A new Te Aroha emerges from the ashes

Silver Fern Farms' Te Aroha exterior.Two years after Silver Fern Farms’ Te Aroha beef processing operation was destroyed by fire in December 2010, a state of the art facility opened in December and is up and running in its place.

Silver Fern Farms’ new $67m Te Aroha plant is a hot-boned beef processing operation designed for best practice processing of manufacturing cows, bulls, steers and heifers from farmer suppliers across the Waikato region.

It joins a network of 23 Silver Fern Farms processing facilities employing over 7,000 staff throughout the country. Te Aroha will employ up to 380 staff when operating at full capacity with two shifts in peak season with an annual capacity of 125,000 cattle.

At the plant’s official opening in December last year, Silver Fern Farms chief executive, Keith Cooper, said the new design reflected the company’s focus on plant economics and best practice processing and the investment was testament to the co-operative’s strong confidence in the sector.

The plant has been designed in consultation with internationally recognised experts in process layout and ergonomics. It is compliant with New Zealand, EU, US Department of Agriculture (USDA), and Chinese hygiene requirements and also to halal standards for the Middle East, Malaysia and Indonesia.

Te Aroha incorporates the latest meat processing technologies; including sophisticated traceability and yield measurement systems.

Te Aroha, December 2013: Computerised Marel Streamline technology monitors meat as it passes through slaughter, grading and boning processes. The plant is configured with a custom-designed two-level Milmeq slaughterboard. Extensive use is made of RFID tags, with scanning stations at slaughter, grading and boning stages, monitored through the new Marel Streamline computerised deboning and trimming system. The process has been designed for complete traceability and to enable Silver Fern Farms to closely monitor key production indicators.

Rapid feedback

This system has the capability to deliver rapid feedback to plant staff on how closely they are meeting customer requirements for particular cuts. This fits with Silver Fern Farms’ plate-to-pasture strategy where consumer requirements are driving process improvements in order for the company to extract higher value returns from products.

This data collection is underpinned by the Primary Growth Partnership FarmIQ joint venture programme – an investment of $151 million by Silver Fern Farms, Landcorp Farming, Tru-Test Group and the Ministry of Primary Industries.

Over the seven years of the programme the aim is to integrate the red meat value chain to maximise returns to farmer partners.

For farmers, information collected at the Te Aroha plant on meat yield and quality can be used to inform farm management decisions as they look for avenues to lift farm system performance. This information can also be married with information from the insights FarmIQ will bring from consumers so farmers can produce to target higher-value returns from specific consumers.

Trimming to specification

Boning room technology at SFF Te Aroha.Following break-down and deboning, the primal cuts are distributed to work stations on the trimming line, based on operator availability. They are then trimmed according to individual specifications and all cuts are fully traceable. The automated conveyor system will enable Silver Fern Farms to closely monitor and control critical key production indicators in real time throughout the complete processing cycle. These include yield, throughput, cutting performance, giveaway and loss of sales. These are automatically registered and monitored for the entire line as well as for the individual operator, using Innova intelligent production control software.

Provision has been made for future installation of technologies including robotic bagging.

Sustainability top-of-mind

Eco-efficiency and sustainability were top-of-mind considerations. As a result, the new plant uses significantly less electricity and water per head and discharges less effluent per animal processed, setting new benchmarks in line with global customer requirements.

Keith Cooper says the rebuild gives the company an opportunity to review the environmental footprint of the operation. “Our focus is improving environmental efficiency while reducing costs through better use of resources and reduction of waste.”

The plant has also been orientated to ensure noisy areas and truck movements are at the centre or the rear of the plant, away from neighbours. Every effort has been made to reduce noise coming from the plant, even to the point that refrigeration equipment, undamaged by the fire, was relocated.

Health and safety focus

Te Aroha, December 2013: Trim stations are individually tailored for each workeer's reach to meat, height and access to work stations.Health and safety was another major focus for the company when developing the specifications for the new facility. Process areas have been designed to minimise workstation hazards. A suite of solutions to minimise lifting, turning and carrying were factored into the design. The boning room has European-designed workstations intended to maximize productivity by minimising operator fatigue and discomfort. At trim stations adjustable work heights, reach to meat and easy access to work positions make for a safer and more comfortable work environment for staff.

Separate viewing areas let people observe the slaughter and boning processes without interfering with workers on the floor. The plant layout also factors in separation between pedestrian and heavy vehicle movement areas to provide a safer environment for people.

Throughout the rebuilding process, Silver Fern Farms endeavoured to provide alternative options for staff whose livelihoods were affected by the fire, to the extent of making positions available at other company plants in the North Island and providing accommodation supplements in the early stages. The company’s significant capital spend also has provided positive spin-offs to the local economy as a result of the number of contractors throughout the region engaged during the course of construction.

Cooper says the co-operative’s loyal farmer-suppliers in the area were particularly supportive of the company through the re-build.

“We are grateful to those suppliers who have stood by us and persevered while we got the new plant up and running – we know the disruption has been an inconvenience for many. But we are enthusiastic about the service levels and advantages we can now offer them as a result of our investment.”

Pictured at the Te Aroha opening are (left to right): local MP Scott Simpson; John Key; Eoin Garden chairman Silver Fern Farms; Keith Cooper, chief executive Silver Fern Farms; Kevin Winders, chief operating officer Silver Fern Farms.

Pictured at the Te Aroha opening are (left to right): local MP Scott Simpson; John Key; Eoin Garden chairman Silver Fern Farms; Keith Cooper, chief executive Silver Fern Farms; Kevin Winders, chief operating officer Silver Fern Farms.

 

This article has appeared in Food NZ magazine (February/March 2013) and is reproduced here with permission.

Debt is good under some circumstances, says Barber

Allan BarberAfter Allan Barber’s column last week about meat industry debt levels, Keith Cooper, chief executive of Silver Fern Farms, took him to task for incorrectly reporting the situation with Silver Fern Farms’ debt facility, he writes in his latest guest blog.

I stated that these expired in September 2012 and therefore the company was operating on a temporary extension. The correct position was that the debt facility was originally negotiated for two years from September 2010 and consequently due to expire in September 2012. This remained the position at balance date in September 2011. However in the 2012 annual report, the facility was stated as expiring on 31 December 2012.

Clearly, the company had arranged a three month extension at some point before the original two year facility expired and this was not a temporary facility, as I implied. Nevertheless, it was no more than a three month extension, while the next longer term arrangement was being negotiated.

I apologise for any incorrect interpretation, but still maintain the company’s current debt level at balance date was higher than could be considered comfortable.

However, in an interview with Jamie Mackay on the Farming Show last week, when asked to comment on the industry’s debt level, Cooper gave his opinion that the debt was a good thing. Because it was tied up in inventories, it would ensure the industry acted responsibly. This is almost exactly what I wrote last week, although I saw the discipline on the companies as a necessity, not a virtue.

In Cooper’s radio interview, he stated after record prices last year, meat companies are reining things in.

“It’s a damn good thing we do have stock in store and we do have high debt because that means meat companies are acting responsibly, and are feeding the product to market to create stability of price. I’m quite happy that us and other companies have debt because that means they’ve got stock in store and that means we’re managing markets well.”

I must give Keith credit for being unreservedly a ‘glass half full’ kind of guy which you have to be to survive in what I believe is New Zealand’s toughest industry. He promises farmers that things will improve.

“We are living in volatile times. There will be volatility, but through the volatility we will see a steady increase in the price we will receive from offshore,” and he expects meat companies will pay farmers around 90 dollars per lamb this year.

I’m not sure the glass is quite as half full as Keith Cooper suggests, especially in the sheep meat market. Although lamb leg prices in the UK are holding fairly well, especially for chilled product, prices for middle cuts, like racks, loins and tenderloins, in North America and Europe are under pressure.

The price of loins and tenderloins have dropped by as much as 30 percent in the last couple of months, while there are fears of another collapse in lamb rack prices because of competition from low priced Australian product. As a result, importers are not placing orders for New Zealand lamb, because they remember the last time prices collapsed.

The Middle East has gone quiet on lamb shoulders because of cheaper Australian product, although China is still firm. Here, it appears New Zealand exporters benefit from less Australian competition with fewer China licensed plants in Australia.

All this explains why the New Zealand consumer is able to buy plenty of well priced lamb available on the domestic market. But this won’t provide more than a minimal contribution to managing the existing inventory levels and it certainly won’t cope with next year’s peak production. The industry will be keeping its fingers and toes crossed for an early economic uplift in our main markets, UK, Europe and North America, because otherwise the glass won’t have much in it at all.

Allan Barber is an agribusiness commentator, with particular interest in the meat industry. He has his own blog Barber’s Meaty Issues. This item has also appeared at www.interest.co.nz.

BurgerFuel wins franchise export award

Congratulations to New Zealand gourmet burger franchise BurgerFuel, which has won the Franchise Export of the Year award in the Westpac NZ Franchise Awards 2012.

The judges praised BurgerFuel for not just selling high quality, gourmet products, but also for developing the company into a specialist exporter which sources raw materials from New Zealand wherever possible, The products BurgerFuel sends overseas are extensive, exporting anything from 100% pure New Zealand grass-fed beef to a complete store fit-out, ensuring that the products and service they provide their customers, remains of a consistently high quality standard, in all export countries.

BurgerFuel now has stores in Iraq, Abu Dhabi and Saudi Arabia, with plans to open in Egypt and other Middle Eastern territories in the next year, making them firmly established in the international market and exporting industry, the company says.

The award also takes into account critical success factors such as outstanding systems that ultimately lead to a company’s ability to scale into new markets.

BurgerFuel says that whilst it’s also growing its chain in New Zealand, having just opened its thirtieth store here, its focus is firmly on its objective of becoming a global brand. The company works with NZ Trade and Enterprise and is a recognised NZTE ‘Beachheads’ company, BurgerFuel Worldwide is a New Zealand gourmet burger concept and is listed on the New Zealand stock exchange,