Where to next for deer?

The number of high fences without deer behind them had agriculture minister Damien O’Connor asking “where to next?” for the deer industry.

At a September parliamentary reception celebrating the conclusion of Deer Industry New Zealand’s (DINZ) Passion to Profit (P2P) strategy, O’Connor said there had been “good progress”, but in follow-up comments he said judgment was reserved until receiving the findings of the final Ministry for Primary Industries report.

“It [P2P] might have given more confidence and profit [but] if that hasn’t occurred, the question is why and what to do?”

A major focus of the seven-year Primary Growth Partnership programme was to increase venison export revenue by 40% through market and product development, improved onfarm productivity and environmental management.

It was a big-thinking and audacious strategy that hasn’t delivered the money. In 2015 $181 million of venison was exported and in 2021 $155m ($141m in 2015 money).

O’Connor acknowledged the Covid effect but said the industry needed to work harder to grow the value of venison and branded Cervena cuts. Most of the meat companies had treated venison as an “add-on” to beef and lamb. He believed there was potential to separate it out as a special product that would stand alone on the world stage in the same way that kiwifruit-branded Zespri did.

“We support initiatives from the sector to grow the value of the product… we look forward to the next stage.”

The future of the deer industry was caught in a challenging environment and very much in the hands of global consumers who were discerning and concerned about global warming and reducing emissions.

“When the lights went out in California recently, it hit home about climate change and it’s affecting the behaviour of consumers. The question is how to turn that into a positive?”

O’Connor didn’t have hard and fast answers on how to do that but talked about adding “more up the value chain” as well as incorporating values and management to address environmental and climate challenges.

Asked about ready-to-go greenhouse gas emission mitigation tools for deer farmers, many of whom were unable to offset with trees due to physical and regional regulations imposed on the hill and high country they operated, O’Connor said the opportunity was there through climate emergency response initiatives announced in May. These included $339m to fast track development of technologies and practices to reduce GHG emissions.

The sheep and dairy sectors had been quick to pick up on this new opportunity, but O’Connor was unaware of anything connected with deer; it was up to the industry to take the lead. He said the door was not shut to the deer industry for future collaborations, such as P2P, but any such initiative would have to be in a co-ordinated way.

B-minus effort

P2P scored a 6.5/10 – the equivalent of a B-minus exam result, DINZ chief executive Innes Moffat said. That was the verdict of the P2P advisory group members. They rated progress and results midway, and at the conclusion of the seven-year project, P2P was a cornerstone $15 million 50-50 government and industry-funded project. The big goal was to earn the industry another $56m in revenue over seven years by changing the way deer were farmed, the way venison was marketed and reversing the decline in deer numbers.

It had succeeded with the first two but failed in the latter with the national hind herd shrinking by 65,000 head (15%) to 365,000 over six years. That retrenchment in numbers meant the industry fell well short of meeting the volume and value of venison targeted at the outset.

“Back in 2013 and 2014 we were optimistic in our forecasts around the increase in hind numbers, venison production and chilled venison exports and the cumulative effect of that were bold projections,” Moffat said.

Over the seven years the value of venison exports fell from $181m to $155m, or $141m in 2015 dollar terms. This was due largely to the dwindling volume of venison, and Covid-19, especially in Europe where much of NZ venison was destined for higher-end restaurant and food service sectors.

Moffat welcomed the agriculture minister’s challenge for the industry and venison marketers to do more to add value and work more collaboratively.

However, venison marketers had done a good job targeting new and small niche markets such as Sweden, United Arab Emirates and New York with their particular brands and the common story of farm-raised venison.

“They are small niche markets so there’s less of a need for a collaborative strategy. It’s different from lamb where there are large volumes going into UK supermarkets and there is a higher degree of competition.”

During the course of P2P, marketing activity had changed focus from the European food service sector to North American retail. NZ exporters of venison were getting a foothold into that market, but it needed investment to sustain that momentum.

Another change during the course of P2P was a greater emphasis on environmental management, a response to the rollout of various guidelines and legislation over the seven years.

Managing and mitigation of GHG emissions was a big issue, but Moffat said it was unrealistic for the industry to fund standalone research on mitigations. Instead, DINZ was an investor partner in the Pastoral Greenhouse Gas Research Consortium on the understanding and hope that projects would lead to mitigations, such as inhibitors or vaccines that could be adapted for deer.

Although P2P achieved an overall B-minus, Moffat said it scored a 9/10 in motivating change among deer farmers. The main forum for doing this was advance parties – farmer-led groups where members followed through on production-boosting projects with support and advice from industry specialists.

At the conclusion of P2P there were 29 groups with 333 farmers involved. These groups had led to the creation of environmental groups to help farmers develop their own farm plans and assess their GHG emissions.

NZDFA president Justin Stevens said advance parties was a success story because it motivated, challenged and encouraged farmers to take on board and follow through with new management.

“They’ve been effective, although I think there should have been more benchmarking included.”

He drew on his own involvement, which he credited in part to lifting his velvet income by 85% through a combination of better management and a 35% increase in stag numbers.

Advance parties had been confidence and morale boosters to a certain degree, but the fact was many deer farmers were at the crossroads on where to go with deer due to financial and growing environmental regulation.

On Stevens’s 180ha Marlborough rolling-hill farm near Seddon, about 10% of the area was planted in grapes and contributed half the farm income. His velvet system produced the other half, but he could easily double or triple farm income by reducing stag numbers and planting another 20ha of grapes. “It’s both the money and the environmental regulations that farmers are struggling with,” he said.

Overall he awarded P2P a 7/10 and “could do better”.

What payback?

Could the $15 million dollars invested in P2P be better invested to generate some return?

It’s a big question for a small industry that struggles for leverage from the money invested in industry growth.

History has shown that research and development and the execution of big-thinking production and marketing strategies are invariably ‘slow burn’ exercises that can take decades for measurable success. A good example of that kind of investment was Cervena, an overarching brand for high quality, high spec venison from NZ farmed young deer launched in 1992.

The strategy burned up more than $13m of industry money over the first five years with little discernible return. It finally fired when it was picked up as part of the P2P climbing to about 16% of venison export sales in 2018/19.

Innes Moffat said in retrospect some of the P2P spending, especially on venison market and product development, led down some massive rabbit holes.

Development of a venison protein bar is one example, progressing well until the commercialisation stage at which point it was decided the risk was too great to continue further. But he says the spending was not a waste because it had created the intellectual property for a company to pick up and run with.

Another arguable example of misspent money was the European summer venison programme that fell flat. However, the time and effort had left DINZ confident in the decision to target new markets.

“A lot of what we did was research and sharing the financial risk to find something new.”