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Developing economies offer hope for NZ meat

New Zealand beef and sheepmeat farmers who have been struggling through the global financial crisis are set to benefit from both a trimmed-down international meat supply and new demand in developing countries whose economies have better weathered the toug

NZPA
Fri, 26 Mar 2010

New Zealand beef and sheepmeat farmers who have been struggling through the global financial crisis are set to benefit from both a trimmed-down international meat supply and new demand in developing countries whose economies have better weathered the tough times, an analyst says.

Economic recovery is taking place at two speeds: slowly improving in key developed markets such as the United States, Europe and Japan, but well entrenched in Asia, where demand for meat is strong, said Wendy Voss, a senior analyst with leading food and agribusiness bank Rabobank.

High levels of unemployment and underemployment in the developed markets had kept meat demand there relatively soft, though slowly improving, Ms Voss said today in a statement.

While unemployment in the US appeared to be falling, European countries would take longer to recover because of their rigid labour markets.

Ms Voss said that despite such pressures the European Union and the United States would remain key markets for New Zealand, with modest opportunities for export growth, mainly through reduced local supply.

"But the strongest growth in demand for meat, including offal, will be in developing countries, such as Indonesia, Russia, China and the Middle East, which have better weathered the global financial crisis and whose populations are rapidly urbanising and becoming more affluent," she said.

New Zealand already had a free trade agreement with China and was negotiating with India to provide a good platform for taking advantage of these growing markets over the next decade.

The industry now faced the challenge of picking winners - deciding where to focus limited product supply and promotional funds to both maintain awareness in traditional markets and develop new markets.

Another key issue was how to maintain a consistent supply of meat to end users, to ensure that it remained on restaurant menus and retail shelves, Ms Voss said.

The strong New Zealand dollar -- which put pressure on margins in late 2009 and early 2010 but has come back a little since last year's highs -- continued to be a concern.

"The good news is that prices have picked up in recent months and should continue to rise over the next three years as demand increases and supply tightens," she said.

The outlook for global meat prices was very positive overall, though more complex and potentially more volatile.

NZPA
Fri, 26 Mar 2010
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Developing economies offer hope for NZ meat
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