‘Momentous’ US/NZ food safety agreement signed

Ministry for Primary Industries deputy director-general standards Carol Barnao (left) and US Food and Drug Administration deputy commissioner for food Michael R Taylor sign a systems recognition agreement at a meeting in Washington DC.

Ministry for Primary Industries deputy director-general standards Carol Barnao (left) and US Food and Drug Administration deputy commissioner for food Michael R Taylor sign a systems recognition agreement at a meeting in Washington DC.

New Zealand this week became the first country in the world to sign an agreement with the US Food and Drug Administration (FDA) that recognises each other’s food safety systems as providing a comparable degree of food safety assurance.

Meat exporters will welcome the move, which will enable

streamlining of product to the market – New Zealand’s top destination for beef, fifth largest for venison and fourth largest for lamb – through the reduction of red tape and costs.

The Food Safety Systems Recognition Arrangement was signed at a meeting in Washington DC by delegations from the Ministry for Primary Industries (MPI) and FDA.

“This is momentous for MPI as it is the first time the FDA has recognised another country’s food safety system as comparable to its own,” says MPI deputy director-general standards, Carol Barnao.

“The arrangement with New Zealand is part of an overall strategy for strengthening the global food safety net through closer collaboration with regulators around the world, highlighted in FDA’s report Pathway to Global Product Safety and Quality,” FDA’s Deputy Commissioner for Food Michael R Taylor says.

Carole Barnao says both countries have done a huge amount of work ahead of this week’s signing.

“This process has included a comprehensive review of each country’s relevant laws and regulations, inspection programmes, response to food-related illness and outbreaks, compliance and enforcement and laboratory support.

“In one calendar year, FDA and New Zealand officials spent an intensive period of time together including visiting production plants, cold-store facilities, verifiers and accreditation authorities looking at the effectiveness of how each other’s preventative controls and verification systems worked.”

Barnao explains that both countries intend to use the agreement to lessen the potential regulatory burden for foods traded between the countries by removing unnecessary duplication of activities.

The agreement covers all foods and animal feeds regulated by the FDA, which equates to $1.5 billion of New Zealand’s current exports of primary products.

“Systems recognition agreements are very important for MPI to help us achieve one of our key strategic goals of maximising export opportunities through other countries’ recognition of the credibility of our food safety controls,” Barnao says.

Touch screen at Tesco

One of New Zealand meat’s biggest customers, Tesco, is trialling new technology – a giant 80 inch touch screen giving shoppers interactive access to more than 11,000 toy products – in one of its key stores in the run up to Christmas.

Shoppers at the UK’s largest retailer’s Cheshunt Extra store, have been experiencing the latest retail experience: browsing the full range of toys available on tesco.com and filtering what’s available by age, gender and price. They can then place an order by printing a ticket for Click and Collect or by using their mobiles, by using a QR code on the screen or by sending a text message to get a weblink. Some products will be able to be rotated 360 degrees and all come with full descriptions.

Just a sample of the future sophisticated modern retail environment New Zealand’s meat exporters are working in, the three-month trial has been running at Cheshunt Extra since late October. The application was designed and developed by Tesco’s in-house R&D team, using the giant touch screen, provided by u-touch in collaboration with Computacenter. The innovation builds on another recent trial of a virtual grocery store at Gatwick Airport, which also offered  customers instant touch-screen access to online and mobile ordering in a convenient location.

Tesco’s UK general merchandise director Neela Mukherjee says, “Our focus is on making shopping as convenient as possible for our customers and we also want to make sure store customers don’t miss out on the growing range of products we have available online. This giant screen makes use of a single section of the store to offer shoppers access to an enormous range of toys, like being able to stroll down the longest aisle in the world.”

 

 

 

Meat industry lacks leadership according to Cooke

The National Meat Workers Union’s General Secretary Grahame Cooke stated last Monday the large loss published by Alliance Group would be the first of several for the 2012 year. His point is fairly accurate, confirmed by Silver Fern Farms’ loss announced on Tuesday, writes industry commentator Allan Barber.

Of the other companies ANZCO and Blue Sky Meats will file their results with the Companies Office at the end of March. AFFCO is now a wholly owned subsidiary of Talley’s and doesn’t disclose its results, although the Meat Workers Union says (optimistically) these will be horrendous because of the lock out earlier this year. AFFCO’s results may not be as bad as all that because of the lack of a peak kill.

Cooke’s next point was the losses would inevitably lead to more industry rationalisation; this in turn would cause job losses for the meat workers who have already been affected by several plant closures in recent years. Job and earnings security suffered from fewer stock numbers and shorter season with workers being paid piece rates for shorter shifts; also higher average weights mean better productivity which is true for lambs, but not cattle.

His final point was about the lack of industry leadership in spite of the fact there are a number of good individual companies, all competing vigorously with each other. Cooke said the meat industry has not changed in the last fifty years with poor marketing and plant closures quickly followed by the addition of more capacity. He described the industry graphically as behaving like a cow with its head chopped off.

A look at the Union’s website provides more information on this topic: plant capacity has increased over the past decade with new plants, rebuilds and upgrades at nine plants across the country as well as capacity increases at several more. The Union believes the Government must initiate a ‘meat summit’ to address this.

So the questions are whether Cooke is correct or the industry is behaving in a perfectly rational manner.

My first reaction is the Government will never initiate a summit, almost certainly just another talkfest, because it realises the industry has a functioning commercial model. It competes in a global market and government should never interfere with privately owned businesses, provided they comply with the law. The meat industry has its own industry body, the MIA, which deals with all sorts of industry issues, but not those which impinge on competition between its members.

In addition, land use changes dictated by relative sector profitability will continue to occur regardless. The government would not be wise to get involved in picking winners or hobbling one sector’s ability to adjust its processing facilities.

My next reaction is meat processors and exporters are not the whole industry. There is a value chain which starts behind the farm gate and finishes in restaurants or consumers’ homes. The Red Meat Sector Strategy, FarmIQ and other company based initiatives attempt to define what can be done to join links in the value chain so they contribute to higher, more consistent returns. But it’s up to the farmers to produce to these specifications.

Meat exporters have done a great job over recent years to convert yesterday’s freezing industry into a sophisticated red meat member of the food industry, while also expanding into high value medical and other non-food product areas. More can always be done, but the industry has moved light years from the age of subsidies.

However, this process of modernisation has of necessity been achieved at a cost to overall jobs and terms of employment. The older plants were inefficient and built to service a different industry structure from a previous age. The period following deregulation and more particularly the removal of subsidies saw many farmers in serious financial straits, so their only option was to change farming practice or land use or sell. An unavoidable, even desirable, outcome was a big decline in sheep and prime beef numbers, offset to some extent by the growth in the dairy industry and the US manufacturing beef market.

Owen Poole made the point to me the losses are a sheepmeat problem and Alliance has responded by making the appropriate plant decisions, such as closure of Mataura sheepmeat processing, doubling Mataura’s beef capacity, increased venison processing at Smithfield and rendering at Lorneville. Keith Cooper also confirmed his satisfaction with SFF’s footprint in relation to livestock volumes, having already taken some tough capacity decisions.

This emphasises the regular requirement for new plant configurations to meet the demands of the market place and consequently the workforce must adapt as well. My experience tells me the meat industry does a pretty good job of responding to changes in market conditions, while generally trying to keep its workforce employed. But there is no future in keeping inefficient plants running to protect workers’ jobs, because these will disappear sooner rather than later.

Equally there are no prizes for leaving customer orders unsupplied when competitors are still prepared to process livestock. I certainly wouldn’t fancy the chances of the industry leader who sets an example by refusing to pay the money and has to tell Tesco or Marks and Spencer his company can’t supply because the stock costs too much this week.

Leadership is not as simple as it appears.

The item has appeared in NZ Farmers Weekly and at Allan Barber’s blog Barber’s Meaty Issues.

Optimistic signs for coming season’s red meat trade

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.