Tag Archives: lamb

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.

Positive signs in Europe

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There are positive signs in Europe for New Zealand lamb, beef and venison meats and co-products according to Silver Fern Farms which has finalised its plans for Christmas chilled lamb sales and completed its overall sales plan for 2012/2013 with positive outcomes, it says.

The company’s sales teams have been active in Europe over the past two weeks, culminating in the European food fair SIAL in Paris last weekend.

“Working with our Aalst office team in Belgium, we have met and concluded business with many European customers who appear to have regained confidence based on supply and stability of value, which is underpinning the overall market sentiment from European customers,” says chief executive Keith Cooper.

For general manager sales and marketing Glenn Tyrrell, this early confidence is a healthy sign. “It will likely lead to sustained demand and relising on food service delivery cards, something which has been lacking lately due to the price hike in 2011,” he says.

In the UK, Marks and Spencer (M&S) recently put up their annual six month supply of chilled NZ lamb for sole tender. “As we could not offer organic lamb to M&S, the Alliance Group picked up this tender. While unfortunate, given the effort from both Silver Fern Farms and suppliers who have supported M&S for the last five years, our priority is to maximise organic and overall chilled supply to Tesco which has fully supported development of our branded retail packs in their store,” says Tyrrell.

Silver Fern Farms continues to be optimistic on beef with a prediction for schedule prices to farmers of $3.60 a kg during the season heading to $4.20 per kg, according to Cooper. “Venison is forecast to track up from a low of $6.70-8.00 per kg next October and lamb is likely to bottom out at peak season post-Christmas at $4.80 per kg and will progressively build to $5.80 per kg this time next year,” he says.

“It is clear the European market cannot be taken for granted,” comments Cooper. “Market forces over 2011/2012 saw a downturn in sales and a major price correction, in market and at farm gate. Now this has passed, many customers are looking to relist products but they are also looking for marketing support and price stability. These opportunities fit particularly well with Silver Fern Farms’ strategy of creating value in the way of a truly integrated value chain – linking consumers to farmer suppliers.”

 

Meat export revenue down in June quarter, says MPI

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Lamb leads a drop in export meat revenue for the June 2012 quarter, according to the latest figures from the Ministry for Primary Industries (MPI).

The Ministry’s Primary Industries: Production and Trade report for the June 2012 quarter, says that this is mostly because of lower export prices from weaker international demand and a build up in meat stocks in New Zealand, particularly for lamb, which fell by 25.6 percent against the same period a year earlier. Venison also  recorded a fall of 15.1 percent for the quarter and beef and veal -2.9 percent. In total,  meat export revenue for the quarter, was down 14.4 percent to $1.6 billion. Lamb production, however, was up 5.9 percent in the year ended June 2012, with slaughter numbers up 2.4 percent and carcase weights up 2.5 percent on the previous year, says MPI.

“This reflects increased numbers of lambs born in late winter and early spring 2011 and a record average carcase weight of 18.48kg.”

Beef production fell by 1.8 percent in the quarter due to lower slaughter numbers, particularly for cows and heifers, reflecting lower beef cattle inventories at the end of the 2011 season and retentions for an expanding national dairy milking herd.

Offals seem to have had a healthy year with quarterly revenue increasing for ‘other meat’ of 8.5 percent and a year-on-year increase of 10.7 percent, to end June 2012.

Another significant highlight is that China became the number one market for frozen bone-in lamb cuts in the six months to end June, with the European Union now taking second spot, according to MPI. “However, average export prices of lamb sold to China re about half that received in the EU,” the report concedes.

All but one industry grouping experienced a decline in export revenues, the report says. Overall, primary sector revenue for the June quarter was down 5.8 percent, compared with the final quarter in 2011, to $8.8 million. However,  during the year ending June 2012 there was a production-driven revenue increase of 1.3 percent to just over $32 billion, due to favourable climatic conditions, MPI says.

Climate conditions for pasture growth for the year ended June 2012 were the best since 2002, MPI notes, with 51.4 days of soil moisture deficit compared to the 20-year average of 61.6  – resulting in record carcase weights for lambs, heifers and cows and record milk solids per cow.

The full report Primary Industries: Production and Trade is available for download at the MPI website (search under Publications).

 

 

 

 

‘Meating’ the plastic challenge

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A series of challenges has been thrown out to the plastics industry to develop packaging that will help the meat industry maintain high food safety standards, increase shelf-life and develop new products.

The meat industry is one of this country’s biggest users of plastic, particularly in the form of packaging that keeps products safe, fresh and looking great right to through to the customer.

Speaking to the Plastics New Zealand conference in Queenstown in May, Meat Industry Association chief executive Tim Ritchie outlined where he thought future opportunities lay for the material.

He told delegates that the meat industry has been very responsive to market demands and there has been a very significant change in the business model over the last 25 to 30 years. Trade has moved from sending frozen carcases – which, early on, were simply stockingetted and later shrink-wrapped for shipping – to the UK, to now sending chilled and frozen cuts and ready-prepared products to more than 115 markets around the world, with a growing focus on the Asian region, he explained.

“Now, we are in the business of directly servicing supermarkets with quality, consumer-ready cuts of meat, produced and packaged at source in New Zealand.

The industry is now in the ‘disassembly’ process, exporting and marketing the ‘bits’ around the world so as to maximise value, he said, adding that “a steadily increasing proportion of trade is high value chilled product.”

Ritchie said that plastics are widely used in the production process, covering products such as clips, liners, covers, containers, crates and pallets, “ensuring that processes are as clean as possible while meeting the needs of industrial production for items that are lightweight and resilient.”

There is a need to ensure their biodegradability and detectability. “But the greatest opportunities for the future of plastics in the meat industry are probably in packaging,” he said.

Areas of opportunity lie in safety, shelf-life, environmental sustainability and, finally, product quality and presentation. Reducing costs and lifting efficiencies are also part of the equation.

A growing volume of New Zealand meat is chilled and it is vacuum-packaged and sometimes CO2-gas flushed.  “The use of barrier bags and gas flushing were important steps in the evolution of our business.”

New packaging that contains anti-bacterial agents, such as ‘biophages’, and ‘smart packaging’ which can identify changes in the product and alert consumers if there is a problem, are two new areas where manufacturers can assist the meat industry to maintain high food safety standards, according to Ritchie.

Shelf-life is another area which has become even more important especially for the perishable chilled meat trade, as the global shipping industry moves towards greater use of ‘slow-steaming’, which increases transit times and reduces the remaining shelf life of products once they get to market. He noted that packaging companies already working on solutions with shelf-life enhancing properties.

In addition, consumers are increasingly demanding environmental sustainability, which means reduced and/or recyclable packaging. Food waste, identified as a major problem especially by the European Union, is also an issue.

“But a significant amount also occurs after purchase and here packaging can be part of the problem,” Ritchie says. Packaging sizes for single or fewer portions, for example, or re-sealable and compartmentalised packages can help limit unnecessary waste.

“And then there are bio-plastics, such as those being made from meat by-products.”

It is not just being satisfied ourselves that all is sustainable and safe, said Ritchie. “We need to be able to demonstrate it to the consumer and retailer, who is often proxy for the consumer in this business.

“Plastics can play an increasing role in helping with food safety, extending product shelf-life, improving attractiveness and ease-of-use by consumers. At the same time, our industry increasingly needs products that are environmentally sustainable, with recyclable or biodegradable attributes,” he concluded.

“And of course, anything your industry can do to help us take cost out of the system and improve operational efficiency will be welcomed.”

This article has appeared in Food New Zealand magazine (October/November 2012).

Alliance to transfer Mataura sheepmeat processing to Lorneville

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Alliance Group announced this afternoon its intention to close its sheep and lamb processing operations at its Mataura plant and transfer them to its main Southland lamb plant at Lorneville, reports Allan Barber.

Mataura’s beef facility which has recently had a $15 million upgrade will continue to process beef with its remaining staff count of more than 400.

This decision is still up for final consultation with the workforce and union but, as always, this is a formality in as much as the decision has already been made. However, the media release indicates that other options could emerge during the consultation process. If the proposal remains unchanged, approximately 260 workers will be offered the chance to transfer to Lorneville with a further 65 engineering, administration and management staff also affected.

In a media release, Alliance’s chief executive Grant Cuff refers to the company’s status as one of Southland’s largest employers, emphasising its duty as a cooperative to its shareholders to operate the plant configuration most appropriate to the available stock numbers. Significant efforts had been made to retain complementary sheep, lamb and beef processing at Mataura, but declining stock numbers have made this unsustainable.

Cuff refers to the strength of Alliance’s balance sheet, which will enable it to withstand the challenge of a difficult period for the industry as a whole. He also says: “We are confident in the long-term outlook and these changes are essential to allow the company and its 5,000 farmer shareholders to benefit from the demand for New Zealand meat products in the global market.”

Today’s announcement confirms the rumours of industry rationalisation that have been circulating in recent days. The fact that Alliance has made the first move does not mean there won’t be further changes in due course affecting either the South Island’s other large cooperative Silver Fern Farms or ANZCO’s Canterbury Meat Packers operation near Ashburton.

However Alliance’s move will provide a small breathing space before further capacity or structural changes are necessary.

Iron Maidens + Sophie

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London Paralympic Games champion swimmer Sophie Pascoe is the newest Beef+Lamb NZ Inc Iron Maiden, becoming the + between Sarah Walker’s ‘Beef’ and Lisa Carrington’s ‘Lamb’.

Announced first on the domestic promotion agency’s Facebook page this morning, the well anticipated news has since been covered at the NZ Herald, which says ‘It all adds up now Sophie has joined in‘.

The 19 year old swimmer from Christchurch, who lost the lower half of her left leg aged two following a lawnmower accident, scored three gold and three silver medals at the recent games in London – breaking two world records and setting a new Paralympic record in the process. She added those to her earlier hauls of ten medals at the Summer Paralympics and four medals at the 2008 Paralympics.

Sophie, who  was made a Member of the New Zealand Order of Merit earlier this year for her services to swimming, will appear alongside the other two B+LNZ ambassadors in a marketing campaign promoting the importance of a healthy diet, including red meat. Kiwis can expect to see Pascoe, Walker and Carrington on their television screens from November.

B+LNZ Inc chief executive, Rod Slater, says Pascoe completes the team.

“She has it all; the New Zealand public love her. Sophie fits seamlessly into the Beef + Lamb brand. We really are seeing the second generation of superstars following on from the original Iron Maidens” says Slater.

Pascoe says she’s really excited to be part of the team.

“I’m thrilled, especially to be working with two other amazing athletes. We all get on so well, it’s going to be great,” says Pascoe.

Congratulations Sophie and B+LNZ!

Alliance getting ready for new season

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Meat processor and exporter Alliance Group, like many others, has been busy getting ready for the new meat export season. The company has announced new plant and process modifications at two of its South Island plants, Pukeuri and Lorneville, recently. 

Additional shift and modifications at Pukeuri

Alliance is to provide an additional shift at its Pukeuri plant as it ramps up cattle processing in the peak period, the company announced last week.

The third shift at the plant north of Oamaru will enable the company to process 880 extra cattle a week through May and June when the cattle throughput traditionally hits its peak. the third shift will also offer about 80 existing employees from the sheep and lamb processing shifts a longer season.

Alliance Group is currently undertaking a number of modifications to the plant, including extending the cattle yards ahead of the change.

John Brader, general manager of processing at Alliance Group, says the additional third shift was necessary to ensure Alliance continues to meet the needs of its suppliers.

Alterations have been made in Alliance’s systems to accommodate the additional cartons, giving more flexibility to which blast freezers or equilibration chillers the product can be directed, he explained.

Pukeuri processes more than 10,500 sheep and lambs a day. More than 900 staff work at the plant, which is the largest employer in North Otago. It is estimated the plant injects around $100 million into the local economy each year.

New rendering plant at Lorneville

In addition, Alliance announced that it has also completed the construction of the building for a new $13 million rendering plant at it’s Lorneville plant near Invercargill. Rendering machinery is now being installed in the 1,121 square metre building. The facility, which is designed to reduce Alliance’s energy and operating costs, as well as improve product recovery, is expected to be commissioned in October.

The new plant incorporates the latest technology, including a Press Dewatering System, which uses less energy and produces high quality products. When fitted with a waste heat evaporator, the process is virtually ‘zero waste’, resulting in high product yields and low wastewater output.

The first stage in a larger rendering redevelopment project, two further stages are proposed in the future. The complete project is said to save 9,000 tonnes of lignite and more than 1.5 million hours of electricity a year, enough to power 170 homes a year, the company says.

John Brader says the new rendering plant represented the largest single investment at the Lorneville plant for more than a decade.

“Completion of the building marks a major milestone for the development. Rendering remains a significant contributor to Alliance Group’s income and the investment in the latest technology will ensure we maximise revenue in this area.

“Alliance measures energy use and the associated greenhouse gas emissions from its plant to assist in making good business decisions.

“Since 2000, Alliance Group has reduced greenhouse gas emissions from energy use at its processing plants by 26 percent per unit of production and total fuel use has been reduced by 32 percent.”

Almost 2,000 people are employed at Lorneville, which is New Zealand’s largest sheepmeat processing plant.

Try lamb, says joint promotional group

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A joint promotional push is getting United States consumers to try lamb.

Project partners involved with the Tri-Lamb Group, which has a goal to get more Americans eating lamb, are meeting with two Beef + Lamb New Zealand (B+LNZ Ltd) farmer directors.

Central South Island director, Anne Munro and Southern South Island director, Leon Black are in Idaho, representing New Zealand sheep farmers alongside their fellow Tri- Lamb Group representatives from Australia and the United States.

B+LNZ Ltd chief executive Dr Scott Champion says the collaborative promotion by the three sheep producing nations is built around the understanding that the profitability and sustainability of the lamb market in the US is important for farmers in all three countries.

“If more Americans are eating lamb, then each country stands to gain from the opportunities that increased consumption will provide.

“The programme includes online food and nutrition blogs that share lamb recipes and podcasts showing how to build simple and healthy lamb meals for the family. They’re tracking a lot of interest.

“This week the Group reviewed last year’s programme and considered continuing support for the initiative, called ‘Making Lamb Famous in the United States’.”

For the year ended 30 June, the United States was New Zealand’s third largest sheepmeat market by value (NZ$256 million), behind the United Kingdom (NZ$534 million) and Germany ($NZ275 million) and ahead of China (NZ$247 million).

View Lean on Lamb online food blog.

 

Market will cope with extra lambs

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The market should be able to cope with the expected one million more lambs this season, suggests meat industry commentator Allan Barber.

Responding to recently released figures from B+LNZ Ltd’s Economic Service Barber points out that last year’s 4.4 percent reduction led sheep numbers to an all time low and that this season saw a bounceback of 2.6 percent, largely from an increase in ewe hoggets.

“Providing adverse weather doesn’t cause larger than anticipated lamb losses, there is every reason to expect one million more lambs on the ground this season,” he suggests, adding that this will prompt the question as to whether the markets can absorb the extra lambs, given the flat state of most overseas economies and the significant amount of inventory clogging up the pipeline.

“Past experience suggests that the pipeline will free up, so buyers will hopefully start to place orders again in the not too distant future. In addition, the growth last season meant that farmers held back stock and continued to put weight on. At the same time, meat exporters failed to give the right market signals soon enough, because they had to keep prices high to secure throughput,” explains Barber.

“Assuming the law of climatic averages reasserts itself, the coming season will return to more normal conditions. Therefore, the conflicting messages of procurement and market price will not be so far out of kilter again and supply and demand will be more complementary.

“If not, we will have to pray for an outbreak of rational behaviour from producers and processors!”

Barber notes that the changing nature of land use in New Zealand can be seen from the fact that the North Island is now home to more sheep than the South Island for the first time in living memory. At the same time, the South Island, assisted by irrigation, now has 35 percent of the country’s dairy cows, “a proportion which was inconceivable 15 years ago,” he says.