't now anyway as witnessed by prices.
The key thing is its no ones fault - its the market and it can be brutal - consumers have choice and no one has a given right to carry on doing what they have done - quite frankly the customers- 90% overseas remember, don't care.
We need to realize the cold hard reality and either stay as a lifestyle business and face the succession problems or change to what the market wants. Things change and there is plenty of examples of old villages, towns gone that used to do things that are no longer wanted.
Its this belief that without this farming the country is finished - nothing could be further from the truth - change has been happening for decades and will continue at even greater pace going forward.

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put me in the ditto column. thanks.

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Foxglove,

As an outsider, I have read the posts with interest. I think that some 40 years ago, NZ had around 70m sheep. Is that correct? If so, the decline has certainly been going on for decades.
Like many, I eat much less meat now, but I still greatly enjoy a rare lamb rack or a slow cooked leg. I also can't imagine having a synthetic rather than a wool carpet.

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Good Morning. Yes a sheep flock peaking about 75mill in the 80s under Muldoon’s disastrous SMPs. Predominantly frozen carcass trade UK & others like Iran before the Shah was ousted. Quick hard frozen product, tough but safe and, alongside the offals, born & raised out of being ready protein for the UK working class, hence the domination early on of British traders,Borthwicks , Vesty, Dalgety, Swift’s, to name a few. That couldn’t last and it didn’t once the UK joined the EEC. The industry slowly adjusted itself & diversified. That involved cutting the carcases and then exporting the cuts spread out to markets as best suited to each but that also introduced higher labour and equipment costs and product complications and risk. It wasn’t until the mid 80s that processors largely moved to cutting fresh rather than frozen carcases and thence the ability to supply the market fresh/chilled product. However despite these improvements the market(s) continued to decline in tonnage as rather than being the fast, simple and cheap product to fuel the hoi polloi it was now quite sophisticated and expensive and resultantly competing where any economic set back to the consumer would quickly affect it. But unfortunately the brutal reality hasn’t changed. If you go back to those old UK processors they were there to make money out of that product type flow and in those days there was good reliable demand for that sort of protein. But the young ones now don’t eat like their grandparents and before did, far from it. If NZ had a foot & mouth calamity, the export product would scarcely be missed except for those that can still make money out of it of course. Thanks for the moment to reminisce on a lock down Sunday morning

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Foxglove,

As an outsider, I have read the posts with interest. I think that some 40 years ago, NZ had around 70m sheep. Is that correct? If so, the decline has certainly been going on for decades.
Like many, I eat much less meat now, but I still greatly enjoy a rare lamb rack or a slow cooked leg. I also can't imagine having a synthetic rather than a wool carpet.

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I'm not sure the numbers have stacked up since the SMP ended. It's always been about capital gain, but in today's world , the time scale is now, or 10 years max. But it's pretty much the same for any small business, you could make more investing the same money in property, and doing nothing. But it's a life style choice, and a income from day to day. I think the decline will stop or slow in 10 years or so, the mixed forestry/ farm will emerge as the norm, farmers will get used to the new regs, and it will be better off for it .

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I think you are right in a way solardb, the larger hard hill blocks will struggle with the cost of fertilizer and keeping the land clear becoming increasingly more expensive. I think sheep meat is one of the most expensive meats in the world and if that is right then there only needs a slight fall to upset the apple cart. The figures hardly stack up now. And remember infrastructure all has a useby date and when fences, yards etc need replacing you are talking serious coin. Let alone the woolshed.

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Probably right but they had better get their skates on as a lot of sheep and beef farm owners are ageing and to be able to hand the farm on means Mum and Dad want a reasonable income, the child taking the farm needs to survive plus their brothers and sisters want their share as well. On a lifestyle income from X million asset value, that everyone wants a share off, it doesn't add up.
Add in the kids have been educated and have partners who in many cases aren't from farms - Im not giving up my career, income and you expect me to live where, in what!! - its hard to actually find one that wants to work the farm.
So Mum and Dad cant afford to leave, no one wants to come back or if they do the family will never have Christmas together again as they wont talk over who gets what.
The only way to keep the family together is to sell it - I see this all the time and in truth its the best result for the people side of this dilemma.
Its no ones fault - it a function of the market as the comments demonstrate.
Its quite amusing really as these groups accuse the Government of being communists but what they really want is state intervention to stop anyone or anything changing the status quo (which is changing anyway). Yes communities will change but that's happening in urban areas as well and has since people walked the earth. As I said earlier people believe without this industry we are dead as a country - well its shrunk by a huge amount and the country is wealthier -as a % of GDP ag and all primary industries continue to shrink. Technology has left primary industry - look at where the money in Silicon Valley is going - its not in traditional farming, forestry etc - its in how to take these industries over without needing the land at a far cheaper cost - if the last 20 years has shown us anything tech will drive down the costs - just look at your smart phone and what we do with that and how many people and businesses that simple object has replaced.

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Some irony too, your previous comment that mutton carcases are getting better returns from China. That in its own way replicates the basis and the features of the old frozen carcass trade to the UK and illustrates that while it might not be pretty, there will always be a commodity trade for basic protein wherever there is a large population workforce that needs feeding.

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The cheaper the cost the bigger the market. More people can afford cheap things - few can afford expensive things. Commodities aren't all bad.

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Same with beef, the premium prime had over bull has reduced over the last few years to virtually nothing.

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Aye and it would interesting to know too in that vein, by way of relativity, just how NZ’s dairy export to China splits out between commodity and say end retail product, and how that may have changed or not changed over say the last twenty years or so.

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Sheep can eat acorns , they could graze an oak forest block, providing there is 30 % canopy cover , this could provide a double income.

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Who is planting oak en masse in NZ? For that matter who is not planting pine would be a small list as well.

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I just used as acorns as one example of a timber tree that could also provide fodder, And is this case , because sheep can eat acorns , and cows can't (at least it is not advised to let them ).There are many different trees that provide some kind of fodder. As long as it doesnt detract form thier primary purpose of storing carbon , it should be ok in a carbon forest .
. https://treecrops.org.nz/crops/fodder-and-forage/forage/

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And during early spring after acorns are gone and grass is slow due to shading?

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You'd still have grass between the trees. Actually , you may have more , depending on the site. I've been to a customers farm that was an old orchard. his grass in summer was the envy of the entire area, because of the shade of the shelterbelts , which he let grow unchecked . Plus shelter from wind chill etc . maybe not a great idea in high snow areas.

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If you look at the graph the decline has been going for years - over a 40% fall since 2000. In fact the largest decline is 2006 to 2015ish. Its easy to blame trees, dairy etc etc but the fact is the decline has been going for decades. The reason sheep have fallen is its not profitable for most - simple really. You only have to read some of the comments in the report

"Prices for crossbred wool rose at season-end and reached pre-COVID-19 levels, essentially rising from disastrous to terrible. Fine wools were priced higher but shearing expenses consume a larger portion of the value of those clips."

On the forestry front they accept only around 19,000 ha a year is going in and of that @40% is by farmers on farm - excuse me complaining about your own farmers planting trees.
Also upset that over 14,000 ha went to manuka/native - terrible displacing stock
They also estimates around 5,000 ha (prob 3 to 4) per annum going to carbon only forest - the rest is normal timber forest. Hardly a world takeover.
All the overseas planted forest is NOT carbon - it has to be timber harvest.

The key to having sheep survive is to increase the profitability of sheep - if we cant do that the trend will just continue simply from the lack of profit making it untenable and highly unattractive to younger ones and banks. I hope they do as we do want a mixed economy but time is running out as farmers age, wages rise in other sectors to draw young ones in along with less working age people in the regions - the real killer.

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Exactly.

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Prior to the bubble, most new farm staff seemed to be either Filipino or Indian , nothing wrong with that , but perhaps not the rosy picture of country living that some are trying to preserve. Most young people migrate overseas or to the cities , always has been the case. They tend to come back to start families etc, so the key is to keeping rural schools and services open.

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I see Gretta is now wearing wool?!? How dare she....

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Boomer.

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