Stubborn attitudes in the meat and wool industries and farmer loyalty need to be dealt with to move the industry forward, according to the former Minister of Primary Industries, David Carter, in an interview with Jon Morgan of the Dominion Post. Read more …
Yesterday’s announcement of the Red Meat PGP Collaboration Programme for Greater Farmer Profitability at a total investment of $65 million is fantastic news for the whole industry, says meat industry commentator Allan Barber. The key words are ‘collaboration’ and ‘farmer profitability’, he writes.
The first of these has usually been notable by its absence, while the second combination of words has only been evident at irregular intervals.
Half the funding will be made available from the Ministry for Primary Industries (MPI)’s Primary Growth partnership fund, while 30 percent will come from farmers through Beef & Lamb New Zealand Ltd (B+LNZ) and Meat Board reserves and the balance from six meat companies, two banks and Deloitte.
B+LNZ’s contribution is contingent on levy paying farmers voting in support of the proposal at its annual meeting on 8 March. Although nothing is ever certain, it would be a shock if this support wasn’t forthcoming, because the programme represents a significant step towards fulfilling the objectives of the Red Meat Sector Strategy conducted by Deloitte and completed nearly two years ago.
The aim of the programme is to lift the performance of all farmers to match that of the best performers which was identified in the strategy as the best way of improving industry profitability. There is a significant gap between the top and bottom performers in farming methods and profitability. If this gap can be closed the gains for the sector and New Zealand are enormous.
The participation of the six meat processors – AFFCO, Alliance, ANZCO, Blue Sky, Progressive Meats and Silver Fern Farms – is as meaningful as it is welcome. These are the key sheepmeat processors which is recognition that it is the sheep meat sector in particular where the greatest gains are to be made. However, the focus behind the farm gate shouldn’t obscure the fact that there are substantial gains to be made from greater collaboration in the market place.
A striking aspect of yesterday’s press releases by Ministry of Primary Industries, B+LNZ, Alliance and Silver Fern Farms (SFF) was the difference in tone between the statements by the two meat companies and the enthusiasm with which Beef & Lamb is greeting the opportunity.
The tone of SFF’s press release was less than enthusiastic, emphasising the need for a levy vote in support before the programme could begin and the care taken to ensure this programme did not cut across SFF’s Farm IQ programme which was the first project out of the blocks.
In spite of a first sentence which confirmed SFF’s support for the collaboration programme, the main impression from the statement was that the company was a somewhat unwilling participant and would be guided by the farmers’ decision. If this happened not to be supportive, I was left with the feeling SFF would not be particularly upset.
In comparison with Keith Cooper’s guarded support for the programme, Alliance chief executive Grant Cuff was positively euphoric, stating:
“This new coordinated 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 earnings by ensuring all parts of the value chain collaborate so suppliers are using the best available farm and business management practice and tools.
“This initiative is an important step in the implementation of the Red Meat Sector Strategy. We’re supportive of any steps to lift the industry’s game and improve on-farm profitability.”
After my recent call for a sheep meat strategy, I am cheered by this progress. Admittedly, results won’t happen immediately, but it provides an investment over several years during which industry participants will work together for the collective good.
This must be one of the best possible outcomes for an industry which is noted more for its divisiveness than its potential to cooperate in the interest of a better future for all the parties.
Allan Barber is a meat industry commentator who writes a number of columns on the topics. He has his own blog Barber’s Meaty Issues.
Interesting observations from Chalkie in this morning’s Dominion Post regarding meat processing giant Silver Fern Farms’ balance sheet and its relationship with farmers. Read more …
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.
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.
Vaccination, one of the greatest scientific achievements according to veterinary leaders, is the selected theme for this year’s World Veterinary Day, to be celebrated on Saturday 27 April.
Vaccination of animals helps people to protect their livestock and their companion animals, as well as themselves in case of zoonotic diseases, says the World Organisation for Animal Health (OIE). A successful vaccination programme depends mainly on the use of high quality vaccines, appropriate infrastructure to ensure the rapid and safe delivery of vaccines, monitoring of vaccinated flocks, movement control of animals, and adequate financial resources. The veterinary profession, through effective and efficient veterinary services is crucial for the success of vaccination in animal health.
The Day was instigated by the World Veterinary Association and OIE to reward the most successful celebration of the veterinary profession by national veterinary associations, alone, or in cooperation with any other selected body.
The winner of the 2013 Award will be announced at the opening ceremony of the OIE’s 81st General Session to be held in Paris, France on 26 May 2013. The winner will be invited to the World Veterinary Congress 17-20 September in Prague in the Czech Republic to receive the US$1,000 prize.
For more information visit www.oie.int
Leading meat processor and exporter Alliance Group is now supplying Pure South beef, venison and lamb to a restaurant in Singapore’s iconic waterfront precinct.
The cooperative’s export brand is on the menu at Singapore’s Fern & Kiwi restaurant, an offshoot of the Lone Star bar and restaurant. The restaurant, located in a refurbished warehouse in the upmarket waterfront dining area of Clarke Quay, is the Lone Star’s first outlet outside of New Zealand.
It follows trials with Fern & Kiwi and its executive consultant chef, former New Zealand Master Chef guest Mathew Metcalfe. Metcalfe has cooked for the world’s rich and famous including Apple founder, the late Steve Jobs, and leading figures in Hollywood.
The lamb, beef and venison is sourced from farms across the country and processed at Alliance’s Group’s eight plants.
Murray Brown, general manager, marketing at Alliance Group, said Singapore is known as a leading culinary city in Asia, which is a major area of growth for Alliance Group.
“Pure South is now well-established as an export brand after more than a decade representing Alliance Group’s products in Asia. Pure South lamb, beef and venison is New Zealand’s leading brand in many leading restaurants and top hotels throughout Malaysia, Thailand, Hong Kong and increasingly in the main cities in China.
“With Singapore having the world’s fourth highest income per capita, Fern & Kiwi is expected to help promote the New Zealand brand in Asia. The quality of the cuisine is excellent and the restaurant is the perfect fit for Pure South.
“Pure South symbolises all the key elements of Alliance Group – the pure southern location, world-class technology, production techniques, the proud heritage and the very best grass-fed red meat.”
Established in 1988, Lone Star is a Kiwi institution with 21 branches across the North and South Islands. The Clarke Quay site is the first restaurant to open since the flagship outlet was destroyed in the devastating Christchurch earthquakes.
The red meat industry has agreed to work together to promote and assist in the adoption of best practice by sheep and beef farmers, as part of a new $65 million dollar sector development project with Government co-funding.
Wayne McNee, director-general of the Ministry for Primary Industries (MPI), has just approved a commitment of up to $32.4 million from MPI’s Primary Growth Partnership Fund (PGP) for the red meat sector’s new Collaboration for Sustainable Growth programme.
This seven-year programme will bring together a number of participants in New Zealand’s red meat sector including co-operatively owned and privately owned processing companies that together account for a substantial majority of New Zealand’s sheep and beef exports, two banks and Beef + Lamb New Zealand Ltd.
It aims to ensure that red meat producers consistently have access to and are able to effectively use the best-available farm and business management practices, by addressing gaps in technology transfer and ensuring stronger co-ordination between organisations and individuals working with farmers.
MPI Director General, Wayne McNee says the new PGP programme will transform the delivery of knowledge and capability within the sheep and beef sector.
“Importantly this is the most comprehensive collaboration of its type ever seen in the red meat sector, and the opportunities are very exciting. The Collaboration programme will build base capability, delivering benefits across the sector and aligned with other PGP programmes.”
The next step to establish this PGP programme is to develop the contract with the Crown and to seek farmer support for their portion of the investment. It is anticipated that once the required farmer and company approvals and contracts are in place programme delivery can begin, expected to be in the third quarter of this year.
Organisations presently in this initiative are: AFFCO, Alliance Group, ANZCO Foods, ANZ Bank, Beef + Lamb New Zealand, Blue Sky Meats, Deloitte, Progressive Meats, Rabobank and Silver Fern Farms. The programme is designed to be open, enabling others to invest. Participants will establish a formal partnership to run the Collaboration programme.
Chairman of the programme’s Steering Group, Dr Scott Champion says the Collaboration programme is built on the findings of the Red Meat Sector Strategy and will deliver significantly on the Strategy’s sector best-practice theme.
“This initiative is evidence that the industry is committed to delivering on the recommendations of the sector strategy. More industry collaboration is high on the list of Strategy actions, and so to have the red meat industry focused on supporting farmers and united in this programme is of major significance. Importantly, the Strategy also underlined the returns available to all farmers by lifting productivity and management towards that of the country’s highest performing farms.”
The PGP programme comprises several elements, including investigating how farmers prefer to receive and use new information and what drives their profitability, as well as benchmarking and integrating relevant databases. New tools, services and knowledge will be packaged and delivered in a range of ways by programme partners.
“With a new awareness of what drives farm profitability, the Collaboration programme will change the sector’s focus from one that is dominated by price to one focused on performance, productivity, profitability and the factors we can control,” Champion said.
“This investment will support the sector to better control its future and ensure confidence for continued investment.”
The Red Meat Sector Strategy was jointly developed by Beef + Lamb New Zealand and the Meat Industry Association, with funding support from the Government. It was released in May 2011.The Strategy identified a range of activities that, when implemented, will improve sector productivity and profitability, and provide greater certainty for participants.
The Irish horsemeat scandal continues with burger giant BurgerKing taking product from the ABP-owned Silvercrest suppliers off its British and Irish menus this week. The decision has sent shockwaves through the meat industry, according to the Irish Independent.
Did you know the blog attracts a number of enquiries from overseas for product, from time to time? These are posted at the MeatExportNZ LinkedIn group, which individuals can join for free if they are working in or for the New Zealand meat industry (and are LinkedIn, of course!).
Is this the year for a sheepmeat strategy, asks meat industry commentator Allan Barber in his latest column. The key question for the meat industry this year is whether anybody will make any money, he writes.
After last season when farmers enjoyed unprecedented procurement prices and the meat companies lost millions of dollars as a result, prices have headed south and look set to remain there for the foreseeable future.
Sheepmeat is the product most under threat with the traditional markets all showing serious signs of indigestion. As an example, a US importer has been reported as saying he has a year’s worth of inventory and can’t buy any more and neither is anyone else. This signals a major problem for middle cuts like lamb racks, while Europe isn’t exactly rushing to buy any product either.
This explains the amount of cheap sheepmeat available on our domestic market, although unfortunately local consumers have been turned off buying lamb as a standard part of their diet by last year’s high prices – no different from the rest of the world; and expecting New Zealand’s minute population to absorb any significant part of the oversupply is a bit like expecting Fiji to win the World Cup or the Black Caps to win the series in South Africa for that matter.
Beef may resist the worst of the price downturn because US demand remains steady against a backdrop of falling domestic cow numbers and consequently an increased share for imported beef. Asian demand will also remain firm, while New Zealand exporters may be able to pick up some of Australia’s market share, as Australian supply to the USA is anticipated to take the lion’s share of the increase there.
But even beef will continue to struggle under the impact of our dollar which is set obstinately at about 84 US cents with the greenback unlikely to strengthen at all, unless Congress can agree on a fiscal solution to the enormous American debt problem. In spite of averting the fall over the fiscal cliff, the US really hasn’t solved its long-term problem, merely postponed a decision.
The main difficulty for sheepmeat is the amount of inventory held by wholesalers and exporters which is waiting to be sold into a market which doesn’t need it and, even if it did, can’t afford to pay a price for it which will compensate for our exchange rate sitting at 52p and 0.63 Euro. This inventory problem will only be exacerbated by another season’s production which will hit its peak in less than three months.
If my pessimistic assessment is even only half correct, 2013 bears all the signs of an extremely difficult season for all participants in the sector. MPI’s forecast for farm incomes, down on last year, is still reasonably positive at least in historical terms, but it must come under pressure from any further price drops or cost increases. There is most unlikely to be any spare cash around.
After the beating taken last season by the processors, shown factually in the annual accounts of Silver Fern Farms, Alliance and Blue Sky Meats, and by implication in the results of the others, all the meat companies will be under pressure to get back into the black. The only way they can achieve this is to reduce procurement costs, increase operational efficiencies and sell inventory into the market, preferably with a profit margin on what it cost them.
This last one will be by far the hardest. There is already plenty of evidence of product being offered at very competitive, or silly, prices in spite of Keith Cooper’s claim before Christmas that working capital tied up in inventory is ‘good’ debt because it restrains companies from dumping product. Now if that isn’t a case of making a virtue out of necessity, I don’t know what is.
Logically if there is an inventory problem, it makes sense to quit it at the going rate rather than waiting for the market to recover by which time there will be more inventory in the freezer tying up more working capital.
The meat industry is becoming increasingly a division between sheep (very hard to make a consistent profit) and beef (quite or extremely profitable, mostly because of the livestock sourced from the dairy industry). Those companies which specialise in beef from dairy regions, notably Greenlea and Universal, appear to be very profitable without interference from the volatility of sheepmeat pricing.
Alliance has traditionally been the outstanding performer among the processors with a commitment to the sheep industry. Silver Fern Farms has reinvented itself as a company with a significant beef business which has reduced its vulnerability. But as last season’s results showed, the sheepmeat business placed serious pressure on their balance sheets which will inevitably continue throughout this year.
This may be the year when some serious strategic thinking is applied to finding a viable industry model for sheepmeat alone, instead of trying to find a single solution for the meat industry as a whole.
This column has appeared in NZ Farmers Weekly and interest.co.nz and is reproduced here with permission. Allan also has his own blog Barber’s Meaty Issues.
