Program Overview

Background and Long-Term Strategy

Deer projects are now managed in the RIRDC New Animal Products Program.

Deer farms are found throughout all Australian states, but production is now concentrated in Victoria, South Australia, New South Wales and Tasmania. Red Deer and Red Deer hybrids have become the predominant species on Australian deer farms because they have a better production of velvet antler and a larger carcass size which reduces slaughter and processing costs.

There has been a significant decline in deer production across Australia, but particularly in Queensland and Western Australia. In 1997-98, there were about 190,000 farmed deer, and the national herd increased until the onset of drought in 2002 which saw the decline in the herd size and the total value of the industry. The industry is characterized by a large number of small scale producers, although there are now many deer farmers with more than 1,000 animals.

The number of deer processed during 2006-07 (12,857) was estimated to be about half the number processed during 2005-06 (27,305) and 2004-05 (31,061) (Tuckwell 2007). The total farm gate value of venison in 2006-07 was $1.24 million compared to $2.47 million in 2005-06. This has been declining since 2001-02 when the value of venison reached $6.32 million. This decline has been influenced by drought and poor returns.

Average venison prices have improved since 2003-04 when prices were $1.81/kg hot carcass weight (due to the slaughter of a large number of drought affected stock being slaughtered). Prices for animals meeting market specifications improved in 2006-07 with processors paying in excess of $2.70/kg hot carcass weight for prime animals.

Prices for velvet antler were similarly depressed in historic terms over the last five-years. In 1999 average prices exceeded $100/kg for top grade velvet but fell to around $45/kg in early 2006. In 2006-07, average velvet prices increased to $86.68/kg. This price increase was a reflection of a reduction in New Zealand herds and increased demand, especially in the Korean market.

The number of animals processed annually has also decreased, with a total volume of 461 tonnes in 2006-07 compared to 1,012 tonnes in 2005-06 and 1,174 tonnes in 2004-05.

Since the industry was established in Australia in the 1970's, it has experienced the cyclical ‘boom or bust' phenomena of most export commodity driven industries. The industry has potential for growth but this potential is currently hindered by a commodity trading approach to deer marketing and management.

While broadly based research and development is undoubtedly needed in the industry to maintain industry competitiveness, the industry has also recognized the need to establish Market-Focused Supply Chain Alliances and have targeted all their funds towards this as a short-term measure to re-define the industry.

Australia is a small player on the international deer market and struggles to be internationally competitive against a much larger deer industry in New Zealand, where deer farming is a mainstream farming industry. The New Zealand industry has the advantage of scale and the capacity to use statutory producer levies for product promotion in both domestic and international markets. Most commodities currently produced by the Australian deer industry are sold in export markets - with venison sent predominantly to the European Union and South East Asia, and with velvet exported to Korea, Hong Kong and China. This makes the industry particularly vulnerable to international market forces such as international exchange rates, and international import requirements.

The Research and Development Program is funded by venison and velvet levies. The Deer industry has been successful in reducing the Velvet and Venison levies with the following reductions introduced from July 2007 for review after three years:

• the Deer Slaughter Levy reduced from 10.5 cents/kg to 8.0 cents/kg
• the Deer Export Charge reduced from $7.50 to $5 per animal
• the Deer Velvet Levy reduced from 3.5% to 2% sale value
• the Deer Velvet Export Charge reduced from 3.5% to 2% of sale value

Within the Deer Slaughter Levy (8.0c/kg), the National Residue Service component of the levy used for export testing for residues in carcasses was increased from 1.0c/kg to 4.0c/kg and the research component decreased from 9.5c to 4.0c. This is impacting on the amount of revenue received by the R&D Program and will incur a steep decline in Program reserves.

The Australian venison industry is currently in an extended slump, characterised by low returns to producers and a declining number of large scale deer farmers. Of major concern to the industry at present is the fact that whilst venison supplies and production are at historically low levels, prices being received for deer are also low - a situation that indicates the existence of significant demand and supply chain related issues. This is compounded by a downturn in Australian venison export markets. While the Market-Focused Venison Alliances have demonstrated the benefits of supply-chain alliances, considerable development is needed across the industry before it has an impact.

While there is considerable room for productivity enhancement through use of improved technologies in abattoir and processing operations, the comparatively small volumes of deer put through these facilities, and the resulting diseconomies of scale, are not conducive to investment in these areas by facility owners.

Key Long-Term Strategies 

The RIRDC Deer R&D Program assists the Australian deer industry by investing in research and development to:

• improve understanding of and cooperation between participants in the value chain for venison and velvet products;
• improve market demand for venison and velvet products by improving product quality and quality control systems and improving consumer understanding of deer products;
• improve market demand for deer products by improving end-user knowledge of the attributes of Australian venison products and developing new value-added venison and velvet products that reflect current and emerging market requirements;
• promote utilisation and adoption of research result to improve the uniformity and quality of industry products and the capacity of producers to consistently supply them; and
  
• communicate research outcomes and promote their adoption to the deer industry through strong relationships with key industry organisations.