The Sheep, Deer and Cattle Report: Huge investment in red meat sector in proposed SFF partnership

LAMB

Late season lamb supplies are short, keeping the pressure on present chilled requirements and lifting schedules, but raising concerns by processors on how they will fill the Christmas orders, especially with much of the early regions of North Canterbury affected by the drought.

Some signs reports one exporter, that Chinese consumers are buying frozen product again will be good news, but UK farmers are voicing their concerns about the volumes of NZ chilled product entering their domestic market.

At last an announcement on Silver Fern Farms capital raising project, with a 50: 50 partnership deal proposed with leading Chinese meat processor Shanghai Maling, that had unanimous board support.

The Chinese company will invest $261million into Silver Fern Farms for this equal share, and this will eliminate all debt from the restructured company, enable a 30c per share dividend be paid, and increase the value of the shares to $2.84, up from the 0.35c prior to suspension in July.

Over 50% of shareholders must agree on this proposal by October the 16th, and OIO and Chinese regulatory approval must also be given to allow  the new company to be up and running by years end.

The aligning of two companies with a similar marketing strategy to produce high quality added value meat products in this country with only NZ product, will give the sector a much needed boost, and leaves all other proposals well behind, and ensures the co-operative structure returns half the profits back to the producers.

The new investor provides the ability to access it's considerable contacts into the Chinese supply chain with it now supplying product into 800 supermarkets, and combined with it's parent company Bright Foods, potential into this growth market seems unlimited for NZ's high quality protein products.

Beef and Lamb NZ’s new season outlook are forecasting a lift in lamb revenues helped by a weaker currency and shortage of supply, but whether farmers can cash in on this, will as always, depend on the weather especially with an El Nino forecast looking possible.

WOOL
This weeks South Island auction saw all micron classes including merino, sell for yearly highs, as the currency and low stocks drove the market to new levels.

Wool is again contributing significantly to incomes of the average sheep and beef farm, and Beef and Lamb NZ predicts a 9.6% lift in profit compared to last year.

BEEF
Prices stabilized this week for all beef classes as the uncertainty over the quota puts a dampener on the golden run for beef.

South Island prime steer prices are still rising as supply shortages and strong local trade pricing is driving demand, and heavy store animals become hard to source.

DEER
The spring lifts in venison schedules continue, as national kill figures and currency drop, and the European market now more diversified, and helped by strong chilled sales into the US and UK.

Some concern is being expressed about the Chinese financial markets and how this might affect velvet sales, as NZ now sends nearly two thirds of its production to that destination.

The cold wet weather in the south will slow velvet growth and quality supplements will be needed to fill feed shortages and ensure animals reach their velvet potential as the antler grows.