Meat & Wool Sector General Outlook embargo until 14 august 2009

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Augustus Gray
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1 Meat & Wool Sector General Outlook embargo until 14 august 2009 Presentation to: NZAAA Conference Marlborough Convention Centre Blenheim 31 July 2009 P09025

2 Topics Pastoral Land Use Change Livestock Changes and Outlook Interest and Exchange Rates Price Trends and Global market comment Conclusion

3 Land Use Trend 14,000 12,000 Pastoral Land Area Ha (000) 10,000 8,000 6,000 4,000 2, % % Sheep Beef Deer Goat Dairy Source: Meat & Wool New Zealand Ltd Economic Service Statistics New Zealand. Overall -20% -2.7 m Ha since

4 Source: Meat & Wool New Zealand Economic Service Pastoral land Area e Dairy Sheep & Beef Total pastoral 2.07 million ha 18% 9.21 million ha 82% million ha 100%

5 NZ Sheep and Cattle Numbers to Sheep (000) 75,000 65,000 55,000 45,000 35,000 25,000 Dairy +68% Beef -9% Sheep -41% -5.8% -11.4% 6,000 5,000 4, ,000 2,000 Cattle (000) Source: Meat & Wool New Zealand Economic Service Statistics New Zealand. % change 1990 to sheep and beef decrease due to drought and dairy expansion

6 % Change ( to ) 10% 5% 0% Sheep Numbers 15% 10% 5% Beef Cattle Numbers -5% 0% % -10% -15% -20% -25% % -5% -10% -15% -20% -25% -30% -30% 60% 50% 40% Dairy Cattle Numbers 3% 0% Stock Units 30% -3% -6% -9% -12% -North -Wai BOP East Coast -Taranaki Manawatu -Marlb Canterbury Otago Southland -Otago Southland % 20% 10% 0% -10% -North-Wai BOP East Coast -Taranaki Manawatu -Marlb Canterbury Otago Southland -Otago Southland %

7 World Energy Prices $140 $66 Source: FAPRI 2008

8 Exchange Rate 10% Change Impact on Farm Gate price Appreciation Depreciation +10% -10% Lamb -14% +17% Mutton -18% +22% Beef -13% +16% Wool -12% +14% Source: Meat & Wool New Zealand Economic Service

9 Interest Rates Interest Rates % Jul-08 Sep-08 Nov-08 Jan-09 Mar-09e May-09e Jul-09e Sep-09e Nov-09e Jan-10e Mar-10e May-10e OCR 90 Day Source: Reserve Bank of New Zealand, ANZ Meat & Wool New Zealand Economic Service

10 NZ Exchange Rate Trend (2000 Jan = 1000) Index Jun 2000 Dec 2001 Jun 2001 Dec 2002 Jun 2002 Dec 2003 Jun 2003 Dec 2004 Jun 2004 Dec 2005 Jun 2005 Dec U.S. $ U.K. stg Euro 2006 Jun Source: Meat & Wool New Zealand Economic Service Reserve Bank of New Zealand 2006 Dec 2007 Jun 2007 Dec 2008 Jun 2008 Dec 2009 Jun Since float, March 1985 NZ $ av 59 cents US July NZ $ av 36 UK pence July p NZ $ av 0.50 Euros July Last 12 months (July) UK +4% US $ -5% EU -2%

11 What Does An Exchange Rate Mean? US $100 cents exchange rate = cents exchange rate = NZ$ % Difference = NZ$ %

12 Exchange Rate to Sept 2010 Two views Commodity linked Economic Fundamentals Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Conservatives Optimists Source: Meat & Wool New Zealand Economic Service

13 NZ:US $ vs. West Texas Crude NZ:US $ Jun 2000 Dec 2001 Jun 2001 Dec 2002 Jun 2002 Dec 2003 Jun 2003 Dec 2004 Jun 2004 Dec 2005 Jun 2005 Dec 2006 Jun 2006 Dec US$ per Barrel 2007 Jun 2007 Dec 2008 Jun 2008 Dec 2009 Jun 0 US $ West Texas Crude Source: Meat & Wool New Zealand Economic Service

14 Wool Lamb, Beef and Milksolids Farm price, per kg Dairy x 400 Wool y Lamb 300 Beef Linear (W ool) Linear (Mliksolids) p e Linear (Lamb) Linear (Beef)

15 Raw Wool Exports Crossbred Wool Exports (000 Tonnes Clean, June Year, 11 months) Other Mediterranean North America Middle East Pacific (Aust.) Southern Asia Northern Asia European Union 30% volume; 31% 35% volume; 35% tonnes Source: M eat & Wool New Zealand Economic Service

16 Crossbred Wool Price Trend Cents per kilogram clean month av. Cents Per kg Jun 2001 Jun 2002 Jun 2003 Jun 2004 Jun 2005 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun 290 Source: Meat & Wool New Zealand Economic Service

17 Wool price Trend 2,000 Wool Market Indicator Prices Cents per kg Clean, June Yr. 1,800 1,600 Fine (<24m) 12 mth av. Wool Production Cents per kg 1,400 1,200 1, M id (24-31m) Strong (>32m) 1, Fine 4% Medium 6% Strong 89% Dag 1% Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Total 100% Clean Tonnes153,500 Source: Meat & Wool New Zealand Economic Service

18 NZ Lamb Export Markets Lamb Exports (000 Tonnes Shipped, Sept Year) Pacific Other Middle East North America North Asia European Union 50% volum e; 64% value Source: Meat & Wool New Zealand Economic Service New Zealand Meat Board

19 UK Retail Meat Prices Retail Price per kg Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Poultry Beef Pork Lamb (all) Source: Meat & Wool New Zealand Ltd Economic Service TNS

20 Export Lamb Product Mix to Per cent 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% p Chilled Frz Boneless Frz cuts Frz carcases Source: Meat & Wool New Zealand Economic Service

21 Export Lamb $ per head $ per hd ? $/Hd $/Hd Real $s Line 3 Source: Meat & Wool New Zealand Economic Service Sheep and Beef Farm Survey p

22 Export Lamb $ per head Trend All Grades $88.80 p $ per head month av. $53.60 $80.00 e Jun 2001 Jun 2002 Jun 2003 Jun 2004 Jun 2005 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun Outlook: In market prices OK, Exchange rate negative impact Source: Meat & Wool New Zealand Economic Service

23 NZ Beef Export Markets Beef and Veal Exports (000 Tonnes Shipped, Sept Year) Pacific EU Other South Asia North Asia North Am erica 27% Volume; 29% 53% Volume; 45% Value More high value beef More process beef Source: Meat & Wool New Zealand Economic Service New Zealand Meat Board

24 Beef Exports Sept Year 000 Shipped Tonnes % % % 20 0 Shipped Tonnes $FOB per Kg Processing Secondary Cuts Prime Source: Meat & W ool New Zealand Economic Service $FOB per Kg

25 Export Beef tonnages Carcase Weight 700, , ,000 tonnes 400, , , , Cow Bull Str & Hfr Source: Meat & Wool New Zealand Economic Service Increase in cow + bull beef +18% 51,000 T

26 US Bull Beef Price Quotes 95 CL 600 c/kg difference NZ:US exchange rate NZ -16% Jul 2008 to Jul 2009 US -27% Jul 2008 to Jul Jun 2005 Sep 2005 Dec 2006 Mar 2006 Jun 2006 Sep 2006 Dec 2007 Mar 2007 Jun 2007 Sep 2007 Dec 2008 Mar 2008 Jun 2008 Sep 2008 Dec 2009 Mar 2009 Jun US c/kg NZ c/kg Source: Meat & Wool New Zealand Economic Service

27 Export Bull Beef per kg Trend kg Cents per kg month av p 300 e Exchange Rate Sensitive 2000 Jun 2001 Jun 2002 Jun 2003 Jun 2004 Jun 2005 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun 2010 Jul Source: Meat & Wool New Zealand Economic Service

28 Bull Beef Price 1 cent US change per pound = ± 2.6 cents per Kg carcase weight NZ [$7.80 per head] 1 cent US:NZ Exchange Rate Change = ± 3.3 cents per Kg carcase weight NZ [$9.90 per head] Source: Meat & Wool New Zealand Economic Service 14 July 2009

29 Milksolids per kg Trend Real $s Cents per kg Av p e Milksolids per kg Milksolids per kg Real Av. Source: Meat & Wool New Zealand Ltd Economic Service Livestock Improvement Corporation, Fonterra

30 Sheep & Beef Farm Profit before Tax per Farm, Constant $s 140, ,000 NZ:US$ ,000 80, s decade av. $44,800 60,000 40,000 20, S decade av. $62, Real Farm Profit p f Source: Meat & Wool New Zealand Economic Service Sheep and Beef Farm Survey, All Classes Farm Lowest in 50 years NZ:US$ 77

31 Sheep & Beef Farm Input Prices Paid trend Index = 1,000 1,800 1,600 1,400 1,200 1, to % p Prices Paid Base = 1000 Source: Meat & Wool New Zealand Economic Service

32 Gross Revenue Vs Fertiliser Expenditure $ per hectare All Classes Sheep and Beef Farm Gross Revenue $ per ha Fert Exp $ per ha p f 0 Gross Revenue Fert Expenditure

33 Fertiliser Expenditure vs Volume Index = 1000 All Classes Sheep and Beef Farm Kg per Ha p f $ per ha Kg per ha Fert Expenditure

34 Summary Biggest uncertainty is the Exchange Rate. Overseas markets reasonable for lamb Beef outlook function of US recession Wool outlook by recession and demand

35 Material Supplied for Public use only by agreement from 2009 Meat & Wool New Zealand Limited also referred to as M&WNZ, Economic Service. All rights reserved. This work is covered by copyright and may not be stored, reproduced or copied without the prior written permission of Meat & Wool New Zealand Limited, Box 121, Wellington. Phone: 64 (0) , Fax: 64 (0) info@meatandwoolnz.com Meat & Wool New Zealand Limited, its employees and directors shall not be liable for any loss or damage sustained by any person relying on the forecasts or other information contained in this document, whatever the cause of such loss or damage.

Dave Harrison Regional Manager Europe Presentation to AHDB Beef and Lamb Conference 3 November 2015

New Zealand Production and Export Trends Dave Harrison Regional Manager Europe Presentation to AHDB Beef and Lamb Conference 3 November 2015 OVERVIEW 1. Beef + Lamb New Zealand 2. New Zealand Farming Trends