Allan Barber delivered an address to the AgResearch Meat Industry Research workshop at Ruakura in Hamilton on Tuesday. Preparation for this severely taxed his knowledge of research directed at the future prosperity of the red meat sector, he writes.
Depending on the reaction to my presentation, I will almost certainly find out whether or not I have succeeded in talking sense and, more important, introducing some relevant fresh ideas to the audience of scientists and people with infinitely greater technical credentials than I.
The workshop’s themes are added value, value from quality, and provenance and food assurance which neatly encapsulate what the meat industry needs to provide the consumers of the world and extract from the market. Research output will obviously have to contribute new developments to this, as the industry cannot find its place in the sun by continuing to do what it has been doing to date.
New Zealand has a problem of balance. Generally we must export 90 percent of our commodity output, because the domestic market is so small, but we have plentiful rainfall and grass growth. Even when production numbers reduce, as is the case with sheep, on-farm improvements have compensated for the reduction with higher productivity.
It is tempting to wonder how much better the industry would perform, if climate permitted consistent production every month instead of climate dictated peaks and troughs. But the nature of agricultural commodity markets is to prefer seasonal fluctuations because our peaks tend to coincide with production troughs in other parts of the world. It is unlikely market demand would remain constant, even if New Zealand production could eliminate seasonal volatility.
The inescapable conclusion is that our climate is a positive factor, enabling plentiful agricultural output for much of the year. But it doesn’t automatically lend itself to added-value, premium quality, niche production which is what we must move to, if we are to lift the prosperity of our farmers as well as the businesses which serve them.
So the challenge I have set for the research community is to find ways for the meat industry to expand its range of higher quality, value added products. This is where it gets difficult for several reasons: meat companies are notoriously unwilling to cooperate with their competitors, if there is a chance to steal a march; consumers can’t say what sort of new product they would buy and how much they would pay; there is a limit to the money available to invest in blue sky research areas; and New Zealand’s food sector, let alone meat processing, is not exactly blessed with global FMCG (fast moving consumer goods) expertise.
The risks associated with new product research are substantial which explains why meat industry research has tended to focus on the farm and on processing technology. The greatest achievement of the last 30 years has been the improvement in sheep and lamb productivity as a result of improved farming systems, better genetics, higher lambing percentage, survivability and carcase weights. As a consequence the decline in sheep numbers from 70 million to 30 million has not resulted in a lesser tonnage for export which points to a productivity improvement of well over 100 percent.
The second achievement of note has been the dramatic change in the economics of processing as a result of smaller more flexible plants, a better industrial relations environment enabling double shifting and faster chain speeds and improved processing technology. Not much more than 30 years ago, processing costs represented 50 percent of the total, whereas today the figure is closer to 30 percent. Apart from what is taken as profit or reinvested in the business, that difference is available to reward farmers for their livestock.
The third notable achievement is the success of New Zealand’s chilled lamb and prime beef programmes. The amount of chilled lamb exported to the European Union has tripled in 25 years, partly because of the removal of the cap on allowable tonnage within the overall quota and partly because of the technical gains in meat processing and packaging. New Zealand grass-fed prime beef has carved out a premium market especially in Asia, which was previously dominated by American and Australian grain fed beef.
Unfortunately, the number of genuine premium added-value products produced by the industry is not very large. There are the company branded retail consumer cuts from Silver Fern Farms, Alliance, ANZCO, AFFCO and others, Alliance has developed the Pure South Grand Farms range with a Chinese partner and ANZCO has invested in beef jerky production and other value added products. Work has also gone into extracting greater value from co-products for pharmaceutical and medical use.
The government has established the Primary Growth Partnership to fund research programmes across the whole agricultural sector on a joint funding basis with industry. Of the $727 million allocated to date, projects submitted by the meat industry represent nearly 50 percent of the funds with the industry investing a similar amount.
The three most significant projects are FarmIQ, led by Silver Fern Farms, which proposes to establish a demand driven value chain for the industry, the Red Meat Profit Partnership, led by Beef + Lamb NZ Ltd, aimed at boosting sheep and beef farmer productivity and profitability, and FoodPlus led by ANZCO which has succeeded in bringing fourteen added-value food, healthcare and food ingredient products to market .
This type of commercial research is inevitable because both partners, government and industry, require a measurable return on the investment. However, there also needs to be more genuine blue sky research which doesn’t necessarily have a measurable outcome, but may make a genuinely game changing discovery. In the present environment it is difficult to see much of this happening.
Allan Barber is a meat industry commentator. This article has appeared in NZ Farmers Weekly. He has his own blog Barber’s Meaty Issues and can be contacted by emailing him at email@example.com.