The national sheep flock and dairy herd have both continued to shrink in recent years, reducing the volume of animals available for processing and putting pressure on staffing levels.
This situation has also created a competitive market among farmers, with some achieving record prices for their livestock, thus further increasing the profitability challenges faced by meat companies.
During the Primary Industries New Zealand Summit held in Ōtautahi, Silver Fern Farms’ chief executive Dan Boulton announced that the major red meat processor is laying off thousands of seasonal workers to better align its processing capacity with the current livestock supply.
“We have about 3000 of our workers on seasonal layoff right now, which normally would be running full steam as we work through the back end of the cow season,” Boulton said.
Reducing capacity, especially among night shift workers, helped lower and manage operating costs but also led to uncertainty.
“We’re trying to attract workers into our sector, and that uncertainty around the workforce is a real challenge.”
Boulton reported that beef processing dropped by 4% and lamb culling by 9% in 2024. The sharp decrease in slaughter has led to heightened procurement competition among companies.
“Clearly a big challenge, and so on one hand we’ve got fantastic market returns, and that’s bringing profitability back into the sector, but we can’t underestimate some of the livestock volumes and where they’ve landed, particularly in the last 18 months.”
In April, Silver Fern Farms disclosed a $21.8 million after-tax loss for the year ending December, alongside a 5% drop in revenue to $2.64 billion.
This followed a $24.4 million after-tax loss reported for the 2023 financial year.
Competitor Alliance Group also posted an after-tax loss of $95.8 million for the year ending September, with slightly more than half attributed to redundancy costs from the closure of Smithfield.
StatsNZ data revealed that the national sheep flock has decreased by 21% over the last ten years, now totalling 23.6 million sheep.
The proportion of sheep per New Zealander has dropped from 22 in the 1980s to just 4.5 today.
Dairy cattle numbers have also declined by roughly 13%—a reduction of about 860,000 animals—leaving the national dairy herd at 5.8 million.