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Livestock Market Update: Velvet market showing good signs for deer farmers
20 January 2021

Livestock Market Update: Velvet market showing good signs for deer farmers

Velvet sales meeting good demand amid disruptions

Although venison sales are severely impacted by the Covid-induced global closure of restaurants, the velvet market is providing deer farmers some confidence.

By volume PGG Wrightson’s velvet sales this season are 20 per cent ahead of 2019/20. While prices are around 15 per cent back, improved production means most deer farmers are receiving much needed cashflow.

Historically, six to 12 months after the 2003 SARS pandemic, velvet sales rose markedly, based on the value Asian cultures place on its capacity to boost immune function. Growing demand for deer velvet is again indicated. In addition, velvet is finding increased use as a healthy food ingredient, reducing reliance on practitioners mixing it into prescribed medications, shifting the focus to finished, branded, easy to consume products such as extracts. These products can be readily obtained online, helping the deer velvet market overcome lockdown disruption.

Due to strict rules around removal, hygiene and safety of deer velvet, New Zealand producers sit far ahead of competitors in China, Russia and North America. New technology coming this year via UHF chipped tags and paperless recording will further enhance traceability and provenance.

Demand is keeping pace with increased production: from the same or lower stock numbers, deer farmers are achieving better results in quality and weight, and positive market trends should boost further returns. That said, velvet is a specialised product with passionate farmer growers who respect the systems and importance of animal welfare. Seasonality increases product pressure, meaning funding is required to keep returns afloat.

PGG Wrightson, alongside larger, loyal suppliers, has used minimum price contracts to underpin prices for the last three seasons. Relationships are the key to future growth, especially in healthy foods: PGG Wrightson is seeking partnerships in this sector in South Korea and China.

Tony Cochrane, PGG Wrightson National Velvet Manager

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Paul Hughes of Ruapehu Red Deer offered 38 lots in a sale that achieved a 100 per cent clearance, a top price of $12,500 and an average of $7,026, up from $5,679 at the corresponding 2019 sale.

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 New coalition for velvet export to China aiming to create opportunities to build profitability

Compared to venison, velvet continues to bear good news for the deer industry, due to greater consumption in South Korea and China than anticipated. A recent forecast indicated China’s economy will grow eight per cent in the coming year, compared to Europe, destination for most New Zealand venison, where the economy is set to retract seven per cent.

Deer farmers have welcomed income from velvet, opting to sell stock early, albeit prices are 15 to 20 per cent lower than last year, balanced by a positive outlook for the coming season. Logistical issues, including a three month freight delay caused by lockdowns in China’s north east regions, where most velvet enters the country, appear to be resolved.

PGG Wrightson has joined a coalition to develop a market for New Zealand velvet as a health food ingredient in China.

Working with two other New Zealand companies that export velvet to China, plus DINZ, NZTE and PCNZ, a China-registered company that represents several New Zealand food and beverage product marketers in China, the new coalition recently employed a business development manager in Shanghai, who will  approach Chinese brand-name companies willing to develop and promote products based on New Zealand velvet.

Capturing more value from velvet is the objective, providing more certainty for farmers looking to build on-farm production.

Growth in China indicates huge potential for New Zealand velvet in health food products. Collaboration should enable accelerated progress.

In South Korea meanwhile, consumption is better than forecast, reinforced by the recent release of new products containing New Zealand velvet that target older consumers and women.

PGG Wrightson will continue to run velvet sales until mid-April.

Tony Cochrane, PGG Wrightson National Velvet Manager


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