Tag Archives: GIRA

Vion leaving British meat industry

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The Dutch-owned meat industry processor Vion NV has announced it is to leave the British meat industry, according to an item in the British Farmers Weekly magazine. The firm is the top EU producing company by meat volume according to Richard Brown of GIRA’s presentation to the Red Meat Sector Conference earlier this year. Producing 2.5 million tonnes (carcase weight equivalent) in 2010/2011, Vion deals principally in pork, but also beef, poultry and a small amount of sheepmeat. It entered the UK market in the late 1990s. According to the article, the UK operations for sale are pork, red meat and poultry units. Read more …

Global meat prices to surge

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Global meat prices could face a surge next year, bringing mixed blessings for New Zealand’s meat exporters and producers, and potentially bad news for consumers around the world.

The main concern is the severe drought in the US – the worst for half a century – which has caused US wheat, corn and soyabean crops to fail. At the same time, adverse weather conditions are also said to be affecting grain harvests in Russia, Ukraine and Kazakhstan. Responding to the shortages, grain prices have surged.

This is good news for New Zealand’s arable farmers – recent figures released by the Ministry of Primary Industries shows that arable farm profit has risen by 136 percent on the previous poor season and forward contract prices for wheat and barley have been going up in recent months because of the US drought.

However, the higher grain prices are impacting on feed prices and will, ultimately, force up downstream prices of foods dependent on grain, including grain-fed meats, in particular beef, poultry and pork. This is the bad news for consumers around the world, with huge numbers potentially finding some foods out of their reach financially, and causing concern for governments and non-governmental organisations (NGOs).

Speaking at the Red Meat Sector Conference in July, GIRA’s Richard Brown had pointed to the fact that global feed prices were at that point already trending higher “with almost the opposite weather conditions to 2011 in the Northern Hemisphere”. He said that this was leading to producer caution around the world.

Now, as supplies dwindle further, US farmers are killing off stock they cannot feed in drought ravaged areas – according to the United States Department of Agriculture (USDA)’s US Drought Monitor, 63 percent of the nation’s hay acreage and 72 percent of the cattle acreage is in areas experiencing drought.

US beef is being bought, frozen and stored for later use. meatpoultry.com reports that the US Defense Logistics Agency (DLA) is procuring US$100 million worth of supplies of meat poultry and fish, to provide drought relief for the US agriculture industry. These supplies will be stored and distributed to American troops around the world, including Afghanistan.

B+LNZ Ltd chairman Mike Petersen reports that US corn yields are being revised down daily and, while there is good confidence in the future of beef, returns generally are going to be dampened in the short-term.

“Reports are predicting an increased flow of US beef on the markets through November and December as a result, but for prices to increase strongly by January with dwindling supplies and the effects of sharply increased grain prices for feedlots,” he says.

Grass-fed beef will not face higher grain input costs

The good news for New Zealand meat exporters is that, with this country’s grass-fed production system, the sector will not face these higher grain input costs, says Meat Industry Association (MIA) chief executive Tim Ritchie.

“All other things being equal, the predicted – grain induced – rising tide of prices later this year should benefit New Zealand at least in the short-term.”

Of more concern to Ritchie and meat exporters are the structural changes to the global meat system, as in recent years China has turned to become a net importer of grain, as opposed to a net exporter.

Ultimately though, it’s New Zealand meat consumers in markets overseas, such as those facing economic pressure in Europe and where demand is expanding such as in Asia, who will make or break the fortunes of the industry.

“It all comes down to the person on the street being more careful with their discretionary dollar,” he says. That, in turn, reinforces the need for the meat industry to continue to develop market-driven products that fit with the needs of the targeted consumer.

“The ‘new norm’ for meat price prediction is ‘volatility’, which makes short-term predictions of price and demand dangerous,” says Ritchie.

“However, the long-term forecast is for meat demand to grow, particularly in Asia.”

Food’s changing world and demands

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Hyperglobalisation, China, mega cities, urbanisation and water are some of the big issues that will play their part in the future of the New Zealand and global export meat industry, according to several Red Meat Sector Conference speakers.

In his presentation about the political and economic environment facing the industry, Colin James of the Hugo Group said it is becoming more and more difficult for a nation to act independently these days. ‘Hyperglobalisation’ refers to the increasing global interdependence and interconnectedness, which make protection from global economic forces more difficult, he said.

We can expect more of the same over the next 20 to 25 years, he explained. “It’s going to need a fair amount of resilience.”

Water, along with fossil fuels, will be the big issues, he predicts. Multinationals are rebranding and adopting a “fresh, clean, natural” stance rather than ‘clean, green’ approach to capitalise on the emergence of an affluent middle class in emerging markets. This growing middle class around the globe is calculated to encompass more than 210 million new households with income of US$20,000 or more by 2025, which he believes New Zealand is well placed to serve.

Four percent global GDP growth predicted

New Zealand’s top ten trading partners are projected to grow roughly four percent a year in 2012 as weighted by the goods trade. “Modest, but not boom time,” James commented.

Four percent in global GDP growth also stood out for Richard Brown of market research company GIRA, who admitted to being surprised that the forecasts were so positive. The leader is China, whose GDP is anticipated to grow in 2011/2012 by 8.5 percent, “not as good as expected but still OK”, followed by Indonesia (6.5 percent). He anticipates similar growth in 2012.

In his detailed look at the outlook for various meats, including beef and sheepmeat, he said that global prices for meat are generally, “fundamentally more exciting than they have been.” He was reassured with the direction of the trends, which he said were, “very good news for the producing sector.”

In 2011, prices had gone up boosting producer morale, because total global meat production was down – largely as a result of the outbreak of the pig disease PRRS in China, Brown explained. “What that illustrates is the Chinese effect on global trade is profound.”

This point was echoed in a later presentation from McDonald’s senior director and head of strategy for China and Hong Kong Arron Hoyle, who said that China is having a dramatic effect on global commodities.

“We don’t sell beef at McDonald’s, we sell a burger, so other commodities have to be taken into account.”

Rise of the dragon

Both James and Brown pointed to the current difficulties in the US and in Europe, which is facing big problems with the Euro. Europe had a “spectacularly fragmented meat industry,” Brown said and pointed to problems with the region’s biggest meat company, Vion, which is now in trouble after a period of rapid acquisition. This reflects a lower rate for now for global corporate processor consolidation “with a long way to go and an unproven success record.”

Arron Hoyle also pointed in his presentation to the ‘rise of the dragon’, the lean away from the west to the East, with McDonald’s choosing to target consumers in what it calls the APMEA (the Asia Pacific, Middle East and East Asian) region.

Unprecedented urbanisation

Hoyle talked about urbanisation in those emerging markets, such as China and India, “like we’ve never seen it before.” In the APMEA countries populations are moving from rural to urban settings in a similar manner to Britain’s Industrial Revolution, “but it’s happening 20 times faster and involves about 800 times more people,” he explained.

“We’re living in an era where we’re seeing different dynamics to the previous 50 years,” he said, adding that volatility will be more extreme than ever before.

‘Mega Cities’, those with populations of more than 10 million, are on the rise and currently count Shanghai, Mexico City, Sau Paolo, Beijing, Mumbai and Delhi as the top six.

“In addition, emerging market cities will be a key driver of global food demand with key 440 cities identified across Asia. With this explosion in urbanisation we see many ‘tier two cities’ with populations over one million evolve: By 2020 it is projected China will have 221, India 50, Indonesia 15 and Korea nine.”

With this trend comes a “massive” transport and infrastructure need, but also a forecast quadrupling of per capita of GDP by 2020, said Hoyle.

“It’s a world of opportunity for years to come,” he said cautioning that it also comes with higher rents and increased pressure on costs for McDonald’s stores or other businesses that target Asia as a key future growth driver.

This article appeared in Food NZ magazine (August/September 2012).

 

Second Red Meat Sector Conference

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Closing speaker for conference: clinical psychologist Nigel Latta.

High quality speakers and ample opportunities to network are on offer to delegates from the meat industry, farming and their service sectors at this year’s Red Meat Sector Conference.

We’ve been given a sneak preview of the content of the meat industry’s second annual conference, which will take place at the Rydges Lakeland Resort in Queenstown. The event is co-hosted once again by the Meat Industry Association (MIA) and Beef + Lamb New Zealand Ltd (B+LNZ).

Keynote speakers include clinical psychologist, author and self-confessed ‘wearer of socks’ Nigel Latta and Swazi Apparel’s Davey Hughes. They are joined by a dozen or so other presenters to focus once more on the core themes identified in the Red Meat Sector Strategy launched in May 2011.

After scene-setting presentations from Colin James of the Hugo Group and Richard Brown of European market research group GIRA, three sessions will cover the themes of the Sector Strategy.

In session one: meeting the needs of consumers will be the focus of Arron Hoyle of McDonald’s and Murray Johnston of Progressive Enterprises, while John Carroll of AVANZA avocado growers will look at managing market supply.

Australian and US perspectives regarding procurement will be explored in the second session, while best practices will be explored by B+LNZ Economic Service’s Rob Davison, Mark Paine of Dairy NZ and farming leader Doug Avery.

The conference will close with a session on behavioural change from Nigel Latta.

Two major social events are planned during the conference; a Welcome Cocktail Function, supported by Hamburg Sud, to be held on the evening of Sunday 15 July; and a Gala Dinner, sponsored by Maersk Line, to be held on the evening of Monday 16 July at which Davey Hughes of Swazi Apparel will speak.

For the first time, ANZ bank has taken the premier sponsorship role.

Don’t miss out: register online and find more information at www.mia.co.nz.

RED MEAT SECTOR CONFERENCE: THANKS TO SPONSORS

Premier: ANZ

Gala Dinner: Maersk Line

Welcome Cocktail Function: Hamburg Sud NZ Ltd.

Pre-networking drinks: Milmeq

Morning and afternoon teas: Triton Commercial Systems

Gold: AgResearch, Bell Gully, Ecolab, Milmeq and System Controls Ltd.

Silver: Industrial Research Ltd, NAIT Ltd, Port of Tauranga, SATO NZ Ltd and Sealed Air NZ.

Delegate bags: Bemis Flexible Packaging Australasia Ltd.

Other: Marfret Compagnie Maritime.

Published in Food NZ magazine (June/July 2012).