Venison prices 'a step in the right direction'
Deer farmers are more upbeat about signs that chilled venison contracts for spring could increase, even if prices are off the mark they really want.
Silver Fern Farms (SFF) and smaller exporter Firstlight Foods have talked about paying an extra 50 cents a kilogram for the 2014-15 season, especially if markets and exchange rates co-operate.
SFF is offering spring contract prices to farmers similar to last year, with the potential to rise another 50c/kg.
Firstlight confirmed that its base price for year-round supply was more than 50c/kg on last year's price.
Deer Farmers Association chairman Kris Orange said farmers would hope these prices materialised and provided benchmarks for other exporters.
He said the consensus among farmers at the recent deer industry conference in Methven was that the farm gate venison price needed to be $2/kg more than lamb to make venison farming competitive.
"While the contract prices on offer don't promise what we want, they are a step in the right direction, and a signal of market confidence that farmers having been looking for."
Farmers would prefer venison prices top the $8/kg mark, with lamb prices sitting at $6/kg at this stage.
It is currently the low point of the venison selling season, and prices usually build towards a peak from October to December. The margin favouring venison remains a few cents a kilogram - the lowest it has been in many years - and farmers are looking for the gap to widen.
SFF national deer manager Malcolm Gourlie said farmers entering a contract this spring could lock in a minimum price similar to last year's fixed contract prices.
There was potential to earn up to 50c/kg above this if market conditions and the exchange rate allowed, he said.
The 2013-14 season reached a disappointing peak of $7.40/kg for a 60kg stag last September, and has come back to about $6.20 now before processing steps up for the European game window.
DINZ chief executive Dan Coup said hard numbers had yet to be set by all processors for the 2014-15 season, but the possibility of an extra 50c/kg was a promising start.
"It's not a huge step, but a step in the right direction. [An extra] $2/kg [above the lamb price] would be great, and chances are we won't get that this season, but it's much better than heading away from [the current price]."
The peak prices in the venison schedule appear earlier than the height of the chilled market in Europe, from October to December, as there is a six- to eight- week lag while sea deliveries are made. After this, much of the venison is frozen and stored.
The strong kiwi dollar - at about 62c against the euro, back only slightly the past few days - continues to affect prices.
Coup said farmers would take heart from marketers signalling that traditional European markets were improving and that the price curve was probably at its nadir. Venison supplies were empty and no stocks were overhanging the market, he said.
Coup said the deer industry had been trying for many years to break free from its reliance on the traditional game meat commodity trade in Europe. The future lay in creating a brand attracting a premium price and year-round demand.
Some exporters were making good progress in niche markets, he said, with Mountain River Venison creating a premium brand in Sweden, and Firstlight and SFF working with a major food service company in the Netherlands to build year-round demand for branded chilled farm-raised venison.
The big hope lay in the proposed launch of the premium Cervena brand in Europe and potentially China, driven by the five largest venison exporters.
Alliance Group marketing manager John Rabbitt said he was an enthusiastic supporter of Cervena in Europe.
He said New Zealand venison was an ideal product to target at discerning customers who could afford to buy quality.
Coup said creating a market premium for venison was a key element in the DINZ Passion2Profit strategy, which was the subject of a Primary Growth Partnership application.