Tag Archives: meat industry

Eventful year for meat training

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It’s been an eventful year for meat training, with the merger of the meat and dairy sectors’ industry training organisation (NZITO) and the Seafood ITO to create a major export food ITO, which is generating synergies that will benefit all.

The new single ITO entity, using the NZITO name and branding, has been in operation since the beginning of August and is now servicing a combined workforce of over 60,000 employees covering New Zealand’s three key export food industries – meat, dairy and seafood.

“There are many obvious synergies we are now taking up, such as knife skills and rendering and there will be more shared servicing over time as we maximise staff and training to keep costs in check,” reports general manager Carl Ammon, who has stepped up from leading the meat and dairy ITO to head the new body, adding that there are new skills in the team that are all adding value.

Ammon is delighted to share that the new NZITO is delivering at the top of the Tertiary Education Commission’s Educational Performance Indicator tables. “Which is creditable as our industries are seasonal and not based around trade apprenticeships, unlike building or engineering,” he says.

The move to a single enlarged ITO has been strongly supported by the Meat Industry Association (MIA) with chief executive Tim Ritchie pointing out that ITOs provide training that many people would not otherwise get, as it is delivered in the workplace and allows for the seasonal pressures of the agricultural industry.

“The ITO system is an invaluable asset for out industry, and this merger can only make it stronger. The merged ITO will allow our people to learn and up-skill themselves while they work and offers clear opportunities for career development in our industry.”

When he announced  the merger, NZITO chair Graeme Sutton said that training offered through the NZIITO will carry more status in the primary sector and the community as a whole.

Because of its increased ‘buying power’, Sutton said that the ITO will be able to demand high standards of delivery from its training providers. There will also be greater emphasis on training skills that are transferable across the food export sector, creating more opportunities for personal advancement, he said.

The new NZITO board includes two representatives each from the meat, dairy and seafood industries. Representing the MIA, and the meat industry, on the board are Carolyn Thompson, HR Manager for Taylor Preston Ltd and Kerry Stevens, Group HR and Communications Manager for Alliance Group Ltd.

There is also a meat advisory group (MAG), comprising representatives from a number of meat companies, which provides industry input to the NZITO. Similar groups have been set up for the dairy and seafood sectors.

Qualifications now under review

Recent work for the groups includes input to the nation-wide Targeted Review of Qualifications (TRoQ), aimed at simplifying the qualification framework, rationalising the number of qualifications and seeing where updates are needed. Proposals are expected to go forward to NZQA in early 2013.

The work is going well, says Ammon, adding that it is using best practice examples between sectors and will allow for qualifications that are simpler to follow and use and that still provide a learning pathway for staff.

“We are focusing on the generics and people skills like communications, problem solving and team work as well as food safety, market access, quality, biosecurity and supply chain.”

Apprenticeship pathways, proving very popular for meat companies and others, are to be rebuilt. “This uses the qualifications and packages them to the level of a well-rounded and capable operator able to take on technical and leadership responsibility.”

The TRoQ review is also building in the future needs that are arising from drivers like automation and robotics that are now expanding in use across the sector. “This mirrors past experience in the dairy industry, so we can benefit from that experience here,” says Ammon.

Health and safety skills and knowledge are being integrated into core training, alongside the running of specialist Occupational Health and Safety qualifications.

Management development and productivity improvement qualifications are being retained, “as these have been used to good advantage by many companies in building both people and organisational performance,” says Ammon.

The NZITO is also planning to implement with other ITOs, such as hospitality, a base food sector qualification aimed at schools and pre-employment. “This will reinforce the career pathways plan of the Ministry of Education and support trade academies and schools delivering trade-focused skills to students who have a career planned in industry.”

What’s next?

The NZITO is now working closely with other primary sector ITOs in the planning of a primary sector platform to coordinate qualifications and training. That will harmonise with Ministry of Primary Industries (MPI) requirements in areas like traceability, transport and animal welfare.

“This will help us to harmonise much that is in common in the food export areas and is intended to reinforce the value chain or paddock to plate concept this is a key driver in New Zealand exports,” Ammon explains.

Practical examples would be common HACCP training standards, animal welfare, animal products inspection and initiatives like halal standards for key markets. “This is also intended to complement our adaptation to expectations from key markets for a standards based approach to the supply chain,” he says.

The NZITO/Seafood ITO merger is part of the reconfiguration of the ITO sector into larger, more capable organisations to better meet the needs of employers. In October, the agriculture and horticulture ITOs also merged into one organisation, under the Primary Industry Training Organisation banner.

“Work is progressing on the prospect of a consolidated primary sector ITO that will deliver greater efficiencies in scale, coverage (market share) and resourcing flexibility,” says Ammon. “Early work shows real potential for savings and improved services so this will be a work in progress for 2012/2013.”

This item appeared first in Food NZ magazine (December 2012/January 2013).

 

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.

Landcorp to return $20 million dividend to government

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State-owned farm, Landcorp, has had a solid performance this year according to its latest accounts, says meat industry commentator Allan Barber.

Landcorp’s net operating profit of $27 million for 2011/12 was down on the previous year, but still a good performance, Barber says in a recent blog, adding that the SOE will pay a $20 million dividend to the Government.

During the year, it produced 10,176 tonnes of sheepmeat, 9,715 tonnes of beef and 2,258 tonnes of venison, as well as large volumes of milk solids, wool and timber.

Landcorp has a target of selling 80 percent of its lambs on fixed price contracts to Silver Fern Farms, Alliance and other meat companies and last year achieved in excess of 70 percent by this method, proving to its satisfaction that this provides less volatile and overall better market returns than spot trading. Lamb production is geared to meet specific weights and specification to fulfill meat companies’ contracts with northern hemisphere retailers.

As a founder partner with Silver Fern Farms and the Ministry for Primary Industries in FarmIQ Systems, Landcorp is committed to the development of integrated value chains from pasture to plate, designed to align New Zealand production and supply with consumer demand preferences. Twelve of Landcorp’s farms are now on FarmIQ’s farm management system.

The development which attracted the most publicity was the joint venture with Shanghai Pengxin to manage the 16 Crafar dairy farmers bought from the receivers and expected to get underway shortly. This fits in with Landcorp’s goal to increase its involvement in the dairy industry and a further “extension to Maronan Dairies in mid-Canterbury and further development Wairakei Estates near Taupo will contribute to this,” Barber believes.

Sheep and beef finishing has been boosted by the development of Cheltenham Downs in Manawatu and this has helped recovery from the drought years of 2007 and 2008, reports Barber.

Over the past 22 years, Landcorp has paid dividends to the government; therefore, New Zealand as a while, of nearly half a billion dollars.

“There’s no evidence that Landcorp is constrained by public ownership or that it would benefit from part privatisation,” concludes Barber.

Read the full blog item here at Barber’s Meaty Issues …

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

 

Global meat industry hurting, signs show …

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The New Zealand meat industry isn’t the only one suffering around the globe as news reports this week are showing signs of hurting businesses and a changing global scene.

In addition to Vion pulling out of the UK – a reflection of the tough trading conditions, says an item in meatinfo.co.uk – the Canadian pork industry has been warning of massive losses, according to an item in Globalmeatnews.com.

In the US, concern was also noted in a recent Wall Street Journal article “Meat firms face hit to plump profits’ as massive global meat processor Tyson Foods prepared to report its quarterly figures. However, Tyson’s results came out on Monday carrying an optimistic note for the next three years and shares rallied by nearly 10%. The company says it will focus on prepared foods and value-added poultry to “weather the anticipated increase in feed costs during the coming year” (meatandpoultry.com).

In the UK, a management buy-in from previous owner ANM has saved struggling meat processor Yorkshire Premier Meats, says foodmanufacture.co.uk, while another ANM-owned company, Scotch Premier Meats, cut 30 jobs in May.

Meanwhile, JBS SA is planning to build six more plants in Brazil on the basis of growing global demand, with a focus on grass-fed beef, reports MENAFN.com. However, foot and mouth disease continues to hold Brazilian beef exports back from Asian markets.

India was forecast by Rabobank’s global arm last week to become the world’s biggest beef exporter next year. Basing its claim on United States Department of Agriculture (USDA) figures, exports of buffalo meat from India are expected to rise to two million tonnes as Indian dairy farmers slaughter unproductive animals from their large and expanding dairy herd in response to high prices for meat.

Vion leaving British meat industry

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The Dutch-owned meat industry processor Vion NV has announced it is to leave the British meat industry, according to an item in the British Farmers Weekly magazine. The firm is the top EU producing company by meat volume according to Richard Brown of GIRA’s presentation to the Red Meat Sector Conference earlier this year. Producing 2.5 million tonnes (carcase weight equivalent) in 2010/2011, Vion deals principally in pork, but also beef, poultry and a small amount of sheepmeat. It entered the UK market in the late 1990s. According to the article, the UK operations for sale are pork, red meat and poultry units. Read more …

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

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

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

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

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

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

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

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

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

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

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

Alliance posts $50.8 million loss for 2012

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

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

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

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

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

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

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

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

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

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

No chance government will legislate to restrict meat capacity

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After the announcement the week before last of Alliance Group’s intention to close sheepmeat processing at its Mataura plant, Meat Workers Union representative Gary Davis called for the government to intervene. This was no doubt caused more by frustration over the loss of jobs than any realistic expectation that the government would interfere in a commercial situation.

Industry commentator Allan Barber argues at his blog that there is no chance government will legislate to restrict meat capacity.

Read more …

Season just ended could produce messy results, says Barber

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The season just ended could produce messy results, according to meat industry commentator Allan Barber.

The two largest processors and exporters, Silver Fern Farms and Alliance, have captured the headlines in the last couple of weeks.

Hot on the heels of its announced intention to close its sheepmeat chain at Mataura, Alliance has come out with an offer to suppliers of $20 in November per lamb contracted before the end of October.

From the other cooperative camp Keith Cooper, chief executive of Silver Fern Farms, last week sent an email out to suppliers which highlighted the disappointing financial result for the year ended 30 September because of the exchange rate and declining sheepmeat values in January and February not being reflected in procurement prices.

The final results will be declared in about two months when the market will be able to see just how disappointing the performance of the two companies actually was. Rumours of multi-million dollar losses have been prevalent, but rumour is just what they are until we see the actual figures. There is no doubt the problem has been almost entirely with sheepmeat in spite of the exchange rate, because exporters have been far more successful at reining in beef procurement costs.

It doesn’t take an Einstein to work out that the shortage of lambs for Mataura and the procurement competition are just two aspects of the same problem. The lowest national lamb kill for 51 years at 18.6 million, 15 percent down on the five year average will have made it very difficult for any company to get sufficient capacity utilisation to come close to making a profit. With Alliance’s largest sheep plant outside Invercargill, Mataura just over 50 km up the road was always under threat from declining volumes.

Blue Sky Meats, which balances in March, presaged the 2011/12 season’s problems in its declared annual result – a pre-tax loss of $604,000 and no dividend paid. The company termed this the most disappointing result in its history and drew attention to the excessive prices paid for stock through the turn of the year, both because of the high dollar and the drought in Southland.

It will be interesting to see how successful Alliance will be in securing committed lambs from suppliers stimulated by the $20 cash advance. Keith Cooper’s reaction was to say Silver Fern Farms had tried it six years ago with no success because some suppliers were affronted by the implication they were short of cash and didn’t want to close out their slaughter options. He prefers to rely on the company’s suite of supply plans rather than to repeat the cash in advance offer.

In his email to suppliers, Cooper sounds quite bullish about the new season’s prospects with a ‘fully configured operating platform’ and some exciting new marketing initiatives, even being bold enough to state that realistic livestock values are being established. If that is the case, it will either be because there’s enough livestock around to satisfy all processors or he is confident Silver Fern Farm’s overhead structure is competitive enough to guarantee filling their requirements.

Either way that is a big call in spite of the gains Silver Fern Farms has made in recent years, notably the closure of the Belfast sheep chain, improvements to its Finegand sheep processing and the rebuild of Te Aroha in the heart of the dairy farming Waikato/Bay of Plenty region. There are expected to be another 1.5 million lambs, but not enough to change processing dynamics much, while the market is another factor.

The meat industry is unique in that it has to compete at both ends of its supply chain. While livestock procurement has the most obvious impact on company profitability, demand from the market is also critical. Last season’s disappointments and losses have been as much about carrying too much inventory which the market couldn’t digest as the cost of the livestock to produce it.

When companies fail to manage both ends of the chain properly, things get messy. Just how messy they were last season will become clearer at the beginning of December when Alliance and Silver Fern Farms publish their results.

Channelling innovation

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The Government released the second of its six progress reports –  Building Innovation – under its Business Growth Agenda this week. The move has been welcomed by the Meat Industry Association (MIA).

Building innovation is central to building a more competitive and productive economy, said Prime Minister John Key at a business breakfast launch for the report earlier this week, adding that it gives a clear picture of the more than 50 policy initiatives the Government has underway to improve innovation, competition and the commercialisation of smart ideas and research into new products.

It calls for a doubling of the amount businesses spend on research and development, from 0.54 percent of GDP to more than one percent of GDP.

MIA chief executive Tim Ritchie has welcomed the report, saying that the meat industry is “all for anything that helps in that area.” Industry is very interested in innovation and already has a number of initiatives in place, he says.

“Individual members are involved with a number of Primary Growth Partnership projects, while the industry has also invested in Ovine Automation Ltd, a consortium of nine MIA member companies and the government that is looking at bringing a step change in sheep processing through the use of automation.”

This all adds to innovations individual meat companies are working on in their own workplaces, like Silver Fern Farms’ robotics projects, Ritchie explains.

New Advanced Technology Institute

Meat exporters will also benefit in the future from the new Advanced Technology Institute (ATI) that was announced this week will be named after the late Sir Paul Callaghan. It is to receive $166 million over the next four years and is one of the initiatives to grow business research and development further.

The Institute will be a one-stop shop that will help high-tech firms become more competitive by better connecting them with innovation and business development expertise within the institute, around the country and internationally, Steven Joyce, science and innovation minister says.

‘It will focus on industries with significant growth potential such as food and beverage manufacturing, agri-technologies, digital technologies, health technologies and therapeutics manufacturing and high-value wood products.

“The ATI will take over some business development functions that are currently within the Ministry of Business, Innovation and Employment. This will include the administration of some business research and development grants,” Joyce says.

A seven member establishment board has been tasked with having the ATI up and running by the end of the year. Chaired by Sue Suckling, who led the set up of AsureQuality NZ and NZQA, other board members include Industrial Research Ltd (IRL) director and former New Zealand Game Industry Board and Cervena Ltd chairman Richard Janes and Dr Michele Allan, who has leadership experience across many facets of the Australian food industry. They join IRL chair Michael Ludbrook, entrepreneur Neville Jordan, Auckland Transport director Paul Lockey and Plant and Food Research chair Michael Ahie.

Strong support in business community

Business NZ says that there is strong support in the business community for the Government’s systematic approach to building innovation. The ATI is a centrepiece of the innovation policy, says BNZ chief executive Phil O’Reilly.

“But there are many other initiatives including expanded TechNZ funding, better, government procurement policies, National Science challenges, more funding for the Performance-Based Research Fund, refinement of trademark and patents law, more investment in engineering at tertiary institutes, encouragement for multi-nationals to conduct research in NZ and others.

“It is up to business to innovate and grow and take up the Government’s invitation to keep the lines of communication open and provide feedback on how we are travelling towards a high-tech future.”