The red meat sector will have to be assertive and agile over the coming two years to deal with the unease and uncertainty around the globe, delegates learned at this year’s Red Meat Sector Conference.
Over 250 delegates from throughout the red meat sector, including senior representatives from all of the red meat companies, industry organisations, government, researchers, service companies and farmers packed into the Rydges Latimer Hotel in Christchurch on 28 and 29 July for their annual conference.
Jointly organised for the ninth time by the Meat Industry Association (MIA) and Beef + Lamb NZ Ltd (B+LNZ), RMSC2019 aimed over four sessions to inspire and inform the red meat sector about the latest consumer, trade and policy trends as well as giving time to reflect on progress to date.
There are a great many opportunities for the sector, which had just noted an eight percent increase in the value of red meat exports to $8.8 billion in the year ending 30 June, noted MIA chairman John Loughlin during his opening comments on the Monday morning. But there are still challenges ahead – on-farm, at processor level and in the markets – not least the resolution of the UK’s withdrawal from the EU and the US-China trade dispute – and also the changing policy scene here in New Zealand.
Climate change has been tagged by Government as the “challenge of our generation,” he said. Regulatory changes are being made at speed, especially those relating to climate change through the Zero Carbon Bill currently before Parliament and the Emissions Trading System, but also changes to training. These are all causing challenges for one of the country’s largest contributors to the economy, the largest manufacturing sector and an employer of over 80,000 people, many in the regions.
“This haste and at times a lack of transparency has caused challenges for the MIA, Beef + Lamb and others in the sector. Those challenges have been amplified by zealots of various types filling the airwaves with their opinions,” Loughlin commented.
The sector is “up for playing it’s part” in a sensible response to climate change, but the size of the targeted 27-47 percent reduction in methane by 2050, “came as a huge surprise to us,” he said. MIA had commissioned University of Oxford analysis of the targets, which had shown – using currently available technology – enormous damage would be inflicted on the sector.
“The only way to achieve the unnecessarily steep reductions in methane is by reducing livestock with a flow-on effect on meat processing and onto regional communities and the wider New Zealand economy,” he said.
Red meat is part of the new cross-sector Primary Sector Climate Change Commitment, which details a practical five-year plan for climate change response. It is also a signal that it intends to be more assertive: “in a balanced and sensible way that balances all the realities,” said Loughlin.
Speaking later at the Maersk Gala Dinner Minister of Agriculture Damien O’Connor referred to the disputed targets and said he still believes the 10 percent reduction in methane emissions will be achievable by 2030.
“Looking at the future I think we need to have a discussion,” he said. “As a traditional industry, we can’t change those things overnight, so you are going to have to let the technology help you.”
Getting the regulatory framework right on all matters will be important, said Loughlin. “The red meat sector wants our Minister alongside us as our champion,” he said.
Scapegoating of meat
Getting down to business on Monday morning, the first session chaired by Greenlea Premier Meats chief executive Tony Egan, tackled some of the consumer trends facing the red meat sector around the world.
The “disturbing” trend of the ‘scapegoating of meat’ was covered in an excellent opening presentation from Belgian Professor Frédéric Leroy of the Brussels-based Vrije Universiteit. A familiar ‘voice’ for those on Twitter, the food scientist and bioengineer spoke about the abuse and misuse of science and data by those with another agenda, whether driven by profit, growth or ideology. He noted the methods being used are similar to those used in misinformation claims about butter when highly processed margarine was introduced “and it took 40 years to recover from that.” He is calling for some perspective on the issue and the need to counter the claims with science-based facts now.
“Livestock farmers are not working against nature, they’re working with nature,” he said.
Another insightful presentation came from the co-founder of the USA’s 45-outlet burger chain Elevation Burger, Michael Berger. The restauranteur and entrepreneur talked of his experience developing the premium organic burger brand – recently sold to another chain, Fat Burger. The chain is now the largest seller of organic meat in the restaurant trade in the US with most of the outlets on the east coast of the States, but also in the Middle East. Their success has been in responding to the growing consumer consciousness in the US and Middle East for antibiotic-free/GMO-free, grass-fed beef. His current focus is on developing custom protein supply chains for foodservice distributors, manufacturers and retailers through partnerships with ranchers and farmers. Elevation Burger’s current supply is mainly Australian beef, in fully traceable supply schemes from about 60 producers.
Noting New Zealand is among a raft of other grass-fed beef suppliers to the US, including Australia, Uruguay, Chile, Mexico and Canada, he said “sincerely” the best steak he had ever had in his life was, “a rib-eye, right here in this hotel last night.”
“Other nations don’t have the grasses and soils that you have. There’s opportunity there,” he said, adding New Zealand would need to supply grass-fed product to match US expectations for larger steaks and a bigger carcase of around 1,300-1,400 pounds (590-635 kgs) weight.
He urged New Zealand, which he said is “looked at fondly” in the US, to actively market its meat as grass-fed rather than feeding it into indistinct ground beef streams.
Shift the dialogue
‘Fake meat’ was mentioned by several of the speakers as a challenge, that needs to be met with shifting the dialogue and focusing on the producers that are raising the meat naturally, suggested Berger.
Approached twice by Impossible Burger and Beyond Burger to put them on his chain’s menus, Berger said: “I told them no. We have nothing to hide or feel bad about in our supply chain. Why would I put something on our menus that’s designed to dispel meat?” he said. While retailers and some chains have taken on the novel products, other burger chains and restaurants have also taken the same stance.
Lab-grown meat still has a long way to go and US government affairs specialist Jim Richards noted later that its regulation is complicated, with the US Food and Drink Administration (FDA) regulating cell cultivation and the US Department of Agriculture regulating harvest. “The next question is: ‘How do we label it?’,” he said, adding there has been action at state level with four states passing bills to ban the labelling of fake meat as ‘meat’ and 10 states limiting what can be labelled as meat.
But, it really needs to come up to federal level, said Richards: “There’s debate over whether the FDA should take a closer look at ways to narrow its standard of identity for meat’,” he said.
Unease and uncertainty
Unease and uncertainty will be the tenor in New Zealand’s major red meat markets over the coming 18 months-two years, according to three speakers in the second session, chaired by B+LNZ board member Sarah Paterson.
Untangling the latest knot in the UK’s negotiations to leave the EU from his first-hand perspective, was London-based Jeff Grant, the red meat sector’s Brexit representative. Following the election of Boris Johnson as the new British Conservative Party Leader and Prime Minister on 23 July, a new, largely Brexiteer Cabinet is now in place. This has lifted the possibility of the UK crashing out without a deal on 31 October to a high probability, at 60-70 percent chance, Grant feels.
Delays at British ports for consignments of New Zealand meat are possible, but he believes it will be a temporary situation and the two-year transition period from the exit date will alleviate the pressure.
However, he noted again the impact of No Deal will be “brutal” for British producers. Welsh lamb exports to EU countries, for example, will face an immediate tariff of 48-55 percent, while beef imports will be subject to a 20 percent tariff.
“It’s a mature market that will have sticky times going forward,” he predicted.
Animal welfare issues “are starting to get a bit of noise,” especially around UK halal meat, 75 percent of which is not stunned before slaughter, and lamb tailing.
Since he spoke, new British Minister of International Trade Liz Truss has re-confirmed New Zealand will be one of the first countries in line for a free trade agreement (FTA) with the UK.
Looking to the EU-NZ FTA, Grant said New Zealand’s in a reasonably good position, as the agreement will be made with the European Commission who will then put it to the European Parliament for ratification, as opposed to going to each of the 27 nations individually.
Electoral politics to drive US in next 15 months
Meanwhile over the Atlantic, the US will see electoral politics driving everything over the next 15 months. This could mean getting things done there will be difficult, explained Jim Richards, a Washington DC-based government relations specialist and director of Cornerstone Government Affairs.
Issues during the period will include the US budget, the US-Mexico-Canada (USMCA) FTA, Mexico and The Wall and the economy: “Which is humming along nicely,” he said.
Add that to good foundational support from Republicans, “It’s going to be difficult to beat the President in 2020,” he believes.
Trade deals and the Iran/Russia/China matters will also be to the fore.
The President will want to get some runs on the board in tying up bi- and tri-lateral trade deals, such as USMCA, a deal with Japan and one with the UK, especially now Johnson is in No 10 Downing Street.
Richards also noted the US-China trade dispute is having an impact on agricultural products – sheep pelts for example were selling at US$1.50 profit, but processors are now having to pay US$1 per hide to dispose of them. However, if China sees Trump is going to be re-elected, Richards foresees a substantive agreement being made with them, but it will be painstaking – “commodity by commodity” – and much broader than just agricultural products.
Get closer to your Chinese consumers
New Zealand meat exporters need to get much closer to their consumers in China and be prepared to be agile and responsive, said Pier Smulders part of enormous Chinese online retailer Alibaba’s international business team.
China has taken shopping to a whole new level with ‘new retail’ superstores merging online and offline shopping, he said. Alibaba opened its first Hema store two years ago and now has over 200 and plans for many more. Customers are empowered by an app on their smartphone to find out more information about the products they are buying through scanning barcodes in-store, getting suggestions for other products. As in the traditional wet markets, they can select live seafood, have it cooked for them and eat it, all in-store. They can then check out of the store using AliPay, he explained.
“There is an exciting opportunity for meat companies to change their game,” said Smulders, adding exporters should be challenging traditional ways of thinking about retail.
With a fast-changing market, and the accelerated pace of change, they should also be prepared to take calculated risks to diversify their businesses.
“Branding is also important because the consumers are moving online and that’s where the story-telling and branding come in,” he said, pointing to Zespri’s success in using branding to expand its market-share.
Thoroughly research the market, build a business-to-consumer (B2C) relationship with consumers to connect them with the brand and use data-driven marketing, he advised.
“Capturing the value” by taking the balance of power away from third parties, developing online channels, owning the consumer relationship and building new retail are other aspects to consider, along with managing expectations.
Targeting free independent travellers (FITs) – part of China’s affluent middle class – when they are visiting New Zealand, maybe during Golden Week in October or Chinese New Year at the end of February, will be a sensible first step to take to get closer to the consumers as he believes food tourism will be big in the future for them.
“These people are your consumers in China,” he said.
Domestic policy will affect business
Here at home, changing decisions around political policy will be affecting the red meat sector, business speakers in the third session, chaired by B+LNZ board member Nicky Hyslop, noted.
Political commentator and Radio NZ’s Morning Report presenter Corin Dann gave his spin on the New Zealand political landscape over the next year as New Zealand heads towards our own election.
Business NZ’s Kirk Hope covered the policy changes that will be affecting the productive sector, including emissions reduction and the New Zealand Emissions Trading Scheme. “The biggest risk is that New Zealand gets ahead of other countries,” he said. Other policy changes are coming relating to overseas investments, local government, immigration and skills and around collective agreements and employment relations, he noted.
Business journalist Fran O’Sullivan facilitated the final session, a panel of three – Loughlin, Lindy Nelson, founder of the Agri-Women’s Development Trust (AWDT) and Andrew Morrison, B+LNZ chair – reflecting on the conference.
In his closing summary, Morrison said the sector has some challenges, “some larger than we would have liked.” He cited numerous examples of sector collaboration, including a combined approach to the threat of Brexit, the new national Farm Assurance Programme, the new Taste Pure Nature origin brand, and “really, really good” close co-operation with MIA, which is being built upon in the Primary Leaders Group.
“I will be leaving the room today thinking ‘this is a really exciting time to be in the sector’,” he said.
Copies of presentations, where available, can be downloaded at at www.redmeatsector.co.nz.
This article appeared in Food NZ magazine (August/September 2019) and is reproduced here with permission.