Deer sector 'has base' for growth

JON MORGAN
Last updated 05:00 02/04/2013

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After 13 years in the deer industry Mark O'Connor feels he is leaving it in good heart.

The 44-year-old chief executive of Deer Industry New Zealand will run a family investment business started by his father, Wellington sharebroker and former Infratil chairman Kevin O'Connor.

Since the beginning of the century he has seen the industry weather a price boom, followed by a crash and long, slow recovery.

After five years of "reasonable" returns for venison and velvet, he is convinced the industry is ready for another forward push.

"That stability is what we've always said we would need before we could expect to see investment and confidence return."

And an influx of youthful leadership will keep it that way, he is sure. "There's a vibrancy, an energy in the industry," he says. "That's really great.

"That will only accelerate, as long they're given the opportunity and leeway to get in there, that the odd mistake is not too badly punished and that they use the wisdom and mentoring of the people that have been around the traps. I'm sure that will happen.

"We've got a solid base of farmers who are passionate about the deer industry and they want to see it right. I don't see them going anywhere - they're into it."

He has seen venison and velvet markets change. In 2000, Germany took more than half of our venison and South Korea was the destination for 80 per cent of velvet exports.

Now, after working hard to develop alternative markets, Germany is down to 35 per cent of venison and South Korea to 65 per cent of velvet while exports overall have grown.

China is the big new velvet buyer, with sales increasing from $2.5 million to $17.5m in the last 10 years. Its needs differ from that of South Korea, with the soft "jelly" tip of the antler preferred.

At the same time, the Asian market has grown from being based on Oriental medicine to more on health supplements marketed by companies with strong brands.

In venison, Europe remains the centre, with increased interest in Scandinavia, Benelux, Switzerland and Britain, though China offers potential if trade barriers can be overcome.

The United States is also important with a small, but high-paying restaurant trade.

The market opportunities are significant, he says.

"Our venison is 0.2 per cent of the whole European meat trade. The difference between that and 0.3 per cent is not very much, but it's 50 per cent for us. So we shouldn't think that Europe is a mature market for us."

Meeting what they hope will be an increasing demand for venison, particularly, is the current concern for industry leaders.

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They want to see the recent income stability reflected in the number of hinds kept for breeding.

At the moment hind slaughter is about 48 per cent of processing numbers and the industry would like that to fall to 44-45 per cent.

O'Connor says the industry's prime assets of being market driven and having a sound structure should provide investment confidence.

"It is one of the few industries in New Zealand where we have a true competitive advantage," he says.

"We are the largest farmed deer industry in the world and we are the only one based on venison. Essentially, we are the only source of chilled venison and the quality is unmatched."

Behind this is an industry structure "relatively unique" in the pastoral sector. Funding for venison is shared equally between the processor-marketers and farmers, and this is reflected in Deer Industry NZ's boardroom.

"It actually does take an industry approach to opportunities and challenges," O'Connor says.

"I love that, it really is great. There's good debates, but respect shown for the expertise of others. This means board members arrive at positions because they're thinking from an industry perspective not a sectoral perspective."

He says that makes his job easier.

"I don't have to go out and deliver bad news to farmers or to processors because one side wants something and the other side won't budge. They come to a point where they say, 'This is best for the industry, this is why we've got to do it'."

Backing this are the industry organisations.

The Deer Farmers Association has 22 active branches and the farmers' informed views are heard at the board table.

In the Deer Industry Association, companies come together and think first about the generic positioning of New Zealand venison and then about their own competitive positioning within that.

O'Connor says he will miss the job.

"The people are fantastic on the market side and the producers are a wonderful, talented bunch that I've learnt a lot from. I'm still learning - as much today as I did 13 years ago."

He will leave after the Deer Industry Conference being held in Wellington in late May. No replacement has yet been appointed.

- BusinessDay.co.nz

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