Beef in 2014: Demand bright, local supply tight
New Zealand’s beef industry faces brighter prospects in 2014 with strong international demand, combined with tight local
supply, according to a new report released by agribusiness banking specialist, Rabobank.
The report, Beef in 2014: Demand bright, local supply tight, says the decline in beef production, particularly in lean
beef, in the United States – New Zealand’s largest beef export market – means New Zealand product will be in demand.
However, the Rabobank report cautions, in other less traditional markets – where cost is the primary determinant –
growing competition from India should be expected, with increased local Indian supply available for export.
Report co-author, Rabobank animal proteins analyst Matt Costello says, New Zealand’s beef sector will be hoping for
increased returns in 2014 as supply tightens domestically and global beef demand remains strong.
“New Zealand beef production is expected to be lower in 2014 compared to the drought-affected production of 2013,” Mr
“Improved seasonal conditions in the second half of 2013 has helped turn around the fortunes since the peak of the
drought and has set things up for an improved spring and summer for 2013-14. The overall increase in processing levels
through 2013 was the direct result of a high cow kill, as more cows were carried over from 2011/12 due to favourable
pasture conditions in New Zealand.”
Mr Costello says New Zealand’s beef production is likely to be limited due to the expansion of the dairy herd, although
beef cattle numbers are not expected to decline greatly in the coming years. The rapid incremental growth in dairy
numbers witnessed over the past decade is expected to slow as pressure from suitable land availability and increasing
emphasis on environmental regulations grows.
Competitor watch in 2014
Exporters will see increased interest from the US while increasing competition from India will likely limit growth in
exports to a number of South East Asian and Middle Eastern Mr Costello says although beef supplies from New Zealand are
expected to tighten in 2014, total beef production globally is forecast to remain relatively steady compared to US
hungry for beef
The US will experience a significant decline in beef production in 2014, the report says.
“The urgency to rebuild the US herd is becoming ever more pressing due to the ongoing liquidation occurring over the
past three or so years,” Mr Costello says.
“If weather permits, US producers will need to grow cattle numbers which are now at 60-year lows. With tight US supply
forecast for 2014, this will help drive strong demand for New Zealand product.”
Indian buffalo meat exports to remain strong Increasing exports of Indian buffalo meat in 2014 will target South East
Asian markets, according to the Rabobank report.
“After becoming the world’s second-largest bovine exporter in 2012, the growth in the Indian buffalo meat shipments
continued throughout 2013, increasing four per cent, or 22,000 tonnes swt, in the first six months of 2013,” Mr Costello
“Of particular importance is India’s continued push of buffalo exports into markets such as Vietnam and Thailand
presumably through grey channel for re-export to China.”
Asian market dynamics
Despite competition from the US for New Zealand product, exports to China are forecast to remain strong in 2014 as China
will continue to face a supply deficit, creating strong demand for imports.
Rabobank expects Brazil to regain formal access to the Chinese market in early 2014, which will give China the
opportunity to diversify its supply base. New Zealand currently accounts for 18 per cent of China’s formal imports.
Rabobank New Zealand is a part of the international Rabobank Group, the world’s leading specialist in food and
agribusiness banking. Rabobank has more than 110 years’ experience providing customised banking and finance solutions to
businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative operates in 42
countries, servicing the needs of approximately 10 million clients worldwide through a network of more than 1600 offices
and branches. Rabobank New Zealand is one of the country's leading rural lenders and a significant provider of business
and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 32 branches
throughout New Zealand.