Better use of bobby calves from the dairy industry combined with sex-selected semen is the path to the future, says Keith Woodford

A recurring theme in articles I have written over the last year has been the need for more exports. Right now, our exports exceed our imports, with this occurring in each of the last five months. This is good news, but running a surplus of exports versus imports for a few months is not enough. We also have to pay for deficits in our invisibles, plus we have big overseas interest bills on all of our historical overseas borrowings.

The latest current account deficit is $24.7 billion per annum as at 31 March 2025. This has had to be financed by an equivalent inflow of investment capital from overseas. This deficit is a measure of the extent to which our international expenditure on consumption items, including imports of goods, plus invisibles and interest on foreign debt, exceeds our income.

A key measure of the extent of the problem as measured by World Bank data is that New Zealand’s exports have declined from 36% of GDP in 2000 to 24% in 2023.  This percentage is now well below both the OECD and global average of 29% of GDP. We are lagging badly.

Dairy is by far our largest export earner with current earnings running at more than $26 billion for the year ending 30 June 2025, according to MPI’s latest SOPI report. These are record figures driven by prices rather than increased production. However, it would require a brave person to claim that we can rely on dairy alone to get us out of our present overarching economic muddle.

Meat income from cattle and sheep is well behind dairy as an earner of foreign exchange, but is still expected to have earned just over $12 billion for the June 2025 year once all the data is collected. This includes more than $2 billion from the so-called ‘fifth quarter’, with this being offal, skins and other non-edible components of the carcass.

This places meat in second place among New Zealand’s export industries. Horticulture ($8.2 billion), forestry ($6.0 billion) and fish ($2.2 billion) are a long way further back.

These numbers indicate that what happens to the sheep and beef meat industries should be of concern to all New Zealanders. A big question for these meat industries is how can income be increased.

The first issue to put to bed is the notion that forestry is gobbling up all the sheep land. It is true that farms comprising 261,000 ha of sheep and beef land have been converted to large-scale forestry since 2017, as laid out in the very informative Orme Report. But that wave of forestry conversions is fast petering out.

I have recently written about the future challenges that forestry poses to sheep and beef. I expect to have more to say on that in future.

But here I wish to put the forestry issues to one side and focus on challenges and opportunities that exist within the sheep and beef industries themselves.

In particular, how can sheep and beef farmers produce more product from within the farm gate?

The reason for looking at sheep and beef together is not only that they compete for the same land. They both rely on essentially the same pastoral systems, which capture energy from the sun via photosynthesis but depend on imported fertiliser nutrients.

Sheep and beef systems also face the same environmental challenges from nutrient losses and methane emissions.

Almost everyone knows that the New Zealand sheep industry has been in decline for many years. Total sheep numbers are now around 23 million whereas fifty years ago there were 60 million sheep.

Fortunately, and through a lot of hard work, the sheep that remain are a lot more productive, with lambing percentage and carcass weights having increased greatly.  Bring those two factors together, and breeding-ewe productivity, measured as meat produced per ewe, has doubled in the last 30 years. Greenhouse gas emissions per kilogram of meat have declined during that time by around 30 percent, as has the feed required per kilogram of meat.

The impact of increasing ewe productivity was sufficient for total sheep-meat production (lamb plus mutton) to trend upward until about 2006, more than counteracting the decline in breeding ewe numbers. Since that time, with the decline in breeding ewes accelerating, sheep meat production has declined by more than 20 percent.

Less well known is that New Zealand’s traditional beef industry, based on beef cows and their progeny, has also been declining for more than 30 years. Indeed, the number of beef cows at around 0.96 million in 2024 is down more than 40 percent on the number of cows 30 years ago.  

Unlike the sheep industry, the traditional beef industry based on the progeny of beef breeding cows, has had limited increases in productivity over the last 30 years This is because beef cows are limited by fundamental biology to producing only one calf per year. That is not going to change.

Therefore, what I am about to say may come as a surprise to many people.

Future on-farm productivity issues on sheep and beef industries are going to come predominantly from the beef industry. However, it won’t be the traditional beef industry. The future productivity of beef will be driven by dairy beef.

Dairy beef is already making a big contribution to the beef industry but it has been hiding in the shadows. The supply chain linking dairy farmers to sheep and beef farmers is not well organised. Also, the level of research and development is low.

Getting good statistics on dairy beef is not easy. Slaughter numbers do not distinguish whether the calves started their lives on a dairy or a beef farm.

However, one key statistic is that in 2024 the total number of beef animals on sheep and beef farms was estimated at 3.55 million, despite the number of beef cows being only 0.96 million.

These numbers only make sense if it is recognised that something more than one million of these animals are progeny from dairy farms that have been raised on sheep and beef farms, and are then typically slaughtered before the second winter.  

However, there is a dark side sitting alongside this existing dairy-beef industry. Bobby-calf slaughter data tells us that there are also approximately 1.9 million calves from dairy farms that are slaughtered each year at just a few days of age, typically when they are on average about 16 to 17 kg carcass weight.

In sorting out the dairy-beef industry there are some challenges. Some of those challenges involve technology.

For example, it is now possible on dairy farms using fresh sex-selected semen from LIC to produce 90% female calves. LIC states that this semen, as long as it is fresh and not frozen, gives comparable pregnancy rates as non-sex-selected semen and also comparable to what a live bull achieves.

All of this now means that the best dairy cows can be mated to sex-selected semen to produce female calves, and the remainder can be mated to beef breeds, using either fresh or frozen semen.

Essentially, sex-selected semen is a technology which has been around for a long time. However, it is only recently that the technology has achieved conception rates to make it commercially viable.

Beef sourced from the progeny of dairy cows is much more efficient than traditional beef systems both in terms of both cost and also lower greenhouse-gas production. By my reckoning the increase in efficiency is between 30% and 40% depending on the specific situation.

The reason for the increased efficiency is very simple. Dairy beef has no costs associated with carrying a breeding cow.  Instead, the calf comes ready-made thanks to the dairy cow.

Of course, the dairy beef animals do have to substitute for other animals as their feed has to come from somewhere. Those animals that drop out of the system can be either sheep or beef reared traditionally.

There is a range of reasons why some farmers will choose not to change. Some of those reasons are valid, and others are simply resistance to change.

 I plan to talk more about the technology-uptake issues in a future article. However, for this article the key message is that we do have a new technology which is economically viable.

I reckon that sex-selected semen is the most exciting new technology for sheep and beef farmers that has recently come over the horizon, albeit needing more development of supply chains linking dairy farmers to beef farmers.

*Keith Woodford was Professor of Farm Management and Agribusiness at Lincoln University for 15 years through to 2015. He is now Principal Consultant at AgriFood Systems Ltd. You can contact him directly here.