Tag Archives: Australia

Pure South on board for butchery tri-nations

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Sharp BlacksAlliance Group’s export brand Pure South has been confirmed as principal sponsor of the annual butchery test match which will now be known as the Pure South Butchery Tri-Nations.

The competition will see the best British and Australian butchers travel to Wanaka in March to take on New Zealand’s Wedderburn Sharp Blacks.

Murray Brown, general manager, marketing, Alliance Group, said it was fitting that a strong and successful export meat brand in Europe and Asia was backing a world-class competition.

“We’re pleased Pure South is supporting some of the world’s top butchers as they battle it out for the top honours. After a decade representing Alliance Group’s lamb in more than 65 countries world-wide, Pure South is now well-established as a brand associated with outstanding quality. Millions of consumer look for Pure South whenever their shopping or dining. It symbolises all the key elements of Alliance Group – pure southern location, world-class technology, production techniques and a proud heritage.”

2013 will be the inaugural Tri-Nations, following on from two years of Trans-Tasman battles between New Zealand and Australia.

Australia has come out the victor of both previous encounters by the narrowest of margins, so the Wedderburn Sharp Blacks, sponsored by Beef + Lamb New Zealand, will be looking for redemption on their home turf next year.

The competition will be accompanied by a study tour which will see 60 butchers from across the three nations travelling the Central Otago region.

Debt is good under some circumstances, says Barber

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Allan BarberAfter Allan Barber’s column last week about meat industry debt levels, Keith Cooper, chief executive of Silver Fern Farms, took him to task for incorrectly reporting the situation with Silver Fern Farms’ debt facility, he writes in his latest guest blog.

I stated that these expired in September 2012 and therefore the company was operating on a temporary extension. The correct position was that the debt facility was originally negotiated for two years from September 2010 and consequently due to expire in September 2012. This remained the position at balance date in September 2011. However in the 2012 annual report, the facility was stated as expiring on 31 December 2012.

Clearly, the company had arranged a three month extension at some point before the original two year facility expired and this was not a temporary facility, as I implied. Nevertheless, it was no more than a three month extension, while the next longer term arrangement was being negotiated.

I apologise for any incorrect interpretation, but still maintain the company’s current debt level at balance date was higher than could be considered comfortable.

However, in an interview with Jamie Mackay on the Farming Show last week, when asked to comment on the industry’s debt level, Cooper gave his opinion that the debt was a good thing. Because it was tied up in inventories, it would ensure the industry acted responsibly. This is almost exactly what I wrote last week, although I saw the discipline on the companies as a necessity, not a virtue.

In Cooper’s radio interview, he stated after record prices last year, meat companies are reining things in.

“It’s a damn good thing we do have stock in store and we do have high debt because that means meat companies are acting responsibly, and are feeding the product to market to create stability of price. I’m quite happy that us and other companies have debt because that means they’ve got stock in store and that means we’re managing markets well.”

I must give Keith credit for being unreservedly a ‘glass half full’ kind of guy which you have to be to survive in what I believe is New Zealand’s toughest industry. He promises farmers that things will improve.

“We are living in volatile times. There will be volatility, but through the volatility we will see a steady increase in the price we will receive from offshore,” and he expects meat companies will pay farmers around 90 dollars per lamb this year.

I’m not sure the glass is quite as half full as Keith Cooper suggests, especially in the sheep meat market. Although lamb leg prices in the UK are holding fairly well, especially for chilled product, prices for middle cuts, like racks, loins and tenderloins, in North America and Europe are under pressure.

The price of loins and tenderloins have dropped by as much as 30 percent in the last couple of months, while there are fears of another collapse in lamb rack prices because of competition from low priced Australian product. As a result, importers are not placing orders for New Zealand lamb, because they remember the last time prices collapsed.

The Middle East has gone quiet on lamb shoulders because of cheaper Australian product, although China is still firm. Here, it appears New Zealand exporters benefit from less Australian competition with fewer China licensed plants in Australia.

All this explains why the New Zealand consumer is able to buy plenty of well priced lamb available on the domestic market. But this won’t provide more than a minimal contribution to managing the existing inventory levels and it certainly won’t cope with next year’s peak production. The industry will be keeping its fingers and toes crossed for an early economic uplift in our main markets, UK, Europe and North America, because otherwise the glass won’t have much in it at all.

Allan Barber is an agribusiness commentator, with particular interest in the meat industry. He has his own blog Barber’s Meaty Issues. This item has also appeared at www.interest.co.nz.

TPP negotiations need to deliver for agriculture

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New Zealand’s red meat sector is encouraging all negotiating parties in the Trans-Pacific Partnership to work tirelessly to ensure this agreement can be completed by October 2013.

Key outcomes from the completion of TPP must be the elimination of agricultural trade barriers and the opportunity for greater economic integration across the Asia Pacific region, says Beef + Lamb New Zealand (B+LNZ Ltd) and the Meat Industry Association (MIA).

The B+LNZ and MIA chairmen, Mike Petersen and Bill Falconer (respectively) reinforced the need for reduced barriers to agricultural trade, including the elimination of tariffs and other technical barriers as a priority. Achieving that would create benefits and opportunities for all TPP members exporting red meat products.

“The TPP agreement has the potential to create new opportunities for all red meat exporting countries through improved market access, reducing both tariff and non-tariff barriers, and trade facilitation in the Asia-Pacific region,” Falconer says.

The TPP agreement also offers the opportunity to do business more easily and transparently.

B+LNZ and MIA are present at the TPP negotiating round in Auckland, meeting with the agricultural trade negotiators and talking with agricultural and meat producer representative organisations from partner countries.

Petersen says the New Zealand red meat sector had well established links with a number of producer organisations, including the Canadian and Mexican beef producers.

“Both Canada and Mexico are part of the Five Nations Beef Alliance along with Australia, the United States and ourselves. Together, we represent producers from countries that account for one-third of global beef production and approximately half of global beef exports.

“The Alliance will be presenting its views on what it considers would be a successful outcome for the beef trade from these negotiations. Our view is that we must achieve a high quality comprehensive agreement that acknowledges the importance of beef production and consumption for all participating countries.”

B+LNZ and the MIA will continue to monitor progress over coming months and, where desired, assist negotiators to address the key issues relevant to the red meat sector in order to achieve a satisfactory outcome.

Feeding East Asia

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The importance of the East Asia region as the most significant market for New Zealand and Australian food and fibre products is set to grow in coming years, highlighted more recently by the global economic downturn, according to Rabobank.

In a recent report titled, Feeding East Asia’, Rabobank senior analyst Marc Soccio says the global and economic downturn has sharpened the focus onto the East Asian region as it continues to expand its slice of the global economic pie, offering opportunities no longer available in traditional markets as incomes grow and diets change in fundamental ways.

“The significance of East Asia to New Zealand and Australian farmers and agribusinesses is growing from an already strong base, with markets in developing economies coming on-stream to supplement more established markets in the region,” Mr Soccio says.

“As developing countries across East Asia continue to grow their share of the global economy, rising incomes are gradually transforming household consumption patterns. Opportunities for greater trade with the region are widespread and are more or less subject to the ongoing evolution of strong and sustainable consumer economies.”

Soccio says supply chains are evolving, and competition to capture value from rising trade flows is arising from both within the region and beyond.

“But overall, with a greater understanding of this diverse region, New Zealand and Australian suppliers appear well positioned to satisfy growing demands for a greater range and value of food and fibre production in years to come.”

The cultural and socio-economic diversity inherent in East Asia remains a defining characteristic that makes the region a particularly complicated prospect to navigate.

Accordingly, Soccio says the need to better understand the region and its future direction has never been so great, as this will provide New Zealand and Australian food producers with the competitive advantage required to explore the right markets, in the right way, at the right time.

On the topic of the rising tide of foreign ownership in the sector, the Rabobank report refers to the case of Australia’s sugar sector which undertook a significant shift in ownership of the industry’s downstream milling assets in the period from 2010 to 2011.

“In fact, over the past decade, control of almost three-quarters of Australia’s downstream sugar refining assets have been acquired by foreign investors – around two-thirds are now owned by businesses based in East Asia,” says Soccio.

“The investment into the sector has had a revitalising effect, but it has also significantly changed supply chain dynamics, with cane farmers now needing to be more mindful of how they transact with parties further downstream.”

The value created by opportunities to supply food and fibre products to East Asia into the future will be influenced by a number of factors.

According to Soccio, competition from suppliers, both within the region and in other parts of the world, will continue to put the strong reputation of New Zealand and Australian food producers to the test.

“Many countries across East Asia are significant agricultural producers in their own right and will try to meet their own needs as best as they can, which can limit opportunities for some crops where New Zealand and Australian producers may not have a clear cost or quality advantage.”

Soccio highlights other competitive forces, such as the way in which value is shared in the supply chain, as well as exchange rates and bilateral trade negotiations, will also have a bearing.

“One way or another, the stronger ties being forged to the region through greater inbound and outbound trade and investment will underline New Zealand and Australia’s pivotal role in feeding Asia in the years to come,” he says.

Rabobank New Zealand is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 110 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 48 countries, servicing the needs of approximately 10 million clients worldwide through a network of more than 1600 offices and branches. Rabobank New Zealand is one of the country’s leading rural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 31 branches throughout New Zealand.

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).

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).

Pet food and jerky emerging as export growth opportunities

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Pet food and prepared/processed beef products like beef jerky, or biltong, are two emerging growth opportunities for the New Zealand meat industry that have been identified in a newly released Coriolis report An Investor’s Guide to Emerging Growth Opportunities in New Zealand Food and Beverage Exports.

Strategic management consultants Coriolis carried out the report on behalf of the Ministry for Business, Innovation and Employment (MBIE) to identify emerging high potential food and beverage export categories.

The report filtered out various export categories over $100 million each, such as boneless frozen and chilled lamb, bone-in sheepmeat, boneless and bone-in frozen and chilled beef, meat and edible offal (including venison), fats of beef, sheep or goats, as they “represent New Zealand’s core food and beverage exports” and also categories under $2 million. This left a core 129 categories for analysis.

Pet food and jerky were two of the initial 25 categories short-listed for their emerging export growth potential. Two more meat industry related categories – protein concentrates and textured protein substances and sausages – just missed the initial cut, with frozen chicken cuts also being dropped out of the final 20 as it had low potential export growth.

Pet food has a large global market, strongly growing demand and opportunities for growth in Asia, especially China, Australia and other rich countries, the analysis shows alongside information showing the category is capital intensive, requires some skills and has moderate trade access. Pet food has already attracted investment from US-owned Watties and Mars NZ and Swiss-owned Nestle NZ. Currently, exports are worth US$169 million, out of a global market worth US$13.8 billion, but the “possible size of the prize” by 2025 could be in excess of US$500 million, says Coriolis.

Beef jerky has received inward investment from US company Jack Link’s, which has grown the category markedly in recent years. New Zealand’s exports of processed/preserved beef are currently worth US$83 million, out of a global market worth US$7.4 billion, but he potential prize lies between $100-200 million for the category to 2025, says Coriolis. Opportunities lie in Asia, but making jerky is a capital intensive process that requires skills.. The UK is seen to have potential for the product

Report: a “vital resource”

New Zealand Food and Grocery Council chief executive Katherine Rich says the report is a vital resource for anyone in the food industry or someone looking to invest in it. This is the first time this information has been collected in such as easy-to-reference format.

“The food industry is the backbone of the economy and is always looking for investment to grow export opportunities. It is important that this additional investment is attracted so new Zealand can take advantage of the significant growth opportunities presenting themselves, particularly in Asia as the middle class there grows,” she says.

“It is perhaps not surprising that the sectors identified by the report as showing the greatest potential to grab these opportunities are ones where New Zealand could have a competitive advantage: salmon, honey, spirits, biscuits, pet food, cherries and infant formula,” says Rich, adding that there are other areas too, including beef jerky.

“As the report identifies, our exports of these top categories in 2010 were greater than the wine industry ($1.03 billion as against $951 million) and most of them are growing faster than all other food and beverage exports. Some 17 of them have already attracted foreign and/or private equity investment, indicating that the market itself has identified they present strong opportunities for growth.”

The categories of processed goods are already having an impact. “But what is most exciting is that Coriolis predicts that if they all acheived their potential we would be looking at exports worth between $4.3 billion and $6.1 billion – approximately $4.9 billion additional.”

To achieve the Government’s goal of increasing exports by 40 percent by 2025, each of these categories needs to continue to grow, says Rich. “This MBIE report will play a critical role in informing this plan.”

An Investor’s Guide to Emerging Growth Opportunities in New Zealand Food and Beverage Exports can be read online at the www.foodandbeverage.govt.nz website, where you can also download a pdf copy.

 

Major new FTA to be negotiated

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A new free trade agreement, that could mean a US$500 billion boost to the Asian region’s economy by 2025, is to be negotiated it was announced today.

The New Zealand International Business Forum (NZIBF) has welcomed the announcement that the ten members of ASEAN (the Association of South East Asian Nations) and six other economies including New Zealand, Australia, China, Japan, Korea and India, intend to negotiate the Regional Comprehensive Economic Partnership (RCEP).

“This is a further sign that New Zealand’s home is in Asia” said NZIBF Chairman Sir Graeme Harrison.

“This negotiation will build on New Zealand and Australia’s existing high quality free trade agreement with ASEAN and will bring both the giant North Asian economies and India into the same network.  The initiation of a free trade negotiation with Japan is particularly welcome: Japan is now the only Asian economy with which New Zealand neither has an FTA or a negotiation underway.  A closer trade and economic relationship with Japan is strongly supported by New Zealand business and would be benefit to both countries”.

The RCEP announcement was made at the East Asia Summit meeting in Phnom Penh which is being attended by Prime Minister Key and Trade Minister Groser. The announcement follows several years of preparatory work by officials.

“We congratulate those associated with this initiative which demonstrates new leadership by the ASEAN economies. I can see several years of hard work by negotiators ahead to bring this new agreement into effect. The effort will be worth it: because of its wide coverage RCEP could be even bigger than the Trans Pacific Partnership (TPP) in terms of its contribution to economic welfare.”

Sir Graeme emphasised that TPP and RCEP were mutually reinforcing as potential pathways to a wider Free Trade Area of the Asia Pacific (FTAAP).

“There can be many paths to a broader vision for regional economic integration. New Zealand is fortunate to be directly involved in both major initiatives. TPP is further advanced but both TPP and RCEP are significant and for New Zealand offer the possibility of eliminating barriers and reducing the cost of doing business, building the basis for economic growth and creating jobs”, concluded Sir Graeme.

ASEAN members include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar (Burma), Singapore, Thailand, The Philippines and Viet Nam, which make up collectively the world’s ninth largest economy.

Research by the East West Centre in Honolulu and the Petersen Institute for International Economics in Washington DC suggests that Asian trade liberalisation could be worth $US500 billion to the region’s economy by 2025.

 

Australian agriculture minister to visit

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The Australian Minister of Agriculture, Fisheries and Forestry Hon Joe Ludwig will visit New Zealand for bilateral and primary industries meetings over the next two days.

Hon Ludwig, who will be joined by Primary Industries Ministers from NSW, Victoria, Queensland and the Northern Territory, will meet with Minister Carter this afternoon.

“This visit is a valuable opportunity to discuss two-way trade and issues in the primary sector that affect both Australia and New Zealand,” says Carter.

While in Auckland Hon Ludwig will also chair the Standing Council on Primary Industries meeting.

“This meeting is attended by Primary Industries Ministers from New Zealand and Australia and allows us to share approaches, ideas, and views on the challenges and opportunities facing the primary industries.

“One of the issues we will discuss is the food sector opportunities available to both countries.

“By focusing on our food industries, New Zealand and Australia have the ability to increase productivity, innovate and add value to the domestic and export sector. There are opportunities in working together.

“We enjoy a strong relationship with Australia, our largest trading partner, and meetings such as this play an important role in enhancing primary sector collaboration between our two countries,” says Carter.