Belgian meat companies in New Zealand

Murray Brown.Representatives of a Belgian company which has imported New Zealand frozen and chilled lamb for almost 40 years have made a flying visit to New Zealand.

Leading meat exporter and processor Alliance Group hosted a delegation from Van Aerde NV and its subsidiary Bimpex Meat NV.

The companies visited Alliance Group’s new venison processing plant at Smithfield near Timaru, a venison farm in Geraldine and the co-operative’s Lorneville plant near Invercargill.

Eddy Lannoo, managing director of Bimpex Meat NV, Jan Van Aerde, director of Van Aerde NV and Karin Severijnen, technical specialist at Van Aerde NV, also discussed the upcoming lamb and venison programme. Bimpex NV specialises in the importation of chilled meat and venison.

Murray Brown, general manager marketing, Alliance Group, said both Bimpex Meat NV and Van Aerde NV were important customers of Alliance Group.

“Bimpex imports between 3,500-4,000 metric tonnes of lamb and venison from New Zealand every year so we obviously value our relationship with them. The company also has strong historic ties with New Zealand, having been established in the 1960s and importing New Zealand frozen lamb to Belgium since the mid 1970s. They have also been importing frozen and chilled venison for 15 years.

“It was also the companies’ first opportunity to visit our new $8.6 million venison plant at Smithfield. The delegation were impressed with the investment in Smithfield, exceptional product quality and food safety standards.”

Until the upgrade, Smithfield only processed sheep and lamb and, with the recent investment, has created more than 50 jobs based at the plant.

 

PGP project suggests meat industry ready to co-operate, says Barber

Allan BarberYesterday’s announcement of the Red Meat PGP Collaboration Programme for Greater Farmer Profitability at a total investment of $65 million is fantastic news for the whole industry, says meat industry commentator Allan Barber. The key words are ‘collaboration’ and ‘farmer profitability’, he writes.

The first of these has usually been notable by its absence, while the second combination of words has only been evident at irregular intervals.

Half the funding will be made available from the Ministry for Primary Industries (MPI)’s Primary Growth partnership fund, while 30 percent will come from farmers through Beef & Lamb New Zealand Ltd (B+LNZ) and Meat Board reserves and the balance from six meat companies, two banks and Deloitte.

B+LNZ’s contribution is contingent on levy paying farmers voting in support of the proposal at its annual meeting on 8 March. Although nothing is ever certain, it would be a shock if this support wasn’t forthcoming, because the programme represents a significant step towards fulfilling the objectives of the Red Meat Sector Strategy conducted by Deloitte and completed nearly two years ago.

The aim of the programme is to lift the performance of all farmers to match that of the best performers which was identified in the strategy as the best way of improving industry profitability. There is a significant gap between the top and bottom performers in farming methods and profitability. If this gap can be closed the gains for the sector and New Zealand are enormous.

The participation of the six meat processors – AFFCO, Alliance, ANZCO, Blue Sky, Progressive Meats and Silver Fern Farms – is as meaningful as it is welcome. These are the key sheepmeat processors which is recognition that it is the sheep meat sector in particular where the greatest gains are to be made. However, the focus behind the farm gate shouldn’t obscure the fact that there are substantial gains to be made from greater collaboration in the market place.

A striking aspect of yesterday’s press releases by Ministry of Primary Industries, B+LNZ, Alliance and Silver Fern Farms (SFF) was the difference in tone between the statements by the two meat companies and the enthusiasm with which Beef & Lamb is greeting the opportunity.

The tone of SFF’s press release was less than enthusiastic, emphasising the need for a levy vote in support before the programme could begin and the care taken to ensure this programme did not cut across SFF’s Farm IQ programme which was the first project out of the blocks.

In spite of a first sentence which confirmed SFF’s support for the collaboration programme, the main impression from the statement was that the company was a somewhat unwilling participant and would be guided by the farmers’ decision. If this happened not to be supportive, I was left with the feeling SFF would not be particularly upset.

In comparison with Keith Cooper’s guarded support for the programme, Alliance chief executive Grant Cuff was positively euphoric, stating:

“This new coordinated collaborative initiative will enhance the knowledge and capability in the sheep and beef sector and help improve farm performance, productivity and profitability.

“New Zealand can make significant gains in its export earnings by ensuring all parts of the value chain collaborate so suppliers are using the best available farm and business management practice and tools.

“This initiative is an important step in the implementation of the Red Meat Sector Strategy. We’re supportive of any steps to lift the industry’s game and improve on-farm profitability.”

After my recent call for a sheep meat strategy, I am cheered by this progress. Admittedly, results won’t happen immediately, but it provides an investment over several years during which industry participants will work together for the collective good.

This must be one of the best possible outcomes for an industry which is noted more for its divisiveness than its potential to cooperate in the interest of a better future for all the parties.

Allan Barber is a meat industry commentator who writes a number of columns on the topics. He has his own blog Barber’s Meaty Issues.

Pure South beef, venison and lamb to Singapore

Pure South is on the menu in SingaporeLeading meat processor and exporter Alliance Group is now supplying Pure South beef, venison and lamb to a restaurant  in Singapore’s iconic waterfront precinct.

The cooperative’s export brand is on the menu at Singapore’s Fern & Kiwi restaurant, an offshoot of the Lone Star bar and restaurant. The restaurant, located in a refurbished warehouse in the upmarket waterfront dining area of Clarke Quay, is the Lone Star’s first outlet outside of New Zealand.

It follows trials with Fern & Kiwi and its executive consultant chef, former New Zealand Master Chef guest Mathew Metcalfe. Metcalfe has cooked for the world’s rich and famous including Apple founder, the late Steve Jobs, and leading figures in Hollywood.

The lamb, beef and venison is sourced from farms across the country and processed at Alliance’s Group’s eight plants.

Murray Brown, general manager, marketing at Alliance Group, said Singapore is  known as a leading culinary city in Asia, which is a major area of growth for Alliance Group.

“Pure South is now well-established as an export brand after more than a decade representing Alliance Group’s products in Asia. Pure South lamb, beef and venison is New Zealand’s leading brand in many leading restaurants and top hotels throughout Malaysia, Thailand, Hong Kong and increasingly in the main cities in China.

“With Singapore having the world’s fourth highest income per capita, Fern & Kiwi is expected to help promote  the New Zealand brand in Asia. The quality of the cuisine is excellent and the restaurant is the perfect fit for Pure South.

“Pure South symbolises all the key elements of Alliance Group – the pure southern location, world-class technology, production techniques, the proud heritage and the very best grass-fed red meat.”

Established in 1988, Lone Star is a Kiwi institution with 21 branches across the North and South Islands. The Clarke Quay site is the first restaurant to open since the flagship outlet was destroyed in the devastating Christchurch earthquakes.

Record year for Beef and Lamb awards

Beef and Lamb Excellence Awards 2013A record number of New Zealand restaurants have been recognised for their top quality beef and lamb cuisine.

The 2013 Beef and Lamb Excellence Awards, presented by Beef + Lamb NZ Inc (B+LNZ), acknowledge consistency and quality in the preparation and presentation of beef and lamb cuisine.

Following anonymous assessments by culinary experts late last year, an impressive total of 194 restaurants nationwide received the Beef and Lamb Excellence Award, which offer an indication of supreme quality says B+LNZ Inc chief executive Rod Slater.

“If an establishment carries an Excellence Award, consumers are assured they can expect a delicious beef or lamb experience.”

Diners in New Zealand can locate Beef and Lamb Excellence Award restaurants easily, by looking for the gold-rimmed plate and window stickers. You can also find all the award-winning restaurants here.

American sheep farmers suffering even more than here

Allan BarberIt’s tougher in the US for sheepfarmers, Allan Barber has found.

An article headlined ‘Drought, high feed costs hurt sheep ranchers,’ appeared last Friday in the Northern Colorado Business Report, he writes in his latest blog posting. It makes the problems being experienced currently by New Zealand sheep farmers look comparatively pretty small.

This isn’t meant to denigrate the difficulties here, but it puts things in context. One rancher has cut his 2,000 head flock by a third and is losing US$80 on every lamb he sells. According to the article, drought, consolidation of the sheep-packing business, increased feed costs and plummeting lamb prices have created hardship among sheep ranchers across Northern Colorado. The situation has deteriorated so much for ranchers that the federal government is investigating whether meat packers have played a role in the market’s collapse.

In 2011 lamb prices soared above US$2 per pound, or about NZ$5.25 a kilo. But today the same lambs fetch only 85 cents per pound (NZ$2.20), while rearing a lamb costs more than $1.30 per pound (NZ$3.40 a kilo). Feed costs have also risen from $250 per ton of grain in 2011 to $400 in 2012.

As lamb prices declined in 2012 demand also softened, causing the US Department of Agriculture to buy $10 million worth of lamb as a drought relief measure. An insurance policy designed to insulate ranchers against fluctuating lamb prices is too expensive at present price levels.

There is also a suspicion that the packers may have been manipulating the market by buying lamb supplies and holding them on feedlots to guard against being caught with insufficient stock to process profitably. This is apparently in violation of the Packers and Stockyards Act which prohibits price manipulation.

A further disadvantage is the fact Japan has been closed as an export market for sheepmeat for 10 years because of mad cow disease – I’m not sure why this was the case, as sheep were not the problem and lambs are too young to pose a risk.

The USDA has asked for any evidence of price manipulation by the packers, as it ‘takes allegations of anti-competitive behaviour very seriously.’ But it doesn’t look as though there will be any relief for sheep farmers any time soon because of low consumer demand and the high cost of feed as a result of the drought.

None of this will be any comfort to New Zealand sheep farmers, especially with the implications for export demand from the USA, but at least our exporters have developed a much broader range of markets for sheepmeat and co-products. This spreads the risk for producers. Equally farmers here don’t have the same worries about feed costs, as the vast majority of sheep and lamb feed generally grows naturally as a result of regular rain.

That said, it is important for New Zealand’s sheep industry, as distinct from its beef industry, to develop a strategy which can ensure our industry doesn’t fall into the same hole as that of Colorado.

Allan Barber is a meat industry and agribusiness commentator. This article has appeared at www.interest.co.nz and also at Allan’s own blog Barber’s Meaty Issues.

Outlook cloudy for 2013

Allan BarberHappy New Year to you all. Meat industry commentator Allan Barber has already had his head down thinking about what’s likely to pan out for the industry later in 2013.

His latest blog, which also appears at www.interest.co.nz, talks of a weak US dollar, weak export demand and low prices for Kiwi producers. However, Allan’s picking that there will be less effect on New Zealand beef than on sheepmeat and he foresees more pressure on lamb this year.

Looking globally, he sees aversion of the fiscal cliff in the US, will allow US economic recovery to emerge, will also allow recovery in China and for Europe to “move further back from its own economic disaster”. In turn, both New Zealand and Australia should avoid the worst impact of an extended downturn in main markets, he says.

His “big questions” for 2013 are whether all meat companies will survive the year and whether the increasing use of farm data will assist the co-operation between farmer and meat processor. Read more …

Lower lamb prices expected, but firm for beef

MPI Situation and Outlook update December 2012New Zealand’s meat processors and farmers can expect lower lamb prices over the remainder of the 2012/2013 production season, while beef prices are expected to remain firm over the next two years, says the Ministry of Primary Industries (MPI).

Deteriorating global economic conditions are having a significant impact on returns for New Zealand’s primary produce, according to the MPI’s recently released half-year update to the annual Situation and Outlook for Primary Industries report, which was published in June.

The update shows there has been strong pastoral production so far in the 2012/2013 season. “This is partly due to favourable climatic conditions during the previous season which left breeding stock in good condition and also ongoing expansion of the dairy herd,” says Chris Jones, manager of economic information and analysis for MPI’s sector policy division.

However, MPI reports the continuing economic slowdown, particularly in the traditional markets of the European Union, is causing weaker demand for some products such as lamb resulting in lower lamb prices. In addition, the strengthening of the New Zealand dollar against most major trading currencies in recent months is having a dampening effect on farm-gate returns for primary produce.

In contrast, beef prices are expected to remain firm over the next two years, following a major drought in North America affecting production there.

As a result, primary sector export revenue for the year to June 2013 is forecast to be around $27.5 billion, down five percent on the previous year ($29.2 billion).

 

 

ANZCO starts energy management programme

One of New Zealand’s largest exporters is set to save more than $2 million a year and enhance its global reputation as a sustainable producer through a company-wide energy management programme.

The Energy Efficiency Conservation Authority’s EECA Business announced yesterday it would support the initiative over two years to help meat processor and exporter ANZCO generate long-term energy savings in its New Zealand plants.

With annual sales of $1.25 billion, ANZCO Foods Ltd processes and markets New Zealand beef and lamb products around the world. The firm employs over 3,000 staff world-wide and has 11 meat processing plants in New Zealand.

This programme will target a reduction in its processing plant energy use by 25 gigawatt hours (GWh), returning ongoing annual savings of $2.45 million after two years.

EECA Business general manager Ian Niven says that making better use of its energy will provide far-reaching benefits for the company and congratulated the company on its vision.

“Globally New Zealand is recognised for sustainably produced, premium quality meat products. And energy efficiency is one of the best ways to strengthen environmental credentials.

“By taking a lead in energy efficiency, ANZCO is making significant energy cost savings and signaling to its customers that it is committed to sustainable production,” he says.

Mark Clarkson, ANZCO Foods.

ANZCO managing director, Mark Clarkson says the programme will deliver on many levels for the company.

“Sustainability is key to the ANZCO brand and we are always looking for new ways to build on our reputation for environmentally responsible production, so reducing energy costs is a priority.”

The programme involves the establishment of a group-wide energy management plan, led by a team responsible for putting in place up to $5 million of identified energy efficiency projects.

With the assistance of one of EECA Business’ industrial programme partners, ANZCO will set up a system to help keep the programme on-track, measure efficiency outcomes, and develop case studies for a number of the projects.

Ian Niven says management commitment is key to the programme achieving its objectives.

“From the Board of Directors through to site operations, ANZCO leadership has indicated it wants to foster a culture of efficient energy use throughout the company.

“Such commitment is important to the success of making enduring improvements to energy management.”

EECA Business funding of up to $450,000 will be made available in stages upon achievement of various programme milestones.

Debt is good under some circumstances, says Barber

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.