Tag Archives: meat

Investment and innovation needed for food export growth

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Steven JoyceMore investment and more innovative processed foods are going to be needed to double New Zealand food exports by 2025 according to a new report released earlier this week by Economic Development Minister Steven Joyce.

The report, Driving Growth in the Processed Foods Sector says that doubling export sales in the food sector by 2025 will require an export growth of 7.7 per cent to 9.3 per cent per annum for 15 years, leading to approximately $30 billion in new exports.

“The report says that doubling our foods exports by 2025 is achievable. New Zealand’s food industry has seen significant growth over the last 16 years – outperforming a wide range of our competitors – but there are still challenges to overcome if we are to reach our goal,” says Joyce.

The report suggests that with investment, the processed foods industry can build on New Zealand’s existing competitive advantage in food and agriculture, and growth can continue to be driven through developing premium, innovative and niche products that are well-branded.

“New Zealand has good food and beverage exports per capita but we need to move beyond our traditional mix of meat and dairy. Processed value-added foods, like infant formula, nutraceuticals and baked goods, have the best potential for achieving the growth we need.”

Petfoods’ potential is also pointed to in the report.

The project is part of the Government’s Business Growth Agenda, to build a more productive and competitive economy. The Agenda sets an ambitious goal to increase the ratio of exports to GDP from the current 30 per cent to 40 per cent of GDP by 2025.

Designed to prompt discussion, the Driving Growth in the Processed Foods Sector report, by Coriolis Research, is part of a suite of reports released under the Food & Beverage Information Project – the most comprehensive analysis of New Zealand’s food industry ever undertaken.

Co-products return to centre-stage, says Rabobank

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A recent Rabobank report, published in the Netherlands, shows what has been evident to New Zealand’s processors and exporters for some time: that by-products – more usually known as co-products here – are returning to centre-stage and becoming a more important part of the carcase.

Over the last few years, the valuation of the animal carcase has shifted from prime cuts to processing cuts and fifth quarter products, the bank says. This is driven by changing consumer preference for processed products, fast-rising economic welfare and preference for animal co-products in Asia, new applications for animal co-products and lower availability of sow meat. The report by analyst Albert Vernooij suggests the trend will be permanent and will impact the business models of almost all players in the global meat industry.

“The impact of this shift in carcase valuation will be different for slaughterhouses, the further processing industry and dedicated companies active in the different parts of the by-product industry,” he says. “For slaughterhouses, the focus will increasingly move towards capturing the value of fifth quarter products, which might lead to forward integration in these activities.”

Vernooij puts the rise in price of cuts and co-products of cattle and hogs down to five main developments: growing economies in developing countries including the opening of the Chinese market for imports; the economic crisis which has caused consumers to trade down to cheaper products; the growth of convenience products with more women entering the workforce; consumers having less time to cook, and increased grazing; the growing number of applications for animal co-products in the pharmaceutical and cosmetic industries; and the decline in the sow herd in both the US and the EU.

He suggests that the further processing industry could be forced to change their raw material sourcing to other products or enter into long-term supplier contracts to safeguard supply. For dedicated processors, competition will increase which will urge them to strengthen their positions in the chain.

Generally, as affluence rises consumers move towards cuts, rather than co-products. However, as most co-products are considered a delicacy in Asia they should remain on menus in the long-term. Coupled with the growing number of applications for fifth quarter products Rabobank believes this will result in continued strong demand and the shift in carcase valuation will be permanent.

American sheep farmers suffering even more than here

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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.

Meat and dairy lead manufacturing rise

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Meat and dairy products dominated the rise in total manufacturing sales for the September 2012 quarter, according to Statistics New Zealand.

After adjusting for seasonal effects, the value of total manufacturing sales rose 1.6 percent ($370 million), led by the 9.3 percent increase in meat and dairy product manufacturing.

When price changes are removed, the volume of manufacturing sales rose 2.6 percent, also led by meat and dairy product manufacturing, up 13 percent.

“The volume increase in meat and dairy manufacturing is reflected in the rise of export volumes for dairy and meat products, with increases of 32 percent in dairy and 15 percent in meat,” industry and labour statistics manager Blair Cardno says.

“Looking at the longer-term picture, the trend for manufacturing volumes has risen in the past year.”

Without the meat and dairy industry contribution, the volume of manufacturing sales fell 1.4 percent in the September quarter.

TPP negotiations need to deliver for agriculture

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

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

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

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

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

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

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

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

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

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

Feeding East Asia

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

New programme to add value to beef

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A new $87 million innovation programme that will look at how more value can be generated from beef carcases has been approved for Government funding.

Ministry for Primary Industries director-general Wayne McNee today announced approved co-funding from the Primary Growth Partnership (PGP) for the new Foodplus programme.

The PGP Fund is committing $43.5 million over seven years for the programme, which is worth $87 million in total and is being run by ANZCO Foods.

Foodplus will identify opportunities to create new products, with a particular focus on parts of the beef carcase that currently generate less value. ANZCO has identified three markets for innovative new products: food, ingredients and healthcare.

ANZCO Foods is a multinational group of companies and one of New Zealand’s largest exporters, with sales of $1.3 billion and employing more than 3,000 staff worldwide. ANZCO Foods also owns processing plants and a cattle feedlot: CMP, Riverlands and Five Star Beef.

“Adding further value to the carcase is essential for the future success of the meat industry,” says McNee. “ANZCO’s vision for Foodplus is relevant and bold and now backed by a significant investment.”

Rennie Davidson, CEO of ANZCO’s Food & Solutions division says ANZCO welcomes the opportunity to partner with the Crown on the Foodplus programme. “It is a large-scale project that wouldn’t be achievable without collaboration. We’re excited about the potential that this will bring to the sector.”

This announcement brings the Government’s investment in meat industry PGP programmes to $129.5 million, for projects worth a total of over half a billion dollars.

Minister welcomes announcement

David Carter, NZ Primary Industries MinisterPrimary Industries Minister David Carter has welcomed the announcement of another successful PGP bid which lifts the total invested in the variety of projects to more than $650 million.

“ANZCO’s proposal to generate more value from the beef carcase with its Foodplus programme is bold and innovative.  This is exactly what PGP is about – transforming great ideas into tangible R&D programmes focussed on results,” says Carter.

“Today’s announcement lifts the total government-industry investment in PGP since its inception three years ago to $665 million.  This is firm proof of the Government’s drive to lift economic growth through primary sector innovation.

“Thanks to the collaborative government-industry approach, we have relevant projects underway across a range of sectors from dairy, arable, red meat and wool to forestry, seafood and aquaculture and manuka honey.

“New Zealand stands to gain from innovative investment in its primary industries because our food, fibre, fishing and forestry sectors are at the heart of our economy,” says the Minister.

ANZCO Foods is a multinational group of companies and one of New Zealand’s largest exporters, with sales of $1.3 billion and employing more than 3000 staff worldwide. The company owns processing plants and a cattle feedlot within a group including CMP, Riverlands and Five Star Beef.

Understanding food protein at heart of science prize

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A world-renowned contribution to the understanding of food protein has led to Distinguished Professor Paul Moughan and Professor Harjinder Singh together being awarded this year’s Prime Minister’s Science Prize – New Zealand’s most valuable award for scientific achievement.

The $500,000 award goes to the two who are Massey University food scientists and co-directors of the Riddet Institute, a centre of research excellence led from the Manawatū campus that focuses on food and health innovation.

Their contribution to food protein science is world-renowned. Singh’s expertise is in food protein structures and how they interact in food systems while Moughan’s work focuses on how proteins are broken down and absorbed in the digestive system and the resulting physiological benefits.

“It’s a marriage made in heaven,” says Moughan. Between us we cover the whole spectrum of food protein science, which is rare worldwide.”

Examples of innovation from their work include the development of a highly effective probiotic, ProBioLife, establishing the health benefits of kiwifruit which is giving Zespri an edge globally and a technology that allows high doses of fish-oil-dervied Omega-3 fatty acids to be added to food products without a fishy smell and after taste.

A recent focus has been developing a novel process to isolate proteins and peptides in low cost meat products and use them in a food product that has been shown to have health benefits for older people. The product is being commercialised by a New Zealand meat company.

The two scientists teamed up more than a decade ago to establish the Riddet Institute as a world-leading centre for food science research. Since 2003, the Institute has secured over $40 million in research funding and used it to carry out fundamental and strategic research and apply the knowledge to create new food products, processes and systems. The Institute has also trained 80 postgraduate scholars and 30 postdoctoral fellows.

“A lot of new ideas and ways of thinking are generated at the Riddet Institute and graduates take that knowledge out into industry,” says Singh.

In addition, the Institute has established Riddet Foodlink, a network of more than 100 companies interested in food innovation and research that work with Riddet Institute researchers.

The winning team plans to use $400,000 of the prize money for on-going research to commercialise discoveries made at the Riddet Institute. “We have a lot of bright minds that come up with really good ideas,” says Singh, adding that the prize money will allow the Institute to screen those ideas and take the most promising through to the next stage.

Moughan says he and Singh are honoured to have won the Prime Minister’s Science Prize and see it as recognition that science and technology is a key to New Zealand’s future. “Food is New Zealand’s biggest industry and there is great opportunity to leverage it further, through advanced scientific understanding, to grow the economy and improve our standard of living. We are privileged to be at the heart of that opportunity.”

Sainsbury’s cadet hosted by Alliance Group

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Leading meat processor and exporter Alliance Group is hosting a representative of one of the UK’s leading supermarkets.

Anna Ballantyne, 22, of Evesham, Worcestershire in England, is visiting Southland-based Alliance Group to gain an insight into the industry including the co-operative’s work in meat quality testing, packaging developments and extending product shelf life.

The 22-year old, who has a Bachelor of Science (Hons) in Nutrition and Food Science, is taking part in the supermarket’s six-week ‘Taste the World’ programme, which sees students working with Sainsbury’s suppliers and partners around the globe.

Each cadet gets involved in specific project work as well as obtaining a general understanding of Alliance technical and quality programmes.

Ballantyne is also spending time on the road with the company’s livestock representatives and seeing first-hand the company’s Lorneville plant boning room operations.

The cadet, who will join Sainsbury’s as a full-time employee on her return to the UK, will have a stint in Alliance Group’s product development centre, where the company undertakes research into meat taste and tenderness.

The co-operative is regularly exploring how meat quality can be improved by factors such as genetics and farm management practices and uses trained panellists for taste and tenderness trials.

Alliance Group is the major supplier of New Zealand lamb to Sainsbury’s through its UK marketing company, New Zealand Farmers Ltd.

Murray Brown, general manager of marketing at Alliance Group, said the visit was further evidence of the ever-strengthening links between the cooperative and its UK retail partner.

“Sainsbury’s is the second largest retailer of lamb in the UK and has a loyal customer base of lamb consumers.

“Alliance Group enjoys a strong partnership with Sainsbury’s and so it’s important their employees gain an understanding of our lamb production systems, our quality assurance programmes, commitment to sustainability, relationship with our suppliers and our procurement programmes.

“This visit is also timely given one of our key selling periods for quality in-season chilled lamb to Sainsbury’s is around Christmas leading into Easter.”

Ballantyne is the fourth Sainsbury ‘Taste the World’ representative Alliance Group has hosted and another three cadets are due to visit the cooperative between now and the end of the 2013 processing season, he said.