Tag Archives: meat industry

Foodplus: value added to beef

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More value is to be generated from beef with the development of innovative new products for food, ingredients and healthcare, thanks to the latest Primary Growth Partnership (PGP) programme.

PGP co-funding has been approved by the Ministry of Primary Industries (MPI) for an $87 million Foodplus programme, run by meat processor and exporter Anzco Foods. The PGP fund is committing $43.5 million over seven years towards the programme, with ANZCO matching that funding.

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.

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

Sir Graeme HarrisonANZCO Foods chairman, Sir Graeme Harrison is enthusiastic about the potential of the new Foodplus programme to enhance business opportunities for the sector.

It will give a vital boost to the industry, he says. “For too long, the meat industry has been criticised as being a production-led commodity business characterised by high volatility and marginal profitability. This government-industry partnership provides a springboard to further transform our industry, to leverage off the inherent strengths of our farming practices and animal health status and to collaborate and capitalise on the benefits of quality New Zealand research and innovation.”

“As Foodplus begins to use the PGP’s comprehensive research opportunities, ANZCO will introduce more projects that will certainly challenge and re-invent the traditional uses of beef cattle in particular.

“The Foodplus initiative will build on the existing expertise within ANZCO Foods but also add considerable new processes and opportunities never before realised in the meat industry,” says Sir Graeme.

Rennie Davidson, chief executive  of ANZCO’s Food & Solutions division says ANZCO welcomed 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.”

The company also recently announced a company-wide energy management programme, which will see it working with the Energy Efficiency Conservation Authority’s business unit over two years to achieve savings of $2 million a year in its processing plant energy usage.

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.

This article has appeared in Food NZ magazine (February/March 2013) and is reproduced with kind permission.

$38 million funding for greenhouse gas research

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Allan BarberThe Pastoral Greenhouse Gas Research Consortium (PGgRc) has just announced that it has secured funding for a further seven years’ research into greenhouse gas (GHG) mitigation. $2.3 million per annum will be contributed by industry partners to be matched by the Ministry of Business, Innovation and Employment with the balance to come from AgResearch in its capacity as leader of the research project. Meat industry commentator Allan Barber has taken a look in his latest blog post.

The consortium has been in existence since 2002 and to date has spent about $45 million of 50/50 joint venture funding from industry and government. Its members are Fonterra, Beef & Lamb New Zealand, DairyNZ, AgResearch, Landcorp Farming, DEEResearch, PGG Wrightson Ltd and Fertiliser Association Joint Venture.

As its name indicates, the consortium’s sole focus since it started 11 years ago has been on finding ways to mitigate greenhouse gas emissions and during that period it has made some significant advances. It has developed knowledge specifically in sequencing the first rumen methanogen genome, developing a low emission sheep flock and finding feeds that can reduce methane emissions.

Mark Aspin, consortium manager, told me that a continuation of the funding will enable the programme to focus on five key areas of research:

  •  Refining  animal breeding tools for low emission livestock
  • Identifying more low greenhouse gas feeds
  • Identifying inhibitors that reduce ruminant emissions
  • Developing a vaccine to reduce ruminant emissions
  • Understanding the productivity effects and enhancing the adoption of mitigations.

The refreshed research programme, while recognising the long term commitment required, will be strongly focused on delivery of mitigation solutions, developed through an increased partnership between the consortium and the New Zealand Agricultural Research Centre (NZAGRC). Both of these organisations will coordinate their operations to ensure rapid delivery of effective options for farmers.

While New Zealand’s greenhouse gas emissions would constitute a significant proportion of our obligations under any future commitment to reduce emissions, political points scoring tends to obscure why it is so critical to get it right. Our economy and our agricultural sector in particular both depend on deciding on the correct entry point which is, I suspect, why the present Government has been so reluctant to commit itself.

Agriculture contributes 46 percent of New Zealand’s greenhouse gas emissions, a proportion no other country comes even remotely close to producing. Ireland with 27 percent is the closest and all other first world economies are in single figures.

The PGgRc has set itself an ambitious goal, stating in its press release “The new work aims to develop a suite of ready-made tools that will reduce greenhouse gases by 30 per cent by 2030 while supporting the agricultural industry’s growth targets of two per cent each year.” The benchmark year is 2008 when I understand emissions were at 1990 levels. As Aspin said “it’s a big challenge, but we think we can get there.”

I suspect the Green party won’t be satisfied with this progress, because anything short of total commitment to eliminating greenhouse gases is unacceptable, whatever it costs the country. But it is a very solid programme of work backed by science and industry and public money which has some challenging, but achievable goals.

The best thing about it is that it won’t send agriculture and the country into a state of bankruptcy, but it should produce some real improvements in our GHG emissions.

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

 

Is this the year for a sheepmeat strategy, asks Barber?

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Allan BarberIs this the year for a sheepmeat strategy, asks meat industry commentator Allan Barber in his latest column. The key question for the meat industry this year is whether anybody will make any money, he writes.

After last season when farmers enjoyed unprecedented procurement prices and the meat companies lost millions of dollars as a result, prices have headed south and look set to remain there for the foreseeable future.

Sheepmeat is the product most under threat with the traditional markets all showing serious signs of indigestion. As an example, a US importer has been reported as saying he has a year’s worth of inventory and can’t buy any more and neither is anyone else. This signals a major problem for middle cuts like lamb racks, while Europe isn’t exactly rushing to buy any product either.

This explains the amount of cheap sheepmeat available on our domestic market, although unfortunately local consumers have been turned off buying lamb as a standard part of their diet by last year’s high prices – no different from the rest of the world; and expecting New Zealand’s minute population to absorb any significant part of the oversupply is a bit like expecting Fiji to win the World Cup or the Black Caps to win the series in South Africa for that matter.

Beef may resist the worst of the price downturn because US demand remains steady against a backdrop of falling domestic cow numbers and consequently an increased share for imported beef. Asian demand will also remain firm, while New Zealand exporters may be able to pick up some of Australia’s market share, as Australian supply to the USA is anticipated to take the lion’s share of the increase there.

But even beef will continue to struggle under the impact of our dollar which is set obstinately at about 84 US cents with the greenback unlikely to strengthen at all, unless Congress can agree on a fiscal solution to the enormous American debt problem. In spite of averting the fall over the fiscal cliff, the US really hasn’t solved its long-term problem, merely postponed a decision.

The main difficulty for sheepmeat is the amount of inventory held by wholesalers and exporters which is waiting to be sold into a market which doesn’t need it and, even if it did, can’t afford to pay a price for it which will compensate for our exchange rate sitting at 52p and 0.63 Euro. This inventory problem will only be exacerbated by another season’s production which will hit its peak in less than three months.

If my pessimistic assessment is even only half correct, 2013 bears all the signs of an extremely difficult season for all participants in the sector. MPI’s forecast for farm incomes, down on last year, is still reasonably positive at least in historical terms, but it must come under pressure from any further price drops or cost increases. There is most unlikely to be any spare cash around.

After the beating taken last season by the processors, shown factually in the annual accounts of Silver Fern Farms, Alliance and Blue Sky Meats, and by implication in the results of the others, all the meat companies will be under pressure to get back into the black. The only way they can achieve this is to reduce procurement costs, increase operational efficiencies and sell inventory into the market, preferably with a profit margin on what it cost them.

This last one will be by far the hardest. There is already plenty of evidence of product being offered at very competitive, or silly, prices in spite of Keith Cooper’s claim before Christmas that working capital tied up in inventory is ‘good’ debt because it restrains companies from dumping product. Now if that isn’t a case of making a virtue out of necessity, I don’t know what is.

Logically if there is an inventory problem, it makes sense to quit it at the going rate rather than waiting for the market to recover by which time there will be more inventory in the freezer tying up more working capital.

The meat industry is becoming increasingly a division between sheep (very hard to make a consistent profit) and beef (quite or extremely profitable, mostly because of the livestock sourced from the dairy industry). Those companies which specialise in beef from dairy regions, notably Greenlea and Universal, appear to be very profitable without interference from the volatility of sheepmeat pricing.

Alliance has traditionally been the outstanding performer among the processors with a commitment to the sheep industry. Silver Fern Farms has reinvented itself as a company with a significant beef business which has reduced its vulnerability. But as last season’s results showed, the sheepmeat business placed serious pressure on their balance sheets which will inevitably continue throughout this year.

This may be the year when some serious strategic thinking is applied to finding a viable industry model for sheepmeat alone, instead of trying to find a single solution for the meat industry as a whole.

This column has appeared in NZ Farmers Weekly and interest.co.nz and is reproduced here with permission. Allan also has his own blog Barber’s Meaty Issues.

 

Burger hell

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Burgers feeling the heat. Photo iStockThe discovery of horse and pig DNA in frozen beefburgers manufactured primarily in Ireland this week has sent the UK and Ireland into a spin as experts try to track its source. While checks are in place here in New Zealand that should prevent a similar thing happening, it is a salutary lesson for the meat industry about what could happen if consumer trust is broken.

What happened in Europe, is that frozen burgers, supposedly made from beef by major EU meat processor ABP Food Group, were routinely DNA-tested by Food Safety Authority Ireland (FSAI) and found to contain meat/protein from other sources including horse and traces from pigs too. The affected burgers, produced in the company’s subsidiaries Liffey Meats and Silvercrest Foods in Ireland and Dalepak Hambleton in the UK are sold in Tesco, Aldi, Lidl and Iceland stores in the UK and in Dunnes stores in Ireland.

Though the FSAI stated in its announcement on Tuesday (15 January) that there was no food safety risk from the products, all retailers have all reacted quickly to remove the items from sale. Tesco, which has also removed all other products from the suppliers from its stores and online, has apologised to its consumers and is promising them that it will find out what has happened and when it does so, it will tell them.

Other supermarkets have also withdrawn similar meat products while answering the British Food Standards Agency’s urgent questions to all British retailers about the exact contents of those items. To date, a total of over 10 million burgers are estimated to have been withdrawn from sale.

The issue is accumulating column inches in the UK and comment from Jewish and Muslim religious groups, animal welfare groups and unions demanding more transparency and more regulation for the meat industry.

ABP is taking the matter “extremely seriously” and says it has “never knowingly bought, handled or supplied equine meat products.

“We are shocked by the results of these tests and are currently at a loss to explain why one test showed 29 percent equine DNA,” the company says, adding that it was checking thoroughly with the two concerned suppliers and “is considering its options”. ABP is conducting its own DNA analysis of the products and will be implementing a new testing regime for meat products which will include routine DNA analysis.

The company assures that its group companies only buy meat from licensed and approved EU suppliers. “These results relate only to where beef based products have been sourced by those suppliers from the Continent. Only a small percentage of meat is currently procured from outside the UK and Ireland. Fresh meat products are unaffected.”

The latest comment in The Guardian suggests that the horse DNA might have come from additives extracted from protein sources, rather than fresh horse meat directly.

NZ: legal requirements not to mislead

Here in New Zealand, there are legal requirements not to mislead the customer, says the Ministry of Primary Industries (MPI), which will be keeping a close eye on proceedings in the UK.

New Zealand processors are subject to performance-based verification by MPI and meat products are not permitted for export until they first comply with requirements for sale domestically. In addition, MPI provides export certificates that provide MPI-verified assurances on the species of animal  from which the exported products were derived.

Under its mandatory Species Verification Programme – which checks the effectiveness of the regulatory requirements in place to ensure truth in labelling with respect to species of origin – MPI samplers collect 300 samples of meat from randomly allocated cold stores all around the country. Each sample is tested and the test includes checks for contamination by other possible species, using the enzyme-linked immunosorbent assay (ELISA), which identifies proteins unique to a species. For example, a sheepmeat sample will be tested for the presence of cattle, deer, goat, horse or pig meat. These tests are conducted by an MPI contracted laboratory to do independent testing using an International Accreditation New Zealand (IANZ) method. The contracted laboratory operates under comprehensive quality systems that, as a minimum, comprise compliance with the ISO 17025 ‘Standard for technical competence of testing laboratories’.

In addition, the Australian/New Zealand Food Standards Code maintains standards for meat and meat products, specifying the proportions of fat free meat flesh and fat (sausages, for example, must contain no less that 500g/kg of fat free meat flesh and the proportion of fat in the sausage must be no more than 500g/kg of the fat free meat flesh content). There are also separate checks for contaminants and residues.

Together, these controls minimise the possibility of a meat not being mentioned in packaging being in the New Zealand product, says MPI, adding that there are no known incidents where a meat product in New Zealand was discovered not to be what it said it was.

 

 

 

 

Outlook cloudy for 2013

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

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

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

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

ANZCO starts energy management programme

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

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

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

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

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

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

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

Mark Clarkson, ANZCO Foods.

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

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

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

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

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

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

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

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

Debt is good under some circumstances, says Barber

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Allan BarberAfter Allan Barber’s column last week about meat industry debt levels, Keith Cooper, chief executive of Silver Fern Farms, took him to task for incorrectly reporting the situation with Silver Fern Farms’ debt facility, he writes in his latest guest blog.

I stated that these expired in September 2012 and therefore the company was operating on a temporary extension. The correct position was that the debt facility was originally negotiated for two years from September 2010 and consequently due to expire in September 2012. This remained the position at balance date in September 2011. However in the 2012 annual report, the facility was stated as expiring on 31 December 2012.

Clearly, the company had arranged a three month extension at some point before the original two year facility expired and this was not a temporary facility, as I implied. Nevertheless, it was no more than a three month extension, while the next longer term arrangement was being negotiated.

I apologise for any incorrect interpretation, but still maintain the company’s current debt level at balance date was higher than could be considered comfortable.

However, in an interview with Jamie Mackay on the Farming Show last week, when asked to comment on the industry’s debt level, Cooper gave his opinion that the debt was a good thing. Because it was tied up in inventories, it would ensure the industry acted responsibly. This is almost exactly what I wrote last week, although I saw the discipline on the companies as a necessity, not a virtue.

In Cooper’s radio interview, he stated after record prices last year, meat companies are reining things in.

“It’s a damn good thing we do have stock in store and we do have high debt because that means meat companies are acting responsibly, and are feeding the product to market to create stability of price. I’m quite happy that us and other companies have debt because that means they’ve got stock in store and that means we’re managing markets well.”

I must give Keith credit for being unreservedly a ‘glass half full’ kind of guy which you have to be to survive in what I believe is New Zealand’s toughest industry. He promises farmers that things will improve.

“We are living in volatile times. There will be volatility, but through the volatility we will see a steady increase in the price we will receive from offshore,” and he expects meat companies will pay farmers around 90 dollars per lamb this year.

I’m not sure the glass is quite as half full as Keith Cooper suggests, especially in the sheep meat market. Although lamb leg prices in the UK are holding fairly well, especially for chilled product, prices for middle cuts, like racks, loins and tenderloins, in North America and Europe are under pressure.

The price of loins and tenderloins have dropped by as much as 30 percent in the last couple of months, while there are fears of another collapse in lamb rack prices because of competition from low priced Australian product. As a result, importers are not placing orders for New Zealand lamb, because they remember the last time prices collapsed.

The Middle East has gone quiet on lamb shoulders because of cheaper Australian product, although China is still firm. Here, it appears New Zealand exporters benefit from less Australian competition with fewer China licensed plants in Australia.

All this explains why the New Zealand consumer is able to buy plenty of well priced lamb available on the domestic market. But this won’t provide more than a minimal contribution to managing the existing inventory levels and it certainly won’t cope with next year’s peak production. The industry will be keeping its fingers and toes crossed for an early economic uplift in our main markets, UK, Europe and North America, because otherwise the glass won’t have much in it at all.

Allan Barber is an agribusiness commentator, with particular interest in the meat industry. He has his own blog Barber’s Meaty Issues. This item has also appeared at www.interest.co.nz.

Silver Fern Farms donates $500,000 to Te Aroha Events Centre

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Pictured left to right are: Eoin Garden, chairman, Silver Fern Farms;
Keith Cooper, chief executive, Silver Fern Farms; Peter Jager, chairman Te Aroha Events Centre Charitable Trust; and Prime Minister John Key.

At the official opening of Silver Fern Farms’ new world-class Te Aroha beef processing facility last week, the company also announced its intention to make a sizeable donation to a community initiative of major significance to Te Aroha.

Silver Fern Farms chief executive, Keith Cooper, revealed that the co-operative and its local farmer-suppliers had jointly contributed to a dedicated Te Aroha Community Fund over the period the plant had been out of operation.

Silver Fern Farms’ Te Aroha beef plant was destroyed by fire in December 2010, devastating the company’s local workforce and impacting heavily on the Te Aroha community. Fully aware of the uncertainty the community faced, the company signalled its intent early-on to rebuild a new state-of-the-art flagship processing operation on the same site.

In the interim period, the company had endeavoured to provide alternative options for staff whose livelihoods were affected by the fire, to the extent of making positions available at neighbouring plants, providing accommodation supplements in the early stages and donating meat for food parcels for those in need.

“We were heartened by the way the Te Aroha community rallied so bravely around affected Silver Fern Farms employees. From the outset, we were determined to make a meaningful contribution to the township above and beyond our commitment to rebuild – one that would acknowledge the support of the Te Aroha community into the future. We reached out to our loyal suppliers in the area and their response to the appeal was overwhelming” said Cooper.

Over the last two years the company had been working in partnership with the Matamata-Piako District Council to identify where the fund might ultimately be best deployed. This culminated in the co-operative proudly announcing base funding of $500,000 for the establishment of the Silver Fern Farms Te Aroha Events Centre in association with the Te Aroha Events Centre Charitable Trust.  The Events Centre has been a long-hoped for facility in the Te Aroha area to support community health and wellbeing, and Silver Fern Farms’ donation will provide a major funding boost to progress the initiative.

Silver Fern Farms’ Te Aroha plant will be fully commissioned ahead of the new season and will employ up to 380 staff when operating at full capacity, which is welcome news for the township.

“The whole community has been behind the project every step of the way” said Te Aroha plant manager, Lance Warmington. “The company’s commitment to rebuilding Te Aroha is a big deal here – it means future security for hundreds of families in the area.”

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.