PGP programme being welcomed by industry

Grant Cuff, Alliance Group.The new PGP programme, Collaboration for Sustainable Growth, announced yesterday is being welcomed by the industry.

Leading meat processor and exporter Alliance Group has welcomed the initiative designed to improve farmer profitability.

Grant Cuff, chief executive of Alliance Group Limited, one of the founding organisations taking part in the initiative says the new co-ordinated collaborative initiative will enhance the knowledge and capability in the sheep and beef sector and help improve farm performance, productivity and profitability.

“New Zealand can make significant gains in its export earning by ensuring all parts of the value chain collaborate so suppliers are using the best available farm and business practice and tools,” he says, adding that the initiative is an important step in the implementation of the Red Meat Sector Strategy (RMSS). “We’re supportive of any steps to lift the industry’s game and improve on-farm profitability.”

Alliance Group is already implementing many of the RMSS recommendations “as we strive to improve sustainable profitability for the sector,” Cuff says.

Alliance Group has invested significantly in technologies such as Hoofprint, VIAscan and Central Progeny Test trials and research into sheepmeat eating quality, which all aim to assist suppliers to produce high quality livestock and improve farm productivity, he says.

Mike Petersen, B+LNZ Ltd chairman.Another programme partner Beef + Lamb NZ Ltd (B+LNZ)’s chairman Mike Petersen has also welcomed the initiative which he says “will be a huge boost for the sector and will accelerate progress in an increasingly collaborative approach across a range of issues that are important for sheep and beef farmers.”

B+LNZ has been working increasingly closely with meat processors in recent years through its joint venture market development programmes and collectively with processors and exporters via the Meat Industry Association (MIA). The Collaboration programme goes behind the farm gate to help improve productivity and profitability and addresses a number of the issues highlighted in the RMSS, developed by B+LNZ Ltd, the Meat Industry Association and the government in 2011.

Alliance group secures exclusive M&S deal

Meat processor and exporter Alliance Group has confirmed it has secured an  exclusive deal to supply chilled New Zealand lamb to iconic UK retailer Marks & Spencer.

The South Island co-operative will be the sole supplier of chilled New Zealand lamb to Marks & Spencer from Christmas 2012, sourcing lambs from approved farms across the South Island for processing at the company’s Lorneville (Invercargill), Pukeuri (Oamaru) and Smithfield (Timaru) plants.

This supply arrangement is the first time Marks & Spencer has agreed to an exclusive deal for chilled lamb from a single New Zealand supplier.

Marks & Spencer supplies a wide range of lamb products to its UK customers, with its fresh lamb cabinet featuring a full selection of bone-in and boneless cuts. The retailer’s added-value lamb lines also include ‘ready to roast’ leg joints as well as other ‘oven-ready’ cuts sold under the premium in-house ‘Cook!’ label.

Alliance Group marketing manager Murray Brown says, “This exclusive contract marks a major milestone in Alliance Group’s 20 year relationship with Marks & Spencer. As they have a loyal customer base for lamb, coupled with the fact that our chilled lamb programme runs counter-cyclical to the UK domestic supply season, we’re very excited about the growth opportunities it offers for everyone involved. This deal is good news for our farmer suppliers.”

Brown added: “As a result of the strengthened relationship, Alliance Group is also now actively exploring a number of other initiatives in our agricultural, technical and commercial divisions with Marks & Spencer to maximise the benefits of this partnership.”

Steve McLean, head of agriculture and fisheries sourcing at Marks & Spencer, says: “We are looking forward to growing our partnership with the Alliance Group and strengthening our links with their producers. We are impressed with Alliance Group’s commitment to high quality lamb production, and I am confident they will meet the taste and tenderness requirements of our discerning customers.”

All Alliance Group products supplied to Marks & Spencer will be sourced from registered M&S Select farms so that the co-operative can trace lambs back to their farm of origin.

The M&S Select Farm scheme sees supplying farmers registered on M&S TRAK, a traceability management system launched by Marks & Spencer in 2009. The programme, which includes lamb suppliers from both New Zealand and the UK, features a database that monitors farm-management, animal origin and livestock records.

Meanwhile, in conjunction with AbacusBio (UK), Alliance Group is progressing with the introduction of its Hoofprint programme to a group of selected UK farmers supplying lambs to Marks & Spencer.

Hoofprint helps farmers monitor the carbon footprint associated with their farm, whilst also focusing on improving productivity. The web-based farmer-friendly programme analyses performance information based on the data collected from each farm in order to determine the size of its carbon footprint. The Hoofprint model will be released to all registered TRAK suppliers in New Zealand.

Marks & Spencer uses two UK based meat processors, Dawn Meats Ltd and Scotbeef Ltd, to cut and retail pack their New Zealand chilled lamb in the marketplace. Both of these companies are already well known to Alliance Group, with personnel from each processor having visited Alliance on a number of occasions in recent years.

Marks & Spencer is one of the UK’S leading retailers with more than 21 million customers every week. The company employs over 78,000 people in the UK and abroad, and has over 700 UK stores, plus an expanding international business operating in 43 different territories around the world.

 

Optimistic signs for coming season’s red meat trade

After some harrowing experiences last season for the meat industry, both processors and farmers, 12 months on things are looking up. This sense of optimism hasn’t yet been reflected in prices from the meat companies, but statements from those in the know strike a perceptibly more positive note, writes industry commentator Allan Barber.

Last year, the lamb kill was down by a million, there was drought in significant livestock areas, the dollar was too high and so was the procurement price for lamb. While beef remained relatively unaffected by the hype, the price really not changing much in a year, sheepmeat was a completely different story. Driven by the unholy combination of scarcity and tight shipping deadlines for the Christmas trade, the procurement price hit $8 a kilo and struggled to get down from that level.

The net result was too many buyers chasing too few lambs which were also allowed to put on too much weight. The export markets got a severe dose of indigestion and inevitably inventories built up fast on both sides of the world. All this time, the New Zealand dollar stayed obstinately high.

We will find out in November how badly this set of circumstances affected the profit and balance sheet performance of the meat exporters, although Blue Sky’s result to the end of March gave a pretty good indication of the effect of the first six months of the season.

Farmers won’t be as unhappy as the processors and exporters because they received more for their stock than it was worth and, although the lamb price has now dropped from $150 to below $100, this is still better than in many previous years. According to Keith Cooper in Silver Fern Farms’ (SFF) news release last week, he predicts the price will bottom out at about $4.80 per kilo after Christmas, equivalent to $90 for an 18.75 kg lamb. It will then rebuild to $5.80 or $109 by this time next year. Cooper has also said last year’s pricing got way out of kilter and won’t happen again this year.

Cooper’s optimism is based on favourable European buyer response in the last couple of weeks, culminating in the European food fair at SIAL in Paris last weekend. UK supermarket chains also seem to be positive about the forthcoming chilled New Zealand lamb season which starts with Christmas and continues until British lamb starts to appear in the chillers after Easter.

SFF’s news release provided an interesting, if slightly puzzling, piece of information which stated that Marks & Spencer had awarded their new contract for chilled lamb to Alliance, having dealt exclusively with SFF for five years, because “we could not offer Organic lamb to M&S.” As far as I can understand, and from memory, M&S have always insisted on knowing where their lamb came from, eventually insisting on identifying the lambs’ farms of origin and traceability, but organics have never been a requirement in the past.

Cooper subsequently confirmed to me that the M&S tender specified a proportion of organic supply as part of the supply which SFF couldn’t guarantee to fulfil.

Alliance suggested that it was not required to supply certified organic lamb under its new contract, although all suppliers involved belong to the company’s Hoofprint programme which measures their carbon footprint. In fact, it’s hard to see how enough organic lamb could be available, especially in the pre-Christmas period, while there is little evidence the UK supermarkets are willing to pay a sufficient premium for organic supply.

In contrast, beef prices appear set to continue stable, underpinned by drought conditions which have affected feed supply and cost in the USA; however, any weakness in the New Zealand dollar would inevitably flow through to better livestock prices, much as meat companies might want to hang onto any bonus they receive.

I imagine meat exporters will be keen to put what was reasonably torrid 2011/12 season behind them and bed in the capacity changes they have decided on, so their new season’s performance can benefit. Sheep farmers can’t aspire to the $150 lamb, but they can expect more certainty and consistency on which to base their farm business.

This article has also appeared at www.interest.co.nz.