At the Red Meat Sector Conference Luke Chandler, General Manager of Rabobank’s Food and Agribusiness Research Advisory group in Australasia, presented an interesting perspective on global protein trends and the increasing complexity required to feed the world’s growing population, writes Allan Barber.
Chandler observed three main trends: demand from emerging markets and market access, competitiveness between proteins and the complexity of the supply chains.
Briefly stated there is a surplus in the west and a shortage in the east with 70 percent of growth occurring in Asia, predominantly in China, India and Indonesia. Australia and New Zealand provide six percent and three percent respectively of imports of agricultural products into Asia and are therefore high value, niche exporters rather than providers of high volume production.
The delivery of value not volume is based on product which is disease-free, sustainable, traceable and above all safe with a brand image that offers these attributes. New Zealand’s brand story takes this premium position in spite of potentially damaging occurrence of such scares as Fonterra’s botulism false positive.
Competition between proteins, at least where meat is concerned, sees a price spread continuing to open up between pork and poultry on the one hand and beef and sheepmeat on the other. The ability to control pork and poultry by factory farming and pre-determined feeding regimes and production times, compared with beef and to a greater extent sheepmeat means there is greater volatility in the price of red meat.
Supply chains are increasing in complexity with shifts in market power and ability to capture margins. The demand patterns as a consequence meeting the needs of nine billion people involve considerable fluctuation in commodity pricing dynamics and changes of protein uses.
This requires a change in supply chain relationships from negotiation to collaboration and from transactional to transformational, reflecting New Zealand’s need to focus on its high value market positioning.
Simply put New Zealand will never be a high volume producer because we don’t have the productive capacity to feed more than a minimal percentage of the global population. Therefore we must concentrate on earning the best price from what we can produce. To do this requires moving up the value chain, not trying to export at the lowest price.