Tag Archives: water

Food’s changing world and demands

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Hyperglobalisation, China, mega cities, urbanisation and water are some of the big issues that will play their part in the future of the New Zealand and global export meat industry, according to several Red Meat Sector Conference speakers.

In his presentation about the political and economic environment facing the industry, Colin James of the Hugo Group said it is becoming more and more difficult for a nation to act independently these days. ‘Hyperglobalisation’ refers to the increasing global interdependence and interconnectedness, which make protection from global economic forces more difficult, he said.

We can expect more of the same over the next 20 to 25 years, he explained. “It’s going to need a fair amount of resilience.”

Water, along with fossil fuels, will be the big issues, he predicts. Multinationals are rebranding and adopting a “fresh, clean, natural” stance rather than ‘clean, green’ approach to capitalise on the emergence of an affluent middle class in emerging markets. This growing middle class around the globe is calculated to encompass more than 210 million new households with income of US$20,000 or more by 2025, which he believes New Zealand is well placed to serve.

Four percent global GDP growth predicted

New Zealand’s top ten trading partners are projected to grow roughly four percent a year in 2012 as weighted by the goods trade. “Modest, but not boom time,” James commented.

Four percent in global GDP growth also stood out for Richard Brown of market research company GIRA, who admitted to being surprised that the forecasts were so positive. The leader is China, whose GDP is anticipated to grow in 2011/2012 by 8.5 percent, “not as good as expected but still OK”, followed by Indonesia (6.5 percent). He anticipates similar growth in 2012.

In his detailed look at the outlook for various meats, including beef and sheepmeat, he said that global prices for meat are generally, “fundamentally more exciting than they have been.” He was reassured with the direction of the trends, which he said were, “very good news for the producing sector.”

In 2011, prices had gone up boosting producer morale, because total global meat production was down – largely as a result of the outbreak of the pig disease PRRS in China, Brown explained. “What that illustrates is the Chinese effect on global trade is profound.”

This point was echoed in a later presentation from McDonald’s senior director and head of strategy for China and Hong Kong Arron Hoyle, who said that China is having a dramatic effect on global commodities.

“We don’t sell beef at McDonald’s, we sell a burger, so other commodities have to be taken into account.”

Rise of the dragon

Both James and Brown pointed to the current difficulties in the US and in Europe, which is facing big problems with the Euro. Europe had a “spectacularly fragmented meat industry,” Brown said and pointed to problems with the region’s biggest meat company, Vion, which is now in trouble after a period of rapid acquisition. This reflects a lower rate for now for global corporate processor consolidation “with a long way to go and an unproven success record.”

Arron Hoyle also pointed in his presentation to the ‘rise of the dragon’, the lean away from the west to the East, with McDonald’s choosing to target consumers in what it calls the APMEA (the Asia Pacific, Middle East and East Asian) region.

Unprecedented urbanisation

Hoyle talked about urbanisation in those emerging markets, such as China and India, “like we’ve never seen it before.” In the APMEA countries populations are moving from rural to urban settings in a similar manner to Britain’s Industrial Revolution, “but it’s happening 20 times faster and involves about 800 times more people,” he explained.

“We’re living in an era where we’re seeing different dynamics to the previous 50 years,” he said, adding that volatility will be more extreme than ever before.

‘Mega Cities’, those with populations of more than 10 million, are on the rise and currently count Shanghai, Mexico City, Sau Paolo, Beijing, Mumbai and Delhi as the top six.

“In addition, emerging market cities will be a key driver of global food demand with key 440 cities identified across Asia. With this explosion in urbanisation we see many ‘tier two cities’ with populations over one million evolve: By 2020 it is projected China will have 221, India 50, Indonesia 15 and Korea nine.”

With this trend comes a “massive” transport and infrastructure need, but also a forecast quadrupling of per capita of GDP by 2020, said Hoyle.

“It’s a world of opportunity for years to come,” he said cautioning that it also comes with higher rents and increased pressure on costs for McDonald’s stores or other businesses that target Asia as a key future growth driver.

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

 

Delivered: second Red Meat Sector Conference

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Delivered, as promised: Excellent, inspirational and thought-provoking speakers, all appearing in a packed programme for the 250 delegates attending the second Red Meat Sector conference.

Congratulations must go to the Meat Industry Association (MIA) and Beef + Lamb NZ Ltd (B+LNZ), joint organisers of this year’s well-attended Red Meat Sector Conference at Rydges Lakeland Resort hotel in Queenstown.

Alongside heartening optimism for future demand for red meat, recurrent themes were the massive potential for New Zealand of emerging markets in Asia, especially China, water issues, the need to utilise best practice, the need for all links in the chain to tell the industry’s story to the public, plus the rapid emergence of social media as a tool for communicating with consumers.

In his opening comments, MIA chairman Bill Falconer also noted that, while not as quickly as some would like, encouraging progress is being made on the Red Meat Sector Strategy and that “small starts are being made across the board.” Later in the day Rob Davison, from the B+LNZ Economic Service, outlined a number of matrices that the Economic Service is developing that will help to track progress against the strategy, and these matrices will “focus conversations, thinking and actions to drive the future”.

The Conference also saw the announcement of new Primary Growth Partnership (PGP) funding for the red meat sector, for a project to develop high-value grass-fed marbled beef, using Waygu genetics.

All the presentations were a veritable smorgasbord of information, packed with facts, statistics and views from many facets of the industry, enabling delegates to pick out what was relevant for their part of the value chain. While every single one of the speakers was passionate and eloquent about their topic, from an export food manufacturing perspective the highlights were excellent presentations from McDonald’s Arron Hoyle and vertically integrated meat processor Agri Beef’s Rick Stott from the US.

Besides the serious business, there was entertainment and laughter too. Lunch – finger food featuring B+LNZ Ambassador chef Ben Battersbury’s speciality “alternative cuts, not cheap cuts” like lamb riblets –  was amusingly heralded with witty comments from him. After dinner speaker Davey Hughes of Swazi Apparel gave an hilarious account of hunting expeditions in Africa and shared a few (tongue-in-cheek) items from his latest collection, including a new ‘mankini’.

Also noteworthy, was a significant Australian presence at the conference in the form of representatives from Meat & Livestock Australia and Aus-Meat. This put physical form to MLA’s managing director Scott Hansen’s opening comment in his presentation that “Australia sees a close collaboration with New Zealand.”

There was positive feedback from delegates, who came from all parts of the sector, including farmers, processors, equipment suppliers, researchers and media.

This article appeared in Food NZ magazine (August/September 2012). Copies of most of the conference presentations are available at www.mia.co.nz or redmeatsector.co.nz.

 

Transformational change (and how to make it)

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One farmer who has made transformational change to his farm business is Marlborough farmer Doug Avery.

In an inspirational and entertaining presentation at the Red Meat Sector Conference, he talked of working “smarter and harder” and the need to “lift yourself up above and see what’s going on around you.”

The tipping point that made him see that he needed to change was sustained drought in the region, over a period of eight years,  which meant that Bonavaree Farm and the Avery family were facing a very uncertain future. In 1998, Doug Avery attended a seminar where Lincoln University pasture Professor Derrick Moot proposed using lucerne as a primary grazing pasture plant. Using that idea started change.

In 2004, with the area still gripped with drought, the NZ Land Care Trust answered a call for help from Avery and a few other farmers. A six-pronged attack on failed systems was engaged with science and the help of funding from the Sustainable Farming Fund and others. This saw the transformational change of the operation from one of failure to one of success.

Having run the emotional gamut of the ‘Three Ugly Sisters’ – envy, anger and blame – Avery realised, when he started looking, that there were some things he could control and others he was concerned about – climate change, weather and the value of the dollar – that he had no control over at all.

Avery realised three things: that the farm business could run 44 percent less sheep but only produce five percent less product; also, that a one percent increase in soil carbon can increase water holding capacity by 144,000 litres per hectare; and, finally, “how much time do we spend telling our story?”

Change of mindset

A change of mindset was also needed, he decided. He would work in what he calls the influence circle, become proactive not reactive, move to solution and enquiry (away from blame and excuse), he would influence thinking and adapt his business systems to the changing climate.

Better practice influenced the systems in place at Bonavaree, says Avery. The year was broken down into three periods: the risk period from mid-December to mid-February where they farm as little as possible; the recovery period from mid-February to late winter, when crops are grown on summer-fallowed land and ewes and hoggets are mated on lucerne and the system charges back into life; and the revenue period, from late summer till mid-December.

“We grow our stock at fast rates to finishing weights before the summer dry,” he said, adding that ewes wean fat and the ewe weights are heavy.

Precious water was conserved by using summer fallow, which intercepted the weed cycle, storing water and creating a water reservoir. Organic matter was built into the soil by stopping tillage. Plants were used that could tap water from deeper layers and also create rapid animal growth and performance. Finally, animals were made for performance, using designer genetics.

Results

The results today speak for themselves. “Lots of wonderful lambs that grow like mushrooms”, and “hogget scanning gone from 40 percent to 165 percent”.

Today, Bonavaree has 1,500 hectares owned and 280 ha leased which will be wintering 13,000 stock units this year (5,000 sheep, 1,650 cattle), growing 90 ha of lucerne for seed and the family is retiring an increasing number of natural areas production. The property has six full-time staff and lots of busy contractors.

Better practice

Better practice for Avery is about using quality contractors, rather than trying to purchase expensive machinery and do it himself, using smart systems like Farmax, inspiring the young who learn by what they see, working with good value chains and smart brands, growing top crops and lambing onto top quality feed, he said.

Reminiscing to the start of his transformational journey, Avery said: “I always wondered why somebody didn’t do something about that, then I realised I am somebody.”

His message for farmers looking to create resilient businesses is to create relationships, manage the soil and water “more crop from every drop”, look at the plant selection for sites and purpose, manage feed supply and demand, work with the natural forces of the local climate, collaborate with science, agency and industry, engage in processes which create financial reward and to create a culture of excitement and fun in the work place.

Bonavaree is now looking to build on its successes through improved management structures, more measuring and collaboration through FarmIQ, better feed conversion in the rumen, improved plant mixes and genetics (plant and animal) and enhanced native plantings and over lay business, says Avery.

Doug Avery has received a number of award for his work at Bonavaree including the 2008 Green Ribbon from the Ministry for the Environment, 2010 Lincoln Foundation South Island Farmer of the Year, 2011 Marlborough District Council Farm Environment Award and the 2012 New Zealand Land Care Trust Ambassador title.

New Zealand’s ‘liquid gold’

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Water is also on the mind of our politicians. Water – New Zealand’s ‘liquid gold’ – is possibly New Zealand’s biggest opportunity to grow the productive part of our economy, according to the Minister for Primary Industries.

David Carter was speaking to the Federated Farmers’ annual conference last week, when he talked about New Zealand playing to its strengths.

“We can’t go past our abundance of water or New Zealand’s ‘liquid gold’.”

Despite difficult fiscal conditions, he pointed to the Government’s fronting with $35 million for the Irrigation Acceleration Fund to 50:50 fund the feasibility studies of schemes around New Zealand.

“The Government’s also committed $400 million through the Future Investment Fund to invest as a cornerstone shareholder in large water storage and irrigation schemes.

“We are making progress, particularly in Hawke’s Bay, Canterbury and Otago, but achieving consensus of all the various stakeholders means progress is slower than I would like.”

Most important aspect

David Carter, NZ Primary Industries MinisterIn his speech, the primary sector was referred to as “the most important aspect driving our economy forward.

“The healthy performance across most of the primary sectors has enabled our economy to weather the storms of the global financial crisis and, locally, the Canterbury earthquakes,” he said, pointing to the fact that the primary sector now makes up 71 percent of New Zealand’s total merchandise export trade.

Carter referred to the EU’s “major challenges” and the “subdued” US, which in the past would have had a huge impact on New Zealand. New Zealand is fortunate to have repositioned itself so significantly with Asia, he said.

“We are well on the way to realising the Prime Minister’s ambition, which is shared by China’s leaders, to double our bilateral trade to $20 billion by 2015. The government’s trade agenda, led by Tim Groser, has the potential to deliver more opportunities to primary producers and exporters.”

Talks with eight other Trans-Pacific Partnership countries, including new partners Mexico and Canada, and also Russia, India, South Korea and the Gulf States “and you sense the size of the potential prize,” he told delegates.

The Minister had just returned from Russia, with which free trade negotiations are progressing. Two-way trade is currently worth about $700 million. “But, if a deal is reached, it will be Russia’s first international trade deal and our exports will grow significantly,” he said.

Highly regarded

“One of the things that was reinforced to me during my trip was how highly regarded New Zealand is internationally. We are renowned as producers of some of the best food in the world, at a time when food security is the world’s greatest challenge.”

The Minister also referred to the importance of biosecurity, local government reform, rural broadband initiatives and a new animal welfare toolkit for farmers being launched by the Ministry for Primary Industries in his speech.

 

Watching water stewardship

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With current consumer trends and international focus on the environmental there is an ever-growing range of requirements facing business and local government. These can focus on tangible things like water and carbon as well as less tangible things like corporate and social responsibility and sustainability, writes sustainability consultant Kevin O’Grady.

In the case of water, there is a worldwide recognition that this will be the next area in which standards will be developed. The development of world standards for water stewardship is likely to form in two ways, concurrently:

  1. As Government policy leading to legislation which must be followed. This legislation may be influenced by bi-lateral or multi-lateral issues in the same way as the development of carbon emission reduction has been influenced by the Kyoto protocol. As the carbon experience shows, dealing with global issues through domestic legislation is fraught with difficulty.
  2. As market-driven standards that are widely accepted by environmental and social stakeholders and promoted water stewardship to consumers via the retailer and other trade ‘gatekeepers’. These standards are typically not constrained by regulatory minima or international trade protocols like the World Trade Organisation (WTO). The Forest Stewardship Council (FSC), the Marine Stewardship Council, Rainforest Alliance and Fair Trade are leading examples of high-end schemes.  These are typically part of the ISEAL Alliance.

Currently, there is a very early draft of a new International Water Stewardship Standard developed by the Alliance for Water Stewardship (AWS) that indicates the focus of water stewardship may be on managing whole of catchment impacts.

Around the world, individual sectors and regions are pondering what an eventual standard will look like for them.

In Australia, Water Stewardship Australia (WSA) has developed a regional standard that aims to be consistent with the AWS approach, but regionally relevant. The risk of not doing so is that another region may move ahead of the game and others will have to adopt a standard not suited to their region.

For example, the European Water Partnership (EWP), although an AWS member, has a programme of developing what they call ‘sectoral tools’ which will be highly Eurocentric.  They describe their aims, as follows:

  • The EWP harnesses European capacity, helps to coordinate initiatives and activities in international water issues and undertakes worldwide promotion of European expertise related to water.
  • The ultimate goal of the EWP is to elaborate strategies and implement concrete actions to achieve the objectives of the Water Vision for Europe.

In the case of the New Zealand meat industry, it may be of interest to note that Ingham Chickens in Australia have worked on an approach to meet the emerging standards.  Also, that large retail players like Marks and Spencer are actively looking at water stewardship for their suppliers (see Hepworth N, Agol D, Von-Lehr S and O’Grady K, 2011. AWS Kenya case-study technical report: Exploring the value of water stewardship standards in Africa. Alliance for Water Stewardship, funded by Marks and Spencer and GIZ amongst others).

For more information contact Kevin O’Grady who was involved as a consultant in the Ingham’s trial but has also worked with approaches to meet the emerging standards for irrigation, cotton growing, dairy farming, flower growing (Kenya), wine growing (Chile).

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