Allan Barber confesses to a degree of scepticism when he read the press release about the launch of the new Silver Fern Farms (SFF) retail range of prime beef cuts just launched in New Zealand supermarkets. But his research, admittedly not as comprehensive as he would like, he says, suggests this is a well-designed programme which ticks most of the boxes for suppliers, consumers and the company.
Time will tell how the programme performs over a longer period, but according to the SFF executives involved initial signs are positive.
My scepticism related to the strong similarity of the criteria to those identified by AUSMEAT more than 30 years ago, a question about how it was possible to conduct nearly 100,000 taste tests in such a short timeframe, how it was feasible to match product consistently against orders and the basis of the 25 cents per kg premium for carcases that meet the criteria.
But I received positive answers to all my queries from Grant Howie and Jeremy Absolom, two of the people most intimately involved in the operation and fulfillment of the EQ System. I imagine it’s not entirely plain sailing and, in fact, Absolom admitted the matching of livestock to forward orders was not always easily managed.
However, a programme which has taken two years of investment of money and effort has attracted farmer buy-in which, in Absolom’s words, ‘exceeds expectations.’ The retail launch is not the first step in the process which began with the international introduction of the Premier Selection Premium Beef foodservice range last year.
The close resemblance of the EQ Master Grade to the AUSMEAT measurements is not a coincidence, because AUSMEAT has been closely involved in training the graders. Where the EQ System differs is in matching Master Grade to characteristics of beef carcases based on the research into consumer attitudes to New Zealand grass-fed beef. This research was conducted in New Zealand and the USA through Otago and Texas Tech Universities which presumably explains the ability to carry out such a high number of taste tests in a relatively short time.
In response to my query about American consumer taste tests being skewed by preference for grain-fed beef, Howie assured me there was no discernible difference in eating quality between grass- and grain-fed carcases with the same attributes. However, he conceded grain-fed cattle provided greater consistency across a whole mob.
The issue of matching supply to forward sales commitments remains the biggest variable to be managed. Supply is secured by contracts up to 12 months out which requires suppliers to commit stock numbers to a specific programme designating weeks of supply. Supply flexibility of one week either side of the contracted date is allowed reflecting seasonal variations.
According to Absolom, the contracts are all well subscribed, although there are still a few gaps to be filled. Presumably, as supply becomes more reliable and predictable, it will be possible for SFF to have confidence in accepting more clients for both retail and foodservice. He says both current and new suppliers are buying into the programme with a common comment being along the lines of ‘At last – what have you been doing for the last 30 years?’
It is not yet possible to predict hit rates accurately, but a combination of measurement of growth rates, genetics and management of stress factors will enable more reliable performance with time. Farm IQ is not yet able to produce the information needed to link seamlessly to the EQ System, but this is also an objective which will be possible in future.
The premium paid for livestock which meets the EQ Master Grade is simply 25 cents per kilo over the supplier’s weekly operating price for qualifying carcases. The final price paid depends on the price agreed with each individual supplier, since we all know not all suppliers are rewarded equally.
The last point I was sceptical about was how SFF could afford to pay 25 cents across the total carcase weight when only a small percentage of the carcase will find its way into the five premium cuts. Both Howie and Absolom assured me this was definitely profitable because of the high value creation obtainable from retail and foodservice for product which meets the specifications. Also, the company is starting to build a good balance of cuts able to be sold at a premium across different markets.
The focus is on creating further value from the market and returning a good proportion to the farmer, as well as achieving a profit for the company.
The success or otherwise of this approach will inevitably take some time to become evident, but SFF deserves credit for introducing a market-led programme with the potential to add value to farmers. It will be interesting to observe the performance of the EQ System in comparison to other programmes like Angus Pure. Ultimately, farmers that produce to specification must benefit.
Allan Barber is a meat industry commentator. This item has appeared in this week’s NZ Farmers Weekly. Barber has his own blog Barber’s Meaty Issues and can be contacted by emailing him at firstname.lastname@example.org.