Tag Archives: lamb

Glamming up for the competition

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The competition is heating up for the 2013 Beef + Lamb New Zealand (B+LNZ) Golden Lamb Awards, aka the Glammies.

More than 100 entries from across the country will be competing next year for the Grand Champion title.

The competition, sponsored by Pfizer Animal Genetics, which aims to find New Zealand’s most tender and tasty lamb is entering its seventh year and sees farmers from across the country vying for the Grand Champion title.

B+LNZ Ltd chief executive, Scott Champion, says the competition is an excellent opportunity to profile the quality product New Zealand farmers produce.

“The Glammies gives farmers a chance to showcase breed lines and demonstrate how their animal management talent and hard work in the field culminates in great tasting lamb.”

Winning the top prize is not easy; entries will first be scientifically tested at Carne Technologies to find the top 20.

From here it will be down to the tastebuds of a panel of judges at the Upper Clutha A & P Show in Wanaka on 8 March 2013, where the winner will be determined. Butchers also have an opportunity to profile their product with the Glammies Retailer of the Year Award.

The competition is supported by processing plants across the country. These include: AFFCO, Alliance Group Ltd, Ashburton Meat Processors Ltd, Auckland Meat Processors/Wilson Hellaby, Blue Sky Meats, Cabernet Foods/Kintyre Meats, Harris Meats, Land Meat NZ, Lean Meats, Silver Fern Farms, Taylor Preston/Ken Wilson Meats.

A little bit of export meat, in Wellington

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Customers of an award-winning New Zealand family line of butchers in Wellington are being treated to export quality product this year.

The run into Christmas for Wellington’s Preston’s Master Butchers is starting this week with the launch of free-range spring lamb. The new season’s lamb is sourced through sister company, meat processor and exporter Taylor Preston, which in turn sources from selected farmers in the lower North Island and top of the South Island.

“It’s not a matter of the best stuff going for export,” says the butcher’s general manager Andrew Preston, “we make sure that it comes straight here.”

Spring lamb has a unique flavour profile which is more delicate than older lambs – predominantly due to being milk-fed and young – and it’s also very tender. “People enjoy the taste,” says Preston, ” and we reckon everybody should have a chance to sample it – so we’re doing a special introduction across our stores, at really affordable prices.”

Preston’s is also launching two new beef ranges – under the Ted’s Choice premium label; Natural Farm Hereford and Natural Farm Angus – with a Preston family influence right through the chain. The cattle are sourced predominantly from lower North Island farms with Andrew Preston’s cousin, Campbell Preston, individually selecting the carcases at the Taylor Preston processing plant for meat colour, muscle size and conformation, marbling content and pH tests are also used as an indicator for tenderness.

“We expect the range will go well in our retail stores and hospitality,” says Andrew Preston. “People are looking for a little bit extra and the Natural Farm product certainly gives that, with very strict quality standards and full traceability. What’s more the butcher in-store can portion it any way you want.”

In addition, Preston’s Master Butchers learned last week that had been awarded a gold medal in the Devro New Zealand Sausage Competition for its Turingia Bratwurst (pictured right).

“Our customers have been telling us for a while that this is a fantastic sausage,” says Preston. “A win in a national competition is reinforcement that we’ve got it right. Our Anytime Turingia Bratwurst is a traditional pre-cooked German bratwurst, flavoured with marjoram and parsley and a touch of pepper and garlic. “It’s great for a variety of uses, from the family BBQ, eating as a snack, through to portioning into a risotto.”

Preston is looking forward to the shops being “a bit crazy for a while, as Preston’s has previously won gold, silver and bronze medals for bacon and other sausages. We will have a bunch of new customers coming to our stores just to try it and, I can tell you now, they won’t be disappointed.”

 

Beef and lamb on show in Seoul

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New Zealand beef and lamb were on show in Seoul recently, when New Zealand Trade and Enterprise (NZTE) held the third New Zealand Food Connection at the Seoul Plaza Hotel on 6 November.

The event showcased the best New Zealand food and beverage products to over 170 Korean food and beverage professionals.

Twelve New Zealand food and beverage companies participated in the event. Alongside the beef and lamb were kiwifruit, guacamole, fruit and vegetable puree and powder, honey, beef jerky, juice, energy drink, beer, syrup and Greenshell mussels.

Over 170 trade people attended, including chefs, menu developers and buyers from major hotels, restaurant chains and catering companies, retailers/distributors, food manufacturing companies, journalists and power bloggers in Seoul, its vicinity areas and as far away as Gwangju and Cheongju.

Following Ambassador Patrick Rata’s welcome speech, participants saw a presentation on how to use social media and enjoyed a food tasting session. Many new recipes were discussed and developed jointly by participants and chefs for this event, showing the New Zealand participants how their products can be used in Korea.

Omnishambles for lamb

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‘Omnishambles’, is the word of the year, according to the Oxford Dictionary. Coined originally in a British TV political sitcom, and meaning ‘a situation that is shambolic from every angle’, at first sight it seems a good way to describe this week’s public showing for the sheepmeat industry. It also seems fitting as ‘shambles’ was the old Middle English word for the place where meat is butchered and sold.

High prices for lamb last year, caused in part by high schedule prices to farmers compounded by the ridiculously high NZ dollar and customer resistance to the resulting final prices, resulting in high stock levels have combined to produce announcements of combined losses of over $81.9 million by Alliance Group and Silver Fern Farms this week to add to the $605,000 loss announced in July by the ‘canary-in-the-mine’ Blue Sky Meats.

The situation was signalled earlier in the year, with price resistance being evident, but it wasn’t apparent, until the end of year accounts wash-up, just how bad the situation was. The fall-out continues. According to media reports, Alliance Group has also confirmed this week that it will make redundancy payments for up to 223 staff as a result of the closure of the Mataura sheepmeat processing plant, which it announced earlier this year. In addition, lamb schedule prices to farmers are said to be tumbling as processors react to the reluctance of European customers to pay the higher prices. Both Alliance and Silver Fern Farms have acknowledged they paid too much for livestock for too long.

The vultures gathered as the Meat Workers Union received plenty of coverage this week with its claims of ‘industry over-capacity’ and lack of leadership in the meat industry – sounding, perhaps, a little last century, but calling for government intervention. Hindsight is a wonderful thing.

Strong, but silent. Like a good southern bloke, the industry is taking its medicine. No industry comment has been made to date by any of the industry organisations or by Government. A response is probably brewing.

We know the meat export industry is resilient. It’s been around for 130 years after all. It’s also characterised by businesses: small-to-medium farming businesses supplying to mainly medium and large meat processing businesses producing product for, in some cases and from New Zealand’s perspective, gigantic global commercial concerns. All of which are subject to the current, and extraordinary, global economic pressures.

Contrary to MWU assertions, plenty is happening behind the scenes as a result of the 2010 Red Meat Sector Strategy, this year’s Riddet Institute’s ‘Call to Arms’, the Stanford University boot camp and no doubt also yesterday’s Pure Advantage Green Growth report will have sparked ideas. All of these work alongside and complement the Government’s  Business Growth Agenda. All highlight the importance of the primary sector to New Zealand’s future fortunes.

Stockpiles have already been worked through, new plants are being built, like Silver Fern Farms’ Te Aroha replacement plant for the one that burned down, and old ones adjusted to cater for the shifts in geographic livestock procurement, to adjust for capacity and cater for new customer requirements.

That was all last season. This is a new season. Lessons have been learned. As Allan Barber reported at the end of October, the 2012-2013 season was looking optimistic from the European perspective following the massive SIAL food fair in Paris. Add to that global meat demand is continuing its upward trend and the the fact that New Zealand meat has an exceptionally good reputation offshore and is the envy of many other producing countries, things ain’t looking so bad.

Omnishambles? I don’t think so.

 

 

Silver Fern Farms bullish in spite of $31 million loss, says Barber

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Allan Barber has been speaking to Silver Fern Farms (SFF)’s chief executive Keith Cooper, following this afternoon’s announcement of a big loss for the co-operative for the year ending 30 September 2012. In his latest blog post, Barber reports finding Cooper bullish in spite of the loss.

Cooper confirmed the effect of lamb on the season’s losses, saying SFF had been comfortable with what it was paying for lambs price before Christmas. Market demand had suddenly stopped dead in February because of the market price and companies had all been hit by exposure to expensive stock, unable to reduce the price quickly enough. The net result was too much product going into overvalued inventory which resulted in a write-down of $25.6 million at balance date.

The company’s media release has highlighted the same reasons as Alliance for the loss, says Barber – unjustifiably high procurement cost, high dollar, sudden drop in market demand, inventory writedown – but made very positive reference to the future outlook. It has made significant new investments, including the Te Aroha rebuild, $8 million of new marketing initiatives and $4 million commitment to FarmIQ.

In the current year, SFF intends to invest a further $22.6 million in brand development, marketing initiatives and FarmIQ. According to chairman Eoin Garden, this “clearly demonstrates our confidence in, and commitment to, the growth path we have charted for our company” notwithstanding the poor performance during the year ended September.

High inventories are already being substantially sold down to a point where the company’s inventory level is already much closer to normal for this time of the year, lonely six weeks after balance date. As will be the case with Alliance the equity ratio will have already benefited from this.

The suspicion that SFF’s loss would not be a large as that posted by Alliance because of a greater proportion of beef in its kill proved to be correct. Nor did SFF have to take any plant closures on the chin. CEO Keith Cooper said the company’s footprint was consistent with livestock numbers and no further closures were under review.

In answer to a question about further industry rationalisation Cooper said SFF had already taken over two small companies, Frasertown and Wallace, and he was always in favour of aggregation. This invariably involved smaller companies being acquired by one of the big four. However it was ultimately up to farmers to decide on the industry’s structure, because industry rationalisation only lasted so long before a new processor emerged, which farmers would then typically support.

The general mood in the meat industry, confirmed by SFF, is positive for the new season. Procurement prices are aligned with the market, livestock volumes are stable, even recovering slightly, and capacity is fairly well balanced with throughput.

In conclusion, Keith Cooper said while 2011/12 was a poor year financially, strategically it was a progressive one. “2012 marked a continuation of our unwavering commitment to executing our Plate-to-Pasture strategy. This is a progressive and long term plan, which demands perseverance and determination, to ultimately generate sustainable value for our farmer-partners, by meeting the modern consumer’s requirements.”

This article appears also at Allan Barber’s Barber’s Meaty Issues. Read more …

Silver Fern Farms reports loss, but says strong balance sheet, investment into the future the key focus

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Silver Fern Farms has reported a net operating loss after tax for the 12 months ended 30 September 2012 of $31.1 million (2011 profit $30.8 million) from total revenue of $2 billion.

Silver Fern Farms chairman Eoin Garden says that, despite an operational loss, the company’s balance sheet was robust (44 percent equity ratio); and significant investments had been made in 2012 to underpin future growth, including new marketing initiatives ($8 million) and the new Te Aroha plant ($67 million).

In addition, Silver Fern Farms had also made a significant investment of $4 million in FarmIQ in 2012. Now in year three of the seven-year build timeframe, not only will FarmIQ become the enabler for farmers to deliver the required product to meet Silver Fern Farms’ marketing and sales plans, but it will also empower farmers to identify opportunities on farm to grow their productive capacity, thereby generating more value from within their own farming businesses.

Garden says it is important to highlight the commitment the company had made to forge ahead with the implementation of the business’ overall growth strategy for the future of Silver Fern Farms, its shareholders, suppliers and people, notwithstanding this poor 12-month financial performance.

“In the 2012/13 financial year, Silver Fern Farms plans to invest a further $22.6 million into brand development and marketing initiatives to build brand equity, channel and market development, and FarmIQ. That clearly demonstrates our confidence in, and commitment to, the growth path we have charted for our co-operative” says Garden.

Chief executive Keith Cooper comments that Silver Fern Farms operates in an environment where many outcomes are beyond the company’s control but materially impact on the business.

“Climatically, we went into the 2011/12 season with ideal pasture growing conditions which meant livestock was held on farm for valid reasons. This resulted in markets being short of product versus historical supply patterns. Off the back of this, we saw global prices for lamb in particular, escalate to unsustainable levels, which resulted in a sharp fall in demand and which then led to a significant decline in value. This market correction was subsequently reflected back to suppliers and, in turn, caused write-downs in inventory valuations throughout the financial year of circa $25.6 million.  Through this period, Silver Fern Farms had to manage business continuity – supplying to customers and operating processing assets – which meant we had to compete for livestock at unsustainable prices which further contributed to the problem.”

Cooper reiterated that while this was a poor year financially, strategically it was a progressive one.

“2012 marked a continuation of our unwavering commitment to executing our Plate-to-Pasture strategy. This is a progressive and long-term plan, which demands perseverance and determination, to ultimately generate sustainable value for our farmer-partners, by meeting the modern consumer’s requirements.”

Over the last four years, Silver Fern Farms has invested in designing the brand detail and marketing infrastructure required to drive a greater proportion of its revenue through premium value branded products. “Our differentiated approach means that our brand has now become integrated across all areas of the business – corporate, supplier service, operations, sales and consumer activities – and we are now starting to see the benefits of this throughout the value chain” says Cooper.

While Silver Fern Farms’ final inventory position for 2012 was up versus the previous year, he advises that this had decreased markedly since balance date, with the increased working capital being driven by those higher balance date inventories.

Eoin Garden also advised that incumbent director Angus Mabin, who retired by rotation, has been re-appointed unopposed, which gives the board confidence they have continuing shareholder support.

Silver Fern Farms is New Zealand’s leading processor and marketer of lamb, mutton, beef, venison and associated products to more than 60 countries.

The summary of key financial items for the year ending 30 September 2012, includes:

  • Turnover of $2.03 billion (as opposed to $2.1 billion for the year ending 30 September 2011)
  • Net result after tax of $31.1 million (2011 $30.8 million)
  • Operating cash flow (deficit) in 2012 of ($105.6m)   (2011 [$7.5m])
  • Equity ratio at balance date  44%  (2011 59%)

Alliance posts $50.8 million loss for 2012

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Alliance posted its annual result on Friday which was every bit as bad as predicted, a net after tax loss of $50.8 million for the 12 months ended September, writes meat industry commentator Allan Barber in his recent blog post.

The result included restructuring costs of $13.5 million associated with the closure of the company’s Mataura sheep and lamb processing operations which followed similar costs of $19.4 million the previous year from the closure of its Sockburn plant.

The 2012 performance saw a $77.8 million deterioration at the operating level compared with 2011 which, despite the $9 million net after tax loss, produced an operating profit of over $20 million.

Chairman Owen Poole expressed his disappointment at Alliance’s first operating loss for 20 years which he attributed to the decline in the sheepmeat market exacerbated by the high New Zealand dollar and the unsustainable level of procurement costs earlier in the season.

In the 2012 financial year, Alliance was hit by a triple whammy of lower sales and product prices, ridiculously high livestock procurement prices driven by short supply pre-Christmas, and the high dollar. The strength of the dollar was in no way reflected in a realistic procurement market. There is a question whether other processors were equally affected or saved to some extent by a higher proportion of beef processing in their operations. This will be at least partially answered when Silver Fern Farms releases its result later this month.

One factor which Poole omitted to cover in detail was the significant impact of the last two years on the balance sheet which he said was “still robust”. Unfortunately, the equity ratio has declined from 81.5 percent in 2010 to 51 percent two years later. Clearly, it cannot keep declining at this rate for much longer, so the company’s board will be hoping fervently that markets will recover and livestock supply at least stabilise in the immediate future.

Poole referred in his statement to the operational upgrades to Mataura’s beef processing, venison processing at Smithfield and rendering at Lorneville which, when combined with the savings from closures, will lead to much improved efficiencies and a significantly better result for the current year. Growth of lamb sales to China, sales to Brazil, the contract with Marks & Spencer and better market outlook encourage some optimism for this year.

Longer-term, the sheep population is unlikely to increase to any great extent, although productivity can be expected to improve with genetics, technology and lambing percentage increases. Whether this will be enough to maintain the industry in its present configuration is doubtful, because individual processors will continue to look for efficiency gains. Silver Fern Farms is already thought to be planning a nightshift at its Gore plant to take advantage of the closure of Mataura.

Meat industry capacity adjustments and potentially company ownerships can be expected to change in response to market conditions. No different from normal!

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

Emissions from global agriculture bigger than thought

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Britain’s Daily Mail newspaper ran an article this week suggesting that (un-named) ‘experts’ were claiming British shops should sell New Zealand lamb because British farming methods produce twice as much greenhouse gas.

The item, which has been picked up and run in various New Zealand papers, was based around a newly released United Nations Consultative Group on International Agricultural Research (CGIAR) analysis Climate Change and Food Systems. Taking a closer look it’s clear that the comprehensive study itself didn’t actually say that but it was an interesting read, presenting for the first time the GHG footprint for the global food industry and showing that global agriculture is a much larger contributor to climate change than previously thought.

The analysis, which was recently published in the 2012 Annual Review of Environment and Resources presents figures showing that feeding the world released up to 17,000 megatonnes (Mt) of carbon dioxide into the atmosphere in 2008, contributing up to 29 percent of greenhouse gas (GHG) emissions. But while the emissions ‘footprint’ needs to be reduced, a companion policy brief by CGIAR’s research programme on climate change, agriculture and food security (CCAFS) – Recalibrating Food Production – lays out how climate change will require a complete calibration of where specific crops are grown and livestock raised.

Together, the two reports “shed new light on the intertwining evolutions of climate change and the world’s food system and their potential impact on humanity’s relationship with food,” says CGIAR.

Climate change mitigation and adaptation are critical priorities, according to Bruce Campbell, CCAFS’ programme director. “Farmers around the world, especially smallholder farmers in developing countries, need access to the latest science, more resources and advanced technology. This research services as an urgent call for negotiators at the upcoming UN Framework Convention on Climate Change in Doha.”

CGIAR Consortium chief executive Frank Rijsberman says: “We are coming to terms with the fact that agriculture is a critical player in climate change. Not only are emissions from agriculture much larger than previously estimated, but with weather records being set every month as regional climates adjust and reset, there is an urgent need for research that helps smallholder farmers adapt to the new normal.”

Climate Change and Food Systems assesses the entire food system’s emissions ‘footprint’ – in total somewhere between a fifth and a third of the greenhouse gases emitted by people on this planet. “This figure accounts for every aspect of food production and distribution – including growing crops and raising livestock, manufacturing fertiliser and storing, transporting and refrigerating food. Agriculture accounts for around 80 percent of these emissions, but the combined contribution of transport, refrigeration, consumer practices and waste management is growing,” according to CGIAR.

“The food-related emissions and, conversely, the impacts of climate change on agriculture and the food system, will profoundly alter the way we grow and produce food. This will affect different parts of the world in radically different ways, but all regions will have to change their current approach to what they grow and eat,” says Sonja Vermeulen, the head of research at CCAFS and the lead author of the study.

Delving deeper

Climate Change and Food Systems adds the figures across the aggregate global food chain, and assuming a growth in emissions of three percent a year, gives the total global greenhouse gas (GHG) emissions for 2008 in the range of 9,800 to 16,900 megatonnes of carbon dioxide equivalent (MtCO2e) from the food system, inclusive of indirect emissions associated with land-cover change. “Thus the food system contributes 19-29 percent of total global anthropogenic GHG emissions … Of this, agricultural production, contributes 80-86 percent at the global level, while the remainder comes from pre-production (predominantly fertiliser manufacture) and the post-production activities of processing, packaging, refrigeration, transport, retail, catering, domestic food management and waste disposal (landfills).”

Reflecting findings from New Zealand’s own 2010 GHG footprint for lamb, where 80 percent of emissions were also found to be from on-farm, the study notes that packaging for both vegetables and meat “is of minor importance in terms of total food emissions.” Transport “makes a large direct contribution” – for example, of the 19MtCO2e produced transporting food around Britain in 2002, 10Mt were emitted in the UK, all from road transport. An interesting estimate from a US researcher is that the same amount of fuel “can transport five kg of food only one km by car, 43 km by air, 740 km by truck, 2,400 km by rail and 3,800 by sea”. So, if that is correct, transporting the five kg of food 3.15 kms by car is the equivalent of a 12,000 km journey by sea, in terms of fuel used. For New Zealand lamb, transport accounts for five percent of the product footprint.

Refrigeration is noted to be the “major energy-intensive component of the food chain”. Limited data brought together by the study suggests that it accounts for one percent of total global GHG emissions and another researcher has estimated it accounts for 15 percent of electricity use worldwide. Food waste also contributes to GHG emissions directly through methane emissions from landfills and handling the waste to get it to landfill.

New Zealand: lead role

New Zealand has been taking a lead role on the world stage in tackling agricultural emissions. The Pastoral Greenhouse Gas Research Consortium (PGgRC), was established in 2002 and the New Zealand Agricultural Greenhouse Gas Research Centre (NZAGRC) opened in 2010. The latter recently released its highlights for 2012 detailing progress made in research focusing on mitigation of methane and nitrous oxide emissions, in understanding soil carbon and in developing integrated systems. The work on the GHG footprint for New Zealand beef was also recently released and will be covered in the forthcoming Food New Zealand magazine (December/January 2012) and included in this blog.

 

Alliance group secures exclusive M&S deal

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Meat processor and exporter Alliance Group has confirmed it has secured an  exclusive deal to supply chilled New Zealand lamb to iconic UK retailer Marks & Spencer.

The South Island co-operative will be the sole supplier of chilled New Zealand lamb to Marks & Spencer from Christmas 2012, sourcing lambs from approved farms across the South Island for processing at the company’s Lorneville (Invercargill), Pukeuri (Oamaru) and Smithfield (Timaru) plants.

This supply arrangement is the first time Marks & Spencer has agreed to an exclusive deal for chilled lamb from a single New Zealand supplier.

Marks & Spencer supplies a wide range of lamb products to its UK customers, with its fresh lamb cabinet featuring a full selection of bone-in and boneless cuts. The retailer’s added-value lamb lines also include ‘ready to roast’ leg joints as well as other ‘oven-ready’ cuts sold under the premium in-house ‘Cook!’ label.

Alliance Group marketing manager Murray Brown says, “This exclusive contract marks a major milestone in Alliance Group’s 20 year relationship with Marks & Spencer. As they have a loyal customer base for lamb, coupled with the fact that our chilled lamb programme runs counter-cyclical to the UK domestic supply season, we’re very excited about the growth opportunities it offers for everyone involved. This deal is good news for our farmer suppliers.”

Brown added: “As a result of the strengthened relationship, Alliance Group is also now actively exploring a number of other initiatives in our agricultural, technical and commercial divisions with Marks & Spencer to maximise the benefits of this partnership.”

Steve McLean, head of agriculture and fisheries sourcing at Marks & Spencer, says: “We are looking forward to growing our partnership with the Alliance Group and strengthening our links with their producers. We are impressed with Alliance Group’s commitment to high quality lamb production, and I am confident they will meet the taste and tenderness requirements of our discerning customers.”

All Alliance Group products supplied to Marks & Spencer will be sourced from registered M&S Select farms so that the co-operative can trace lambs back to their farm of origin.

The M&S Select Farm scheme sees supplying farmers registered on M&S TRAK, a traceability management system launched by Marks & Spencer in 2009. The programme, which includes lamb suppliers from both New Zealand and the UK, features a database that monitors farm-management, animal origin and livestock records.

Meanwhile, in conjunction with AbacusBio (UK), Alliance Group is progressing with the introduction of its Hoofprint programme to a group of selected UK farmers supplying lambs to Marks & Spencer.

Hoofprint helps farmers monitor the carbon footprint associated with their farm, whilst also focusing on improving productivity. The web-based farmer-friendly programme analyses performance information based on the data collected from each farm in order to determine the size of its carbon footprint. The Hoofprint model will be released to all registered TRAK suppliers in New Zealand.

Marks & Spencer uses two UK based meat processors, Dawn Meats Ltd and Scotbeef Ltd, to cut and retail pack their New Zealand chilled lamb in the marketplace. Both of these companies are already well known to Alliance Group, with personnel from each processor having visited Alliance on a number of occasions in recent years.

Marks & Spencer is one of the UK’S leading retailers with more than 21 million customers every week. The company employs over 78,000 people in the UK and abroad, and has over 700 UK stores, plus an expanding international business operating in 43 different territories around the world.

 

Optimistic signs for coming season’s red meat trade

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After some harrowing experiences last season for the meat industry, both processors and farmers, 12 months on things are looking up. This sense of optimism hasn’t yet been reflected in prices from the meat companies, but statements from those in the know strike a perceptibly more positive note, writes industry commentator Allan Barber.

Last year, the lamb kill was down by a million, there was drought in significant livestock areas, the dollar was too high and so was the procurement price for lamb. While beef remained relatively unaffected by the hype, the price really not changing much in a year, sheepmeat was a completely different story. Driven by the unholy combination of scarcity and tight shipping deadlines for the Christmas trade, the procurement price hit $8 a kilo and struggled to get down from that level.

The net result was too many buyers chasing too few lambs which were also allowed to put on too much weight. The export markets got a severe dose of indigestion and inevitably inventories built up fast on both sides of the world. All this time, the New Zealand dollar stayed obstinately high.

We will find out in November how badly this set of circumstances affected the profit and balance sheet performance of the meat exporters, although Blue Sky’s result to the end of March gave a pretty good indication of the effect of the first six months of the season.

Farmers won’t be as unhappy as the processors and exporters because they received more for their stock than it was worth and, although the lamb price has now dropped from $150 to below $100, this is still better than in many previous years. According to Keith Cooper in Silver Fern Farms’ (SFF) news release last week, he predicts the price will bottom out at about $4.80 per kilo after Christmas, equivalent to $90 for an 18.75 kg lamb. It will then rebuild to $5.80 or $109 by this time next year. Cooper has also said last year’s pricing got way out of kilter and won’t happen again this year.

Cooper’s optimism is based on favourable European buyer response in the last couple of weeks, culminating in the European food fair at SIAL in Paris last weekend. UK supermarket chains also seem to be positive about the forthcoming chilled New Zealand lamb season which starts with Christmas and continues until British lamb starts to appear in the chillers after Easter.

SFF’s news release provided an interesting, if slightly puzzling, piece of information which stated that Marks & Spencer had awarded their new contract for chilled lamb to Alliance, having dealt exclusively with SFF for five years, because “we could not offer Organic lamb to M&S.” As far as I can understand, and from memory, M&S have always insisted on knowing where their lamb came from, eventually insisting on identifying the lambs’ farms of origin and traceability, but organics have never been a requirement in the past.

Cooper subsequently confirmed to me that the M&S tender specified a proportion of organic supply as part of the supply which SFF couldn’t guarantee to fulfil.

Alliance suggested that it was not required to supply certified organic lamb under its new contract, although all suppliers involved belong to the company’s Hoofprint programme which measures their carbon footprint. In fact, it’s hard to see how enough organic lamb could be available, especially in the pre-Christmas period, while there is little evidence the UK supermarkets are willing to pay a sufficient premium for organic supply.

In contrast, beef prices appear set to continue stable, underpinned by drought conditions which have affected feed supply and cost in the USA; however, any weakness in the New Zealand dollar would inevitably flow through to better livestock prices, much as meat companies might want to hang onto any bonus they receive.

I imagine meat exporters will be keen to put what was reasonably torrid 2011/12 season behind them and bed in the capacity changes they have decided on, so their new season’s performance can benefit. Sheep farmers can’t aspire to the $150 lamb, but they can expect more certainty and consistency on which to base their farm business.

This article has also appeared at www.interest.co.nz.