Tag Archives: meat industry

Business Growth Agenda a big stretch, says Barber

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The Government’s Business Growth Agenda progress report on Building Export Markets specifies the target of increasing New Zealand’s exports from 30 percent today to 40 percent of GDP by 2025. It’s a big stretch, says meat industry commentator Allan Barber.

The progress report states that primary sector exports have outpaced the rest of the export sector, growing by half in real terms since 2000 at an average productivity growth rate of 2.1 percent per annum. To achieve the target of 40 percent of GDP, agriculture will have to maintain its growth rate for the next 13 years, while the rest of the economy must lift its game considerably. Manufacturing and services have been increasing by one percent a year and need to lift this to five percent over the coming decade, or alternatively agriculture will be required to expand further to bridge the gap.

This is an enormous challenge, equivalent to creating 250 more knowledge-intensive businesses creating $100 million from exports a year. The report cites Navman as an example of the type of business required. How many more like this can we think of? Not many, so it is highly improbable that these new businesses will emerge from areas totally unconnected with agriculture.

Primary sector exports will therefore have to increase by quite a bit more than the average of the past decade, if the target as a whole is to be reached.

Using a different report and set of figures the Riddet Institute in its recent Call to Arms report challenged the primary sector to treble its exports to $60 billion by 2025, equivalent to New Zealand’s total exports of goods and services today. However exports of $20 billion are only one third of the total. These figures emanate from the Government’s Economic Growth Agenda.

We can quibble with the different measurements and totals used to arrive at the conclusions (GDP, total exports, growth rates), but the fact remains, it’s one hell of a big stretch to see how to reach the target. The goal of the Boot Camp taking place at Stanford University this week is to see whether like-minded companies can develop the strategies required to bring agriculture up the value chain, enabling the sort of increase envisaged.

The question is whether the Government’s progress report on the activities of the Business Growth Agenda will contribute to the big goal and, if so, how significantly. It is a big ask, because it demands growth of between 5.5 percent and 7.5 percent, depending on the economic growth path, compared with Treasury’s forecast for the next three years of 1.8 percent.

The report says with a degree of understatement that “to achieve our target will require a concerted effort to develop more internationally competitive businesses in both the commodity and high-value technology-based sectors.” This may be official speak for ‘we know we haven’t got a hope, but we have to start somewhere.’

The key planks of the export growth development strategy are: Delivering a Compelling New Zealand Story; Improving Access to International Markets; Increasing Value from Tourism; Making it Easier to Trade from New Zealand; Growing International Education; Helping Businesses Internationalise; and Strengthening High-Value Manufacturing and Services Exports.

The progress report finishes with a summary of the strategies under each of these headings and Progress Indicators listing detailed actions underpinning the strategies. There is an enormous amount of work going on, notably in trade negotiations, removal of red tape for business, trade missions into key markets and tourism developments such as SmartGate at the airport.

But all work on developing a compelling New Zealand story is listed as a new project which indicates one of the major problems encountered in lifting our exports as a percentage of GDP. There is no agreed brand image under which all New Zealand’s exports and tourism experiences are promoted. The meat industry’s main brand has for a long time been New Zealand Lamb which has been very successful, but a major complaint has been the competition in export markets between exporters. Apart from North America, cooperation has been seriously lacking.

Part of the problem has been the complete lack of a generic New Zealand brand image. Development of this with a believable and compelling story to back it is an absolute priority, because brands take a long time or a lot of money to gain awareness, probably both.

This progress report is the first of six with the other five to come being Innovation, Skilled and Safe Workplaces, Infrastructure, Natural Resources and Capital Markets. Obviously these other areas will play an important role in achieving the export goal.

The Government deserves credit for coming up with a coherent strategy, but it will have to generate a tremendous response from the private sector if the goal is to come close to being realised. Another challenge is the high proportion of SMEs in New Zealand which must be inspired to pursue the new business opportunities capable of converting them into large businesses with the requisite scale.

This article has also appeared at interest.co.nz.

Input sought on animal welfare proposals

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Meat exporters, processors and producers have an opportunity to give their input, alongside other interested parties, to the Government’s proposed changes to New Zealand’s animal welfare system.

Primary Industries Minister David Carter says the proposals set a strategic direction for animal welfare and improve the way the current Animal Welfare Act 1999 operates.

“Animal welfare matters. It matters because how we treat animals says something important about us as a society. It also matters for New Zealand’s reputation because our trading partners and international consumers rightly expect us to maintain high standards of animal welfare.”

The proposed national strategy, the first of its kind, will canvass the views of stakeholders with animal welfare interests, identify the strengths and weaknesses of the current system and set a vision for New Zealand’s animal welfare system into the future, the Minister says.

“The proposed changes to the Animal Welfare Act will clarify the way it operates and make it easier to enforce.”

Radical change is not proposed, as the suggested values, outcomes and approaches are already implicit in the system, neither is it seeking to lift standards, the Ministry for Primary Industries’ discussion paper says. A key proposal is that codes of welfare, which currently set the standards for animal welfare, are replaced with a combination of regulations and guidelines. Regulations will be directly enforceable in law. Guidelines will provide information and advice but will have no legal effect.

Delivering the strategy will require action from the meat industry in terms of implementing industry schemes to improve welfare; recognising and building stockmanship skills, educating members about best practice and meeting standards, measuring animal welfare performance and engaging with the public and consumers. It also encourages continuing collaboration in setting standards, co-investing in research, contingency planning and the existing joint Government/industry initiative to improve animal welfare compliance.Many of these actions are already in place.

The closing date for submissions is 28 September 2012. Read more about how to make a submission and to read the discussion paper.

Tribute to a pioneer

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Friends and colleagues paid their respects at the conference welcome cocktail party to one of the industry’s inspirational leaders Graeme Lowe CNZM QSM, 77, who had passed away earlier that day in Havelock North after a long illness.

Marking the sad news just as Graeme would have wanted it, “with the minimum of fuss and to get back to business”, MIA chairman Bill Falconer asked delegates to raise their glasses to the legendary meat industry leader and his family.

B+LNZ chairman Mike Petersen spoke of him as “one of our pioneers”, a sentiment echoed by the Minister for Primary Industries David Carter who also paid tribute to the “hugely respected” businessman.

“Graeme led Lowe Corporation from its inception in 1964 to become a major animal by-product processor and exporter,” the Minister said.

“As an entrepreneur, Graeme was not afraid of taking risks and his innovative ideas brought a new level of business thinking and technology to the modern meat industry.”

Meat Acts, the history of the meat industry from 1972 to 1997 written by Janet Tyson and Mick Calder, talks of Graeme’s “formidable lobbying skills”, the fact that he was an innovator, a “persistent agitator for deregulation of the industry” and a “trend setter”.

The founder president and managing director of Lowe Corporation – which now employs about 400 nationwide at the peak of the season and has three tanneries, two fellmongeries and two rendering plants around the country and a turnover of $300 million – started his professional life in a tannery before joining the Royal Navy. After rising to the rank of sub-lieutenant, the British-born 21 year old returned to the tannery before taking on a new adventure on the high seas as crew on a yacht heading for New Zealand, where his mother and new step-father had recently immigrated.

On his arrival on this side of the world, he worked for Unilever subsidiary Birds Eye Foods, before branching out into his own butcher’s shop in Hastings. From there, over the next forty years and via the acquisition of Dawn Foods, he built the Lowe Corporation to where it is today.

On the way, Graeme introduced a number of technological innovations into the meat industry that have saved millions of dollars and improved efficiency. One of these is the ‘Jarvis electric stun box’ for halal stunning, which he and his engineers developed and patented. Another is ‘hot boning technology’ which enables a carcase to be broken down and into boxes within half an hour, side-stepping chillers and shaving two to three days off the process.

Graeme remained committed to Lowe Corporation to the end of his life, although suffering from Parkinson’s disease which affected his speech and mobility. Graeme’s son, Andy, who is also Lowe Corporation’s general manager will now steer the Hastings-based ship.

Also a generous supporter of Hawke’s Bay charities and organisations, Graeme had recently been inducted into the NZ Business Hall of Fame (see Food NZ, June/July 2012). In making their decision, the judges looked beyond business attributes to how the nominated individual has assisted their communities in various ways. For Lowe Corporation, it was sponsorship of the Hawke’s Bay Helicopter Rescue Trust for over two decades, along with support for many charities, including the Kids at Risk Charitable Trust. The family also devotes a lot of resources to conservation. Graeme joined two other  meat industry laureates already in the Hall: Amy Maria Hellaby, founder of R&W Hellaby; and ‘Mad Butcher’ Sir Peter Leitch KNZM QSM.

Our condolences go out to his widow Jenny, son Andy, daughters Sarah and Kate and their families, including seven grandchildren.

This article appeared in Food NZ magazine (August/September 2012).

Nearly quarter of a billion being invested in red meat

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Nearly a quarter of a billion dollars is being invested by the meat industry and the government in projects aimed at adding a potential $3 billion to returns over the next decade.

Ministry for Primary Industries (MPI)’s director-general Wayne McNee took the opportunity at the Red Meat Sector Conference to announce approved funding for the latest Primary Growth Partnership programme, which will enable the production of high-value marbled grass-fed New Zealand beef for premium export and domestic markets.

The initiative will develop marbling in grass-fed beef in the New Zealand beef herd, using Wagyu beef genetics, McNee explained. “MPI will invest in this programme with Brownrigg Agriculture and Firstlight Foods. The PGP is committing $11 million over seven years, for a programme worth a total of $23.7 million.”

Marbling, the distribution of fat through meat, is a primary determinant of quality in table beef in international markets such as Japan, China and the United States. Internationally, such high quality beef is produced mainly from cattle housed in pens and fed grain. ANZCO Foods has been producing a supply of hand-selected steers for Japan, raised on grass but finished on Canterbury grain at the Five Star beef feedlot near Ashburton for over 20 years.

To produce a comparable meat fed using New Zealand grass, the new PGP programme is aiming to develop an integrated value chain for the beef. It will combine high marbling Wagyu sires for the yearly mating of dairy heifers and cows and the development of rearing and grazing systems that will support year-round growth of the cattle.

McNee said the programme aligns well with the Red Meat Sector Strategy.

“The programme will produce unique New Zealand high-value beef for discerning consumers. It will link specialists in dairy farming, cattle breeding, finishing, processing and marketing and deliver market signals effectively right through the value chain,” he said.

David Brownrigg of Brownrigg Agriculture says it will be a significant opportunity for beef and dairy farmers to lift the quality and value of their calves and finished cattle.

“The New Zealand dairy sector represents an under-utilised resource for producing quality beef calves. Brownrigg’s Wagyu crossed with ‘Kiwi’ dairy cows and Angus beef cows will produce outstanding beef and help us lift our game in international markets,” according to Brownrigg.

Gerard Hickey, managing director of Firstlight Foods says a planned marketing programme to selected high-end global consumers will enable beef farmers to build their businesses with confidence.

Minister welcomes announcement

Welcoming the announcement, Minister for Primary Industries David Carter says, “The Government’s total investment so far of more than quarter of a billion dollars in PGP programmes, demonstrates its firm commitment to boosting economic growth through primary sector research and innovation.

“All New Zealanders stand to gain from the partnership because, alongside our internationally prized lamb, our beef sector is pivotal to the success of our economy.”

The announcement lifts the total government-industry PGP spend over the past three years to nearly $600 million. Nearly $86 million of government PGP funding has been allocated to three meat industry projects worth a total of nearly a quarter of a billion dollars to date. These are estimated to potentially put over $3 billion more on the country’s GDP by the mid-2020s.

To date, PGP-supported meat projects include funding of up to $59.5 million over seven years for the $151 million Farm IQ project with partners Silver Fern Farms, PGG Wrightson and Landcorp Farming aimed at creating a demand-driven integrated value chain for red meat. Seven project streams and 18 sub-projects are working to improve the capture and utilisation of both market and farm production information. The information will then support the development of new value-driven genetics and extension work that underpin the programme.

Another $36.6 million PGP project with NZ Merino, including $15.15 million of PGP funding, is looking to develop merino sheep with meat, wool and other products suitable for market demands over the next seven years.

Also in the wings, is a project that has been approved to business plan stage and will potentially to be funded to the tune of $37 million, led and matched by funds from Beef + Lamb NZ Ltd focused on implementing a number on-farm elements of the Red Meat Sector Strategy. Other meat industry projects are also in the pipeline, according to MPI.

The PGP is expected to be fully subscribed by next year, says McNee.

An abridged version of this article appeared in Food NZ magazine (August/September 2012).

Be smart: keeping consumers happy

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Keeping its consumers happy and listening to what they want has significantly improved McDonald’s business performance including financial returns, according to one of the company’s top China-based executives.

Introduced as a “good friend of New Zealand beef” at the Red Meat Sector Conference, Arron Hoyle, McDonald’s senior director and head of strategy for China and Hong Kong and a major customer for New Zealand’s lean manufacturing beef, said that the result deserved “a massive thank you to the New Zealand meat industry.”

McDonald’s had selected New Zealand and Australia as its sources of beef for the region because of the two countries’ reputations for food safety. While the US is still the largest market for the company, the company is significantly growing its presence in the APMEA countries.

In 1990, McDonald’s entered China, the fastest growing market in the world, when it opened its first store in Beijing. In 2010, it had 1,000 stores open and by 2013 will have 2,000.

All new stores will have a uniquely McDonald’s style, reflecting Chinese expectations for a modern, trendy image.

“We found that we need to ensure consistency in supply of style and expectations.”

There is no silver bullet, he went on to say. “You have to work extremely hard and to understand your consumer better than your husband or wife.”

He believes that New Zealand is well positioned to grow in Asia, particularly in China with its need to “import virtual water” due to ever growing water constraints as the country develops.

The Chinese market changes rapidly depending on the supply/demand dynamic. McDonald’s is forecasting beef growth to 7-8 million tonnes a year by 2020 and McDonald’s China demand alone to surpass 60,000 metric tonnes per annum.

McDonald’s likes to think it’s a great partner for NZ, says Hoyle, “the industry and all suppliers we partner with, we really like New Zealand beef. We don’t manage the supplier, we manage the business together in a partnership with suppliers.”

For the New Zealand beef team, it’s going to be a case of being better at the value chain, to execute against the opportunity, measure effectiveness versus efficiency and being faster than the competition to solutions.

“The data is showing us the opportunity is behind the hill. We need to work together to get there,” he said.

This article appeared in Food NZ magazine (August/September 2012).

Six Second Project calls on worldwide meat industry to end child starvation

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An ambitious new charitable project encouraging the worldwide meat industry to spearhead a new initiative aimed at ending child starvation and hunger was launched at the recent World Meat Congress in Paris last week, endorsed by the International Meat Secretariat.

The Six-Second Project is a global non-profit organisation, based in the US, deriving its name from the appalling statistic that a child dies every six seconds from hunger or hunger-related causes. The Project aims to raise widespread awareness of that fact, to be achieved through a unified fundraising and awareness campaign led by the global meat industry. Another goal is to foster innovative and sustainable solutions to the hunger pandemic, especially in areas where the six-second statistic is the unacceptable reality, the organisation says.

The worldwide meat industry and its partners are being challenged to join the Project by participating in a unified cause ’cause marketing’ campaign to raise funds for defeating hunger.  The ambitious idea is that project partners will create special products and/or promotions and commit to donating a generous portion of sales to the Six-Second Project. Funds raised will then be used to provide grants that foster innovative and sustainable solutions to the global hunger pandemic.

“It is our hope that, by raising awareness of this global issue, the general public will also be inspired to make a difference, not only through their purchases of products from participating partners, but also through volunteering, donating and recruiting their neighbours and friends to become involved in this noble cause,” say the organisers.

In the unprecedented move – this is believed to be the first time a global industry has been challenged to confront such a crisis – the Six-Second Project is targeting the meat sector’s food production and distribution experts as it believes they have “never been better suited to accept such a challenge”.

The meat industry is not without its critics, its organisers note. “The industry is being challenged to address its environmental impact, and the sustainability of its future production. Likewise, the Six-Second Project challenges the meat industry to harness its size, strength, knowledge and diversity to become the leader in this fight. Through a unified effort to fight hunger, the industry can effect positive change by giving back to the communities that need it most.”

At the project’s launch at the World Meat Congress, chief executive of the US Meat Export Meat Federation, is reported to have said: “This is an opportunity to make meat the brand that is fighting global hunger.”

 

 

 

 

Meat season hits the wall, says Barber

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Cattle supply has virtually dried up earlier than expected this season, Allan Barber has found. Writing in his most recent blog, he says settlement of the industrial dispute at AFFCO barely came in time to beat the passing of the season’s processing peak. Contrary to expectations that the supply of cattle, particularly cull dairy cows, would last until the end of June at least, the flow has virtually dried up.

Barber has been talking to B+LNZ Ltd’s Economic Service executive director Rob Davision. Read more …