Author Archives: Editor

About Editor

Hailing originally from the UK, Ali Spencer has spent over 25 years working with the New Zealand trade not only here in New Zealand, but also in the UK and Europe. She regularly contributes meat industry material for Food New Zealand and more occasionally for Vetscript. In the past, she has also contributed material for Deer Industry News, NZ Meat Producer and European News (the former NZ Meat Board’s European newsletter).

Businesses call for urgent action to conclude TPP in 2013

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Business representatives from four economies – US, NZ, Canada and Australia – have met in Auckland to press for more urgency in concluding the Trans Pacific Partnership (TPP) negotiations currently underway.

“In September business representatives from across the TPP member economies urged governments to conclude an ambitious, comprehensive and high standard outcome in 2013,” says Cal Cohen, president of the Emergency Committee for American Trade (ECAT) speaking on behalf of the US Business Coalition for TPP.

“We are glad this call has been taken on board and we express our strong support for this goal.  It is now time for negotiators to tackle the more sensitive issues to ensure this deadline can be met.”

“TPP has the capacity to change the way business is done in the Asia Pacific region.  This is what is needed to grow economies and create jobs,” says Stephen Jacobi, executive director of the NZ US Council and NZ International Business Forum.

“We appreciate the task is complex but we urge negotiators meeting in Auckland this week to accelerate their efforts and narrow their differences so the benefits of TPP can be brought forward at a time of increasing economic difficulty.”

“Canada is joining the TPP negotiations for the first time here in Auckland and is determined to participate in a way that builds consensus for a strong outcome,” said Kathleen Sullivan, executive director of the Canadian Agri-food Trade Alliance (CAFTA).

“Our immediate priorities are addressing the proliferation of non-tariff barriers which impede trade and issues like rules of origin that can prevent trade occurring even when free trade agreements (FTAs) are put in place. There is a lot at stake for Canada in TPP and we are glad to be participating as one of eleven APEC economies.”

“Australia has a lot to gain from a successful outcome to TPP which can provide an opportunity to reduce the complexity associated with the noodle bowl of over-lapping and contradictory FTAs in the region,” said Bryan Clark, director, trade and international affairs, Australian Chamber of Commerce and Industry (ACCI).

“Simplification of the supply chain will translate into reduced business costs and increase the time in which products move around the region.  That can only advantage businesses and consumers and lead to better economic outcomes for all member economies.”

Asia Pacific business organisations have earlier reaffirmed their view that a successful TPP will be:

  • Comprehensive – with no product exclusions and with commercially meaningful and flexible rules of origin.
  •  High quality – with strong standards across all main areas, from transparency, investment and government procurement to intellectual property, e-commerce and sanitary and phytosanitary measures.
  • Ambitious – with the elimination of tariffs and non-tariff barriers on trade in goods and services and investment no later than 2020, the deadline set for free and open trade and investment in the Bogor goals.
  • Innovative – with concrete new commitments on new generation and behind the border issues, including eliminating chokepoints in the operation of regional supply and value chains, fostering small and medium-sized business participation in expanding trade, facilitating regulatory coherence and promoting and protecting innovation.
  • Enforceable – with clear commitments, and strong and transparent state-to-state and investor-to-state dispute settlement mechanisms.
  • A living agreement – open to accession by other Asia-Pacific economies, provided these economies share TPP’s ambitious vision and can demonstrate their ability to accede to an agreement with the characteristics described above.

Business representatives from TPP member economies will join government negotiators and other representatives of civil society at a Stakeholder Forum in Auckland tomorrow (7 December).

Tackling agricultural emissions

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The New Zealand Agricultural Greenhouse Gas Research Centre (NZAGRC)’s work has been highlighted in a film, produced recently by Motu.

This film, which you can watch below, is the product of years of research into how New Zealand can reduce its agricultural greenhouse gas emissions (GHGs) to reduce climate change. It covers the basic science along with current and potential future technological solutions. With a range of views from farmers to scientists to economists, the film also looks at the challenge of mitigating agricultural GHGs. It covers how New Zealand can develop policy and actions to not only deal with NZ’s emissions, but lead the world in showing other countries it can be done.

You can watch more Motu videos here.

Beef industry stamps footprint

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The government recently announced that it will not sign up for new commitments under the Kyoto Protocol when the treaty’s first commitment period expires at the end of next year. However, this does not mean the meat industry’s sustainability focus will lessen, or that this country’s greenhouse gas (GHG) mitigation efforts for the primary sector are not important.
In August, the New Zealand Beef Footprint study was released highlighting beef productivity gains and giving New Zealand’s beef processors and exporters the comprehensive information they need for their customers about the meat’s carbon footprint.
Meat Industry Association (MIA) chief executive Tim Ritchie says that his organisation had supported the study because sustainability is still a critical issue in important markets.
“While it is possibly not as front-of-mind in markets as it was two or three years ago, sustainability remains very important and greenhouse gas emissions are a key component of sustainability.”
The study has created a benchmark for understanding where greenhouse gas (GHG) emissions are occurring across the beef supply chain, including production, processing, transportation and consumption.It has found that the majority (over 90 percent) of emissions occur on the farm. The footprint varies depending on the type of farm, the sex and age of the animals and whether or not animals from the dairy industry are used.
Overall, the weighted New Zealand average GHG emissions from beef animals from sheep and beef farms was 10.5kg CO2-equvalents (CO2-e) per kg of liveweight.Emissions arising from transport to market are extremely low.
Transport accounts for 4.2 percent of emissions, the report shows. In particular, oceanic shipping is very efficient and this study shows it contributes just 1.1-2.7 percent of the total carbon footprint.In addition, consumption accounts for 3.3 percent of emissions while just 2.1 percent comes from processing, which the report notes “is an area over which industry has direct control and where technologies are available to reduce emissions.”
Dr Stewart Ledgard, the lead author of the report says that until there is a globally-agreed methodology for ‘footprinting’ of meat products, it is hard to assess how New Zealand’s footprint compared to others. This study used the Life Cycle Assessment approach, which is consistent with the PAS2050 published standard for GHG footprinting.The beef study was undertaken by AgResearch and funded by the Meat Industry Association, Ballance Agri-Nutrients, Landcorp and the Ministry for Primary Industries greenhouse gas footprinting strategy. B+LNZ Ltd and individual meat processors provided data and information for the study. This adds to a study already completed on New Zealand lamb’s carbon footprint in 2010.

More reading: see ‘A Greenhouse Gas Footprint Study for Exported New Zealand Beef’, M Lieffering, S Ledgard, M Boyes & R Kemp, February 2012.

This article appeared in Food NZ magazine (December 2012/January 2013).

Movember’s clean shave

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Phil's final result.

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A big congratulations to all those who took part in Movember, especially to the NZ Veterinary Association team, which included Surveillance editor Phil Stewart. To date, they have raised over $2,500, with team captain Callum Irvine topping $500. Stewart says … Continue reading →

NZAGRC produces new factsheets

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The New Zealand Agricultural Greenhouse Gas Research Centre (NZAGRC) has produced its first three new factsheets, which are aimed at providing background and a broader context to the work of the Centre and the challenges this country faces regarding climate change and greenhouse gases (GHGs).

These handy items talk about how livestock agriculture impacts climate change, how climate change is affecting NZ agriculture and the complicated ground of GHG metrics.

The fact sheets are: ‘The impact of livestock agriculture on climate change‘; ‘Impacts of global climate change on New Zealand agriculture‘; and  ‘Economic and Policy Implications of Alternative GHG Metrics’. You can download them here or click the image above.

Further factsheets are planned on specific research areas.

Meat companies high debt levels must concern the banks

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New Zealand meat companies’ high debt levels, must be of concern to the banks, says meat industry commentator Allan Barber.

Silver Fern Farms (SFF) is operating on a three month extension to its bank facility which expired at the end of September, but reported current (expiring within 12 months) loans of $316.7 million at the end of its 2012 financial year, Barber writes.

In its last published annual accounts to September 2011, ANZCO had current and non-current loans of $220 million which must surely have increased in the very challenging 2012 year. Lastly at the end of September Alliance had $331.8 million of assets and non-current loans of $196.1 million which are clearly not causing any immediate concern.

The two big co-operatives published their annual reports last week and neither makes pretty reading. Both results benefited from a large tax loss which, to be effective, must of course be offset eventually by profits.

Alliance’s financial position was fully flagged in its announcement of a $50.8 million post tax loss including the $19.4 million write down of its Mataura sheep processing unit, which was actually a pre-tax loss of $70.6 million before tax credits. Its balance sheet with 51 percent equity ratio is still strong, although not nearly as strong as twenty four or even twelve months earlier.

SFF had already announced an after-tax loss of $32.2 million which was also, in reality, a loss of $44.2 million pre-tax, which included no restructuring costs. Debt rose during the year from $111 million to $316 million, a massive increase which was largely accounted for by the inclusion of $35 million insurance payout for Te Aroha in the 2011 accounts, the cost of the rebuild, $83 million of higher livestock and finished product inventory, and the funding of the annual loss.

A careful study of the annual reports sheds an interesting light on the company’s banking arrangements. Its 2010 report stated that its facilities had been renewed for two years till September 2012 and included $75 million for repayment of its SFF030 bonds. The 2012 report notes that its facilities expire in September 2012, hence the classification of all secured loans as a current liability, as was the case in the 2011 accounts.

I understand from chief financial officer Keith Winders that SFF has been operating on a temporary extension to its banking facilities since the end of September; he claimed this was quite normal because of the annual renewal arrangement with its bankers. However it appears unusual to me, because firstly SFF previously had a two year facility and secondly it can’t be ideal to carry $300 million of bank loans into the new financial year without negotiating secured banking arrangements. However, the directors must have received solid assurances of the company’s continued trading ability to allow it to continue to operate and incur liabilities.

Winders was also quite definite that there would be no significantly different terms and conditions attached to the new facility when finalised. This suggests the operating environment since September must be at least stable, although there is little evidence of an improvement in market demand, especially for sheepmeat which caused all the problems last season.

The only major improvement I can see is the reduction in lamb prices which have fallen from $140 to $90 in a year for a 17.5 kg lamb, but the season hasn’t yet got sufficiently into its stride for trading performance to have recovered many of last year’s losses.

What is absolutely crystal clear is that the banks will be watching their exposure to the industry like hawks and will demand some dramatic improvements for the rest of this season for which the critical period will be from January to May. Last season’s problem was that the price was much too high to start with and none of the processors was brave enough to lead the way to get it down when stock numbers were low.

I imagine none of the meat companies will have any appetite for chasing market share at the expense of margin this year and, if they do, their banks will be down on them like a ton of bricks. Farmers had a bonus last season, but there’s no point in hoping for a repeat any time soon. This presupposes that processing capacity is fairly well aligned with livestock volumes because the last thing the industry can afford is a procurement led price war.

Unfortunately my impression is that there is still excess capacity in the country, even after the closure of Mataura, but for the time being the companies will all be determined to rebuild their balance sheets. Past experience suggests industry peace will only last as long as necessary to repair the damage before the companies find the prospect of grabbing market share too hard to resist.

The only long-term remedy will be rationalisation of processing capacity and ownership, combined with seasonal supply commitment like the dairy industry. The banks are one of two critical factors in a change of this nature, but they would have to work together and accept write-offs in the interest of a lasting solution.

Farmers are the other critical factor, but the process of converting them to seasonally committed suppliers is a slow one and nothing will make this happen overnight.

The meat industry appears likely to be consigned to a further period of instability, but this season may give some indication of whether it is heading in the right direction.

This item has appeared at interest.co.nz and also at Allan’s own blog Barber’s Meaty Issues.

Robotic technology off to Australia

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Dunedin-based production equipment specialist and MIA affiliate member Scott – in association with Robotic Technologies (a joint venture between it and meat processor Silver Fern Farms) – has won an $11 million contract to provide lamb boning room automation technology to two Australian meat processors.

The Australian Lamb Company (ALC) and JBS Australia, a division of the world’s biggest meat processor, will take receipt of the new equipment, which will be installed and in operation before the end of next year.

After installing a fully automated X-Ray Primal system from Scott in 2010, ALC noticed more accurate cutting through use of the x-ray image on each individual carcase, a significant reduction in bandsaw meat dust and a consistent room product flow. In addition, with two less operational staff operating bandsaws, the company anticipates that that there will be a reduction in Occupational Health and Safety claims.

The biggest surprise, however, for ALC general manager of operations Darren Verrall was the consistent room product flow, which has resulted in an extra 250 carcases being processed each shift.

The X-Ray Primal accurately dissects the lamb carcase into forequarter, middle (rack and loin) and hindquarter segments with the use of the x-ray image to define every bone position. Along with the powered rotary cutting knives that can pitch and yaw at the required angles, the entire system can produce accurate cuts that are just not possible using a traditional manual bandsaw.

On viewing the system in operation at ALC, JBS chief executive Don Jackson contracted Scott to deliver a full automated and integrated X-Ray Primal Middle System for its Bordertown facility in South Australia.

Scott is now working with both companies to determine how to use the individual carcase data obtained from the x-ray system to benefit their producers, in addition to bone-in and boneless forequarter automation developments.

The successful contract assisted Scott’s rise in the 2012 TIN100 Report, which is produced by the Technology Investment Network in association with Industrial Research Ltd to showcase New Zealand’s top high-tech companies. Scott grew an impressive 15.1 percent and graduated from the $20m-$49m category into the $50m-$99m set, with revenues of $53.6 million. In its latest August year-end results, the company has reported a further 19 percent revenue growth to $63.8 million.

In addition, Scott has been recently announced as a finalist in the 2012 Westpac Otago Business Excellence Awards.

More information about the vision for Stage 1 of the technology’s development can be found about the system in the video below. For more information about Scott visit the website www.scott.co.nz.

This article appeared in Food NZ magazine (December 2012/January 2013).

 

Rendering R&D gets international boost

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The first New Zealand meat industry appointments to the international Fats and Protein Research Association (FPRF) were made recently.

Graham Shortland, chief executive of Waitoa-based Wallace Corporation, is now a director of the Foundation, while meat scientist Mike North, formerly with AgResearch and now project manager for Taranaki Bio Extracts, has been appointed to the FPRF research committee.

Shortland believes that this is a “super opportunity” for the New Zealand and Australian rendering industry to be directly involved in and influence a very credible organisation. “I’m looking forward to taking up the role,” he says.

The US-based FPRF sponsors research on rendered products to enhance current usage and also to develop new uses.

Rendering is an important contributor to revenues for the New Zealand meat industry, producing value-added products, tallow and bone meal (see Food NZ February/March 2010) and also mitigating greenhouse gas emissions. Exports of both products to the year end June 2012 were worth $308 million. Tallow exports grew in value by $16 million to $169 million, with volume rising 15,710 tonnes to 134,177 tonnes, with China taking over two-thirds of the exported product. While the value of meat and bone meal exports – primarily to Indonesia and the US – grew by $10 million to $139 million, the volume fell slightly, by just over 3,000 tonnes, on the previous year to 145,563 tonnes.

Both Wallace Corporation and Taranaki Bio Extracts are members of the Meat Industry Association (MIA)’s Renderers’ Group, which recently received New Zealand Trade & Enterprise funding for a market development project aiming to increase returns by selling rendered products into higher value applications and markets. Insights Shortland and North gain from their involvement with FPRF will be fed back into that project, which is now at stage one: targeted market research.

“We are now starting to see a clearer picture of where we might obtain higher returns for some of our basic commodities,” says Shortland. “The FPRF has carried out research and innovation projects that could well help us move our value-add objectives ahead more speedily.”

Offering his congratulations on their appointment, Renderers’ Group executive member Alan von Tunzelman, general manager of PVL Proteins Ltd and a past president of the World Renderers’ Organisation, said he never thought a nominee from this country would be appointed to a role in the international organisation.

“To get both appointed to the respective roles is a great tribute to how they feel about us as an organisation and as people who can contribute positively and make sensible inputs into the FPRF. This is a wonderful opportunity to advance international research and development into rendering and the great work performed by the Meat Industry Research Institute of New Zealand has a further chance of some new life.”

The Renderers Group runs training workshops, which enable experienced operators and  supervisors to receive the core knowledge necessary for the National Certificate in Meat Processing (Rendering Level 4) and to build networks with others in the industry. In addition, a joint meeting for members with Australian counterparts in March gave further opportunity for international sharing of knowledge.

In consultation with members, the group published the ‘New Zealand Rendering Industry Guidelines for Managing and Assessing Odour’  last year. Copies are available from the MIA.

Find out more about FPRF at its website www.fprf.org.

 

This article first appeared in Food NZ (December 2012/January 2013).

Meat industry leaders support TPP negotiations

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Heads of various meat industry organisations  have shown their public support for the Trans Pacific Partnership (TPP) trade agreement negotiations underway in Auckland this week between eleven APEC economies.

They are amongst more than 50 business leaders from some of New Zealand’s largest and most successful companies and business organisations to have signed an open letter to Prime Minister John Key, underlining the importance of international trade and investment for New Zealand.

Among the signatories are Alliance chief executive Grant Cuff, ANZCO Foods’ managing director Mark Clarkson, Silver Fern Farms’ Keith Cooper, Greenlea Premier Meats’ Tony Egan and Sir James Wallace chairman of Wallace Corporation alongside Meat Industry Association chairman Bill Falconer and Beef + Lamb NZ Ltd’s chairman Mike Pedersen and chief executive Scott Champion.

“The signatories to the open letter represent a cross section across all major export sectors in New Zealand, including agriculture, forestry, fishing, horticulture, wine, manufacturing, technology and Maori business. Together they either directly employ, or their members employ, an enormous number of Kiwis,” says the chairman of the New Zealand International Business Forum (NZIBF), Sir Graeme Harrison.

“These business leaders welcome the TPP round taking place in Auckland this week and commend negotiators from the TPP economies for their efforts to conclude a future agreement which should bring benefits for all member economies”.

“The group is aware the negotiation poses challenges for New Zealand policy settings in a number of areas and that the negotiation is complex. We have confidence that Trade Minister Tim Groser and his officials will seek solutions that meet New Zealand’s national interests.”

“We see great advantages for New Zealand arising from a future agreement that is high quality, comprehensive and ambitious, one that eliminates trade barriers, lowers the cost of doing business and makes improvements to the way regional supply chains can link producers and consumers in the region.”

The open letter coincides with the launch of a new business-led initiative, Trade Works, a website (www.tradeworks.org.nz) to help Kiwis better understand the benefits of trade and investment for New Zealand, and understand the potential benefits of TPP.  Funding for the website has been provided by the NZ US Council and the website has been built with the support of thirteen business organisations representing the main export sectors.

“The Council and its partners see value from an effort to create a TPP which meets business and wider needs and reflects the way business is being done today and will be done in the future.  This will assist economic growth and job creation in New Zealand.  Our new website signals that we are also ready to participate with other members of civil society in a dialogue about how TPP can contribute to what it is best for New Zealand,” says the chairman of the NZ US Council, Rt Hon James Bolger.