New Zealand red meat producers need to understand the emerging global trend towards sustainability and consider this in the development of their individual business strategies, a visiting animal proteins expert has told the sector.
In New Zealand speaking at a number of events across the country last week, Rabobank’s global animal protein strategist Justin Sherrard told farmers and industry professionals that the global market for red meat products was “moving” and sustainability was a big part of this movement both in New Zealand and globally.
“Sustainability is one of the key issues shaping the outlook for global animal protein markets,” said Sherrard, “and one significant area of opportunity and challenge for the global red meat sector is to respond to market signals and consumers, as well as pressures from regulators, to improve the sustainability of red meat production and processing.”
“While the market trend to sustainability is not building at a rapid pace, there is a consistent drum beat of movement. International consumers are thinking and looking differently at meat products and New Zealand’s red meat producers will need to keep a close eye on how consumer preferences in overseas markets are evolving.”
Sherrard said it is important that farmers did not view this trend towards more sustainable meat production in a negative light.
“This isn’t all bad news and there are opportunities here as well,” he said.
“And the important first step for producers is to ensure they understand how the market is changing, and what opportunities and threats these changes will create, so they are able to make an informed decision on how their business is best to respond.”
Shift to sustainability
Sherrard said growing global consumer spending on sustainable meat products provided strong evidence of the shift towards sustainability.
“While global expenditure on conventional meat products is relatively flat, we’re seeing strong expenditure growth in red meat products with sustainability claims, with this trend particularly evident within the EU.” he said.
“In the Netherlands for example we’ve seen rapid recent growth in sustainable meat expenditure with this growing from less than 15 percent of the total market expenditure in 2014 to over 40 percent last year.”
Sherrard said this growth was influencing decision making along the whole of the red meat supply chain.
“Around the world I see a small but growing number of animal protein companies have made commitments to establish leadership on sustainability, and in this process to get ahead of the consumer trend and regulatory pressures,” he said.
In order to respond successfully to the shift towards sustainability, Sherrard said New Zealand farmers would be best served to view sustainability in the context of their broader business planning.
“I don’t think industry participants are going to be successful addressing sustainability challenges if they view it as something that’s bolted onto the business or as something to focus on in isolation,” he said.
“Rather, the case for responding to sustainability challenges should be integrated into an organisation’s overall business strategy and, in particular, by assessing how any response to sustainability could improve risk management, create commercial advantage and strengthen market position.”
Sherrard said innovation offered scope for gains under each of these pillars.
“Innovation in animal feed additives, and in virtual fencing systems, are two of several new developments that are available to assist New Zealand’s farmers to improve sustainability,” he said.
Sherrard said the degree of collaboration across New Zealand’s red meat industry was another factor which would play a key role in determining the success of the sector’s response to sustainability challenges.
“If farmers haven’t already, they should be holding discussions with their meat companies to find out what they are doing to ensure exported product is being positioned to align with the preferences of consumers in the markets it’s sold into,” he said.
“Farmers’, and the industry’s, response to sustainability will be more effective if it is developed in partnership, with meat processors, with the dairy industry, with local and global industry groups and with government.”
Growing global red meat market
While sustainability challenges would need to be tackled by New Zealand’s red meat industry, Sherrard said it was important to note the overall outlook for the global red meat sector was positive.
“We expect to see beef consumption expand strongly in coming years, particularly in China with significant jumps in beef demand also forecast in the US as well as in a number of emerging markets.” he said.
“On the supply side we’re picking beef production to grow with this led by the US and Brazil.”
For sheepmeat, Mr Sherrard said global consumption was anticipated to grow, with increased Chinese demand again a key factor.
“Market fundamentals for sheepmeat are still in New Zealand’s favour and, with New Zealand production continuing to decline and limiting global supplies, in-market prices are likely to continue to hold above long-term averages.”