B+LNZ’s Economic Service team provides an overview of the 2020-21 Export Season showing NZ red meat exports performed solidly despite COVID-19.
2020–21 Export Season Overview
The 2020–21 export season ended on 30 September 2021. Export data for the season to date shows New Zealand red meat exports performed solidly against the uncertainty and disturbance of COVID-19.
Total export receipts for beef and sheepmeat for the season equalled the record returns of 2019–20 and were 17 per cent up on the five-year average.
The season was dominated by COVID-19 disruption and subsequent recovery. Demand and export prices in the first half of the season were subdued as economies and consumer demand recovered from the economic and health impacts of the initial outbreak and the associated impact on the global food supply chain. Global economic recovery and the roll out of global vaccination programmes resulted in a sharp lift in red meat demand and export returns in the second half of the season. The season finished with sheepmeat and beef export prices close to record highs.
Total sheepmeat and beef export revenue for the season accounted for 13 per cent of New Zealand’s total merchandise exports.
Key drivers of the season included:
- The Chinese economy, which recovered swiftly following COVID-19. Beef and sheepmeat consumption was strong, supported by continued outbreaks of African Swine Fever (ASF) early in 2021 and improving consumer confidence.
- The US economy, which also recovered swiftly from the impact of the COVID-19 outbreak. Substantial financial stimulus packages supported strong consumer demand for red meat. This, combined with lower meat production capacity because of COVID-19 disruption and labour shortages, resulted in a period of inflationary pressure for red meat prices.
- Global shipping costs, which surged, and shipping routes and timeframes, which experienced significant disruption. Strong global demand for sheepmeat and beef has sheltered export receipts, and in turn, returns to farmers, from the full extent of this logistical disruption.
Beef
Beef export volumes reached a record high in 2020–21; eight per cent up on 2019-20 and 16 per cent up on the five-year average. The high volumes reflected the high numbers of steers and heifers processed. The higher volumes were easily absorbed by strong consumer demand and tighter global beef supply.
The average export value of beef exports declined six per cent from the record high of 2019–20 but was five per cent up on the five-year average and the second highest on record. Despite this decline, total beef export receipts for the season were up one per cent, supported by the higher volume of exports.
Tighter global beef supply was a key factor in the upswing in export demand and prices in 2020–21. Australia’s beef exports were down 16 per cent in the eight months to August 2021, increasing competitive pressure between the key markets of US and China, which led to higher prices. In China, competition intensified in mid-2021 when trade from Argentina was restricted due to domestic market protection, and two positive cases of BSE (mad cow disease) were confirmed in Brazil. This situation is expected to underpin export demand for beef into early 2022.
China was the leading destination for beef in 2020–21, accounting for 39 per cent of total export volumes, up from 37 per cent last season and 20 per cent only three seasons ago. The US accounted for 35 per cent of beef export volumes, similar to last season, but down from 47 per cent three seasons ago. The average value of beef exports to China and the US are similar – $7,700 per tonne and $7,800 per tonne respectively.
Japan, Taiwan and Korea were the next most significant markets for beef exports in 2020-21.
Sheepmeat
Lamb export volumes in the 2020–21 season were about the same as in the previous season and the five-year average. The average export value was four per cent down on the record high of 2019–20, but eight per cent above the five-year average. With volume much the same as in 2019-20 and average value down, New Zealand’s total export receipts for lamb were down four per cent on 2019–20.
Like beef, strong demand from China and the US drove a surge in lamb export returns in the second half of the season. Export volumes to China accounted for 53 per cent of total lamb exports, up from 46 per cent in 2019–20 and 35 per cent just three seasons ago. Exports of lamb to the US reached record volumes, driven by the surge in consumer demand for meat protein and the recovery of the foodservice sector following the easing of restrictions on restaurant dining that had been imposed due to COVID-19. The US accounted for nine per cent of total exports, up from six per cent in 201920.
Lamb exports to the UK and EU-27 in 2020–21 declined 17 and 19 per cent respectively on the previous season. This reflects the demand pull from both China and the US, disruption to the foodservice sector due to COVID-19, particularly in the EU-27, and increased challenges in shipping to the region.
Limited global lamb supply, combined with strong global demand, is expected to support export prices for the beginning of the 2021-22 season.
Export returns for mutton were up 14 per cent in the 2020–21 season. China accounted for 84 per cent of mutton exports. Demand and export returns for mutton remained resilient through the pandemic.
About B+LNZ’s Economic Service
Beef + Lamb New Zealand’s (B+LNZ) Economic Service has been in operation for 70 years. Its role is to provide independent, authoritative and credible information for the sector to help inform policy and trade decisions.
One of the ways the Economic Service does this is by using the information from its annual survey of Sheep and Beef Farms, which involves detailed analysis of physical, financial and environmental data from a sample of commercial sheep and beef farms that is representative of the livestock population in New Zealand.
In addition, the Economic Service provides information for policy work, generates forecasts of income and production and expenditure, and monitors international market trends and export data.
You can find the key outputs from the Economic Service on the Data and Tools section of our website.
For more information, please contact econ@beeflambnz.com