Category Archives: Global Trade

International trade decisions or issues affecting, or with the potential to affect, New Zealand meat.

New fashioned shopping values emerging in Britain

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‘New fashioned values’ are emerging in British shoppers in these difficult economic times, according to new research from leading retailer Sainsbury’s.

Having to think more carefully and thoughtfully about household spending, especially on food has triggered a set of new, positive shopping behaviours across all socio-economic groups, says a blog on the retailer’s website.

“Our research shows a deep and widespread change has taken place with 83 percent of Sainsbury’s shoppers having changed their shopping habits in the last year.”

Shoppers are “rediscovering habits of previous generations” – making shopping lists, planning weekly meals, being creative with leftovers and preparing packed lunches. More people are choosing bargains and basic products for everyday needs, but are “enjoying the sense of deferred indulgence that comes from saving up and splashing out on special occasions.”

Sainsbury’s research has also shown that while consumers have reduced their spending, “they actually care more” with quality, integrity and sustainability increasingly becoming the drivers that shape shopping choices, as well as prudence.

“These ‘new fashioned values’ are not a passing phase but represent a fundamental change that is here to stay,” says Sainsbury’s, adding that it launched its 20×20 Sustainability Plan a year ago. The retailer believes its commercial success will continue to depend on continuing to meet and anticipate its customers’ changing needs.

“We can’t do this alone and need the industry, our suppliers and other experts to radically re-examine our ways of doing things, to help meet some of our targets such as doubling the amount of British food we sell and increasing the sales of fairly traded products to £1 billion.”

Market researchers Mintel had analysed Sainsbury’s customer behaviour and reported the findings. The result, a factsheet  ‘The rise of new fashioned values’,  shows that the results span all socio-economic demographics. The research showed that 83 percent of people have changed their shopping habits in response to squeezed family budgets and that fairness to employees, waste and Britain remain similar to last year.

The factsheet shows Sainsbury’s has identified five characteristics of ‘new-fashioned’ values:

  • Savvy sustainability – customers are showing a growing tendency to save and splash out and they also still want to live well.
  • Values re-evaluated – evidence suggests a genuine deepening of values. The economic downturn is not an excuse to abandon issues such as animal welfare, fair-trade or sustainability, even in economy products.
  • Act for me – People have greater, more exacting expectations of companies. “They probe deeper for answers and, largely through digital media, they are far better informed than ever before,” says the report.
  • Health – is now a mainstream consumer issue, “although people are still seeking healthier rather than the healthiest options.”
  • Close to me – While global issues have become increasingly complex and difficult, people are placing greater importance on local matters, “because doing so gives them a greater sense of control and trust.” Customers are also showing more interest than ever in supporting charities and community causes. They are putting more importance on ‘being a good neighbour’ and expect businesses with which they deal to do the same, both locally and nationally.

It also covers how Sainsbury’s is meeting the needs of the new-fashioned shopper, through helping consumers to live the way they want to live and making it easier for them to buy what they need. Making sure customers can be confident about the quality, value and integrity of the products, irrespective of price or range.

Read more …

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.

Feeding East Asia

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The importance of the East Asia region as the most significant market for New Zealand and Australian food and fibre products is set to grow in coming years, highlighted more recently by the global economic downturn, according to Rabobank.

In a recent report titled, Feeding East Asia’, Rabobank senior analyst Marc Soccio says the global and economic downturn has sharpened the focus onto the East Asian region as it continues to expand its slice of the global economic pie, offering opportunities no longer available in traditional markets as incomes grow and diets change in fundamental ways.

“The significance of East Asia to New Zealand and Australian farmers and agribusinesses is growing from an already strong base, with markets in developing economies coming on-stream to supplement more established markets in the region,” Mr Soccio says.

“As developing countries across East Asia continue to grow their share of the global economy, rising incomes are gradually transforming household consumption patterns. Opportunities for greater trade with the region are widespread and are more or less subject to the ongoing evolution of strong and sustainable consumer economies.”

Soccio says supply chains are evolving, and competition to capture value from rising trade flows is arising from both within the region and beyond.

“But overall, with a greater understanding of this diverse region, New Zealand and Australian suppliers appear well positioned to satisfy growing demands for a greater range and value of food and fibre production in years to come.”

The cultural and socio-economic diversity inherent in East Asia remains a defining characteristic that makes the region a particularly complicated prospect to navigate.

Accordingly, Soccio says the need to better understand the region and its future direction has never been so great, as this will provide New Zealand and Australian food producers with the competitive advantage required to explore the right markets, in the right way, at the right time.

On the topic of the rising tide of foreign ownership in the sector, the Rabobank report refers to the case of Australia’s sugar sector which undertook a significant shift in ownership of the industry’s downstream milling assets in the period from 2010 to 2011.

“In fact, over the past decade, control of almost three-quarters of Australia’s downstream sugar refining assets have been acquired by foreign investors – around two-thirds are now owned by businesses based in East Asia,” says Soccio.

“The investment into the sector has had a revitalising effect, but it has also significantly changed supply chain dynamics, with cane farmers now needing to be more mindful of how they transact with parties further downstream.”

The value created by opportunities to supply food and fibre products to East Asia into the future will be influenced by a number of factors.

According to Soccio, competition from suppliers, both within the region and in other parts of the world, will continue to put the strong reputation of New Zealand and Australian food producers to the test.

“Many countries across East Asia are significant agricultural producers in their own right and will try to meet their own needs as best as they can, which can limit opportunities for some crops where New Zealand and Australian producers may not have a clear cost or quality advantage.”

Soccio highlights other competitive forces, such as the way in which value is shared in the supply chain, as well as exchange rates and bilateral trade negotiations, will also have a bearing.

“One way or another, the stronger ties being forged to the region through greater inbound and outbound trade and investment will underline New Zealand and Australia’s pivotal role in feeding Asia in the years to come,” he says.

Rabobank New Zealand is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 110 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 48 countries, servicing the needs of approximately 10 million clients worldwide through a network of more than 1600 offices and branches. Rabobank New Zealand is one of the country’s leading rural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 31 branches throughout New Zealand.

More support for TPP

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More business leaders are speaking publicly in support of the Trans-Pacific Partnership (TPP) trade agreement that is currently being negotiated in Auckland.

Business NZ chief executive Phil O’Reilly has said the TPP has the potential to raise living standards around New Zealand.

Speaking at the TPP Forum he said the trade agreement goes beyond the 20th century approach of simply seeking to reduce tariffs and border restrictions.

“It recognises the fact that industry now relies on complex supply and value chains involving producers in many different locations and countries. New Zealand is deeply involved in many international value chains and the TPP will enable more New Zealand businesses to trade effectively in more countries and that means increased growth and more jobs for New Zealanders.

“The particular value of the TPP is that it involves many of the fastest growing economies on earth. Economic growth in the Asia-Pacific region is surging and TPP will help unlock that growth for New Zealand’s benefit.

“It’s appropriate that New Zealand’s negotiators are focused on protecting and advancing our interests including public health, intellectual property, the environment and the Treaty of Waitangi and success in these areas will mean a high-quality trade deal that is sustainable in the long-term.”

Agreement vital to New Zealand economic success

Also speaking in Auckland at the Stakeholders Forum was Suze Reynolds, NZUS Council associate director who argued that the agreement is vital to New Zealand economic success.

“New Zealand has always been a nation of traders, but we need a level playing field to compete in competitive world markets,” she said. “As a country, we desperately need to grow the economy and grow employment. More trade means more jobs.”

International trade accounts for around two thirds of new Zealand’s total economic activity. In 2011, New Zealand’s merchandise exports totalled $48 billion, while service exports totalled $13 billion.

“These are big numbers, but we are not paying our way. We still spend more than we earn,” said Reynolds. “We can’t prosper by selling to ourselves, we can’t eat all we produce and we can’t produce all that we need. Free trade gives us more choice. It helps to diversify and deepen our economy. It exposes our businesses to innovation and makes them more efficient, it attunes them to international markets and exposes them to high value customers.

Research undertaken by the East-West Center, in Honolulu, states that the TPP could add around $2.1 billion to the New Zealand economy by 2025.

 

Businesses call for urgent action to conclude TPP in 2013

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Business representatives from four economies – US, NZ, Canada and Australia – have met in Auckland to press for more urgency in concluding the Trans Pacific Partnership (TPP) negotiations currently underway.

“In September business representatives from across the TPP member economies urged governments to conclude an ambitious, comprehensive and high standard outcome in 2013,” says Cal Cohen, president of the Emergency Committee for American Trade (ECAT) speaking on behalf of the US Business Coalition for TPP.

“We are glad this call has been taken on board and we express our strong support for this goal.  It is now time for negotiators to tackle the more sensitive issues to ensure this deadline can be met.”

“TPP has the capacity to change the way business is done in the Asia Pacific region.  This is what is needed to grow economies and create jobs,” says Stephen Jacobi, executive director of the NZ US Council and NZ International Business Forum.

“We appreciate the task is complex but we urge negotiators meeting in Auckland this week to accelerate their efforts and narrow their differences so the benefits of TPP can be brought forward at a time of increasing economic difficulty.”

“Canada is joining the TPP negotiations for the first time here in Auckland and is determined to participate in a way that builds consensus for a strong outcome,” said Kathleen Sullivan, executive director of the Canadian Agri-food Trade Alliance (CAFTA).

“Our immediate priorities are addressing the proliferation of non-tariff barriers which impede trade and issues like rules of origin that can prevent trade occurring even when free trade agreements (FTAs) are put in place. There is a lot at stake for Canada in TPP and we are glad to be participating as one of eleven APEC economies.”

“Australia has a lot to gain from a successful outcome to TPP which can provide an opportunity to reduce the complexity associated with the noodle bowl of over-lapping and contradictory FTAs in the region,” said Bryan Clark, director, trade and international affairs, Australian Chamber of Commerce and Industry (ACCI).

“Simplification of the supply chain will translate into reduced business costs and increase the time in which products move around the region.  That can only advantage businesses and consumers and lead to better economic outcomes for all member economies.”

Asia Pacific business organisations have earlier reaffirmed their view that a successful TPP will be:

  • Comprehensive – with no product exclusions and with commercially meaningful and flexible rules of origin.
  •  High quality – with strong standards across all main areas, from transparency, investment and government procurement to intellectual property, e-commerce and sanitary and phytosanitary measures.
  • Ambitious – with the elimination of tariffs and non-tariff barriers on trade in goods and services and investment no later than 2020, the deadline set for free and open trade and investment in the Bogor goals.
  • Innovative – with concrete new commitments on new generation and behind the border issues, including eliminating chokepoints in the operation of regional supply and value chains, fostering small and medium-sized business participation in expanding trade, facilitating regulatory coherence and promoting and protecting innovation.
  • Enforceable – with clear commitments, and strong and transparent state-to-state and investor-to-state dispute settlement mechanisms.
  • A living agreement – open to accession by other Asia-Pacific economies, provided these economies share TPP’s ambitious vision and can demonstrate their ability to accede to an agreement with the characteristics described above.

Business representatives from TPP member economies will join government negotiators and other representatives of civil society at a Stakeholder Forum in Auckland tomorrow (7 December).

Meat industry leaders support TPP negotiations

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Heads of various meat industry organisations  have shown their public support for the Trans Pacific Partnership (TPP) trade agreement negotiations underway in Auckland this week between eleven APEC economies.

They are amongst more than 50 business leaders from some of New Zealand’s largest and most successful companies and business organisations to have signed an open letter to Prime Minister John Key, underlining the importance of international trade and investment for New Zealand.

Among the signatories are Alliance chief executive Grant Cuff, ANZCO Foods’ managing director Mark Clarkson, Silver Fern Farms’ Keith Cooper, Greenlea Premier Meats’ Tony Egan and Sir James Wallace chairman of Wallace Corporation alongside Meat Industry Association chairman Bill Falconer and Beef + Lamb NZ Ltd’s chairman Mike Pedersen and chief executive Scott Champion.

“The signatories to the open letter represent a cross section across all major export sectors in New Zealand, including agriculture, forestry, fishing, horticulture, wine, manufacturing, technology and Maori business. Together they either directly employ, or their members employ, an enormous number of Kiwis,” says the chairman of the New Zealand International Business Forum (NZIBF), Sir Graeme Harrison.

“These business leaders welcome the TPP round taking place in Auckland this week and commend negotiators from the TPP economies for their efforts to conclude a future agreement which should bring benefits for all member economies”.

“The group is aware the negotiation poses challenges for New Zealand policy settings in a number of areas and that the negotiation is complex. We have confidence that Trade Minister Tim Groser and his officials will seek solutions that meet New Zealand’s national interests.”

“We see great advantages for New Zealand arising from a future agreement that is high quality, comprehensive and ambitious, one that eliminates trade barriers, lowers the cost of doing business and makes improvements to the way regional supply chains can link producers and consumers in the region.”

The open letter coincides with the launch of a new business-led initiative, Trade Works, a website (www.tradeworks.org.nz) to help Kiwis better understand the benefits of trade and investment for New Zealand, and understand the potential benefits of TPP.  Funding for the website has been provided by the NZ US Council and the website has been built with the support of thirteen business organisations representing the main export sectors.

“The Council and its partners see value from an effort to create a TPP which meets business and wider needs and reflects the way business is being done today and will be done in the future.  This will assist economic growth and job creation in New Zealand.  Our new website signals that we are also ready to participate with other members of civil society in a dialogue about how TPP can contribute to what it is best for New Zealand,” says the chairman of the NZ US Council, Rt Hon James Bolger.

 

Touch screen at Tesco

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

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

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

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

 

 

 

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 …

Success depends on innovation

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Success depends on innovation, says the head of one of the world’s leading retailers – and a major customer for New Zealand lamb.

Speaking at the FT Innovate 2012 conference in London in early November, Tesco Plc’s group chief executive Philip Clarke said: “Be it nations or companies, if you don’t innovate; if you cling to the old way of doing things in the forlorn hope that the pace of change will slow; if you dare not take risks for fear of failure – if you do these things, then decline is inevitable.”

Change and innovation are part of every successful businesses’ DNA, he said and related the story of Tesco’s founder Jack Cohen “an innovator to his fingertips.”

It was Cohen who helped bring the concept of a self-service supermarket to Britain after World War II “an innovation that changed the entire retail industry.”

His innovative streak was borne out of an attitude of mind. “He’d travel, he’d constantly ask questions, spark ideas, try things. Lesson one from Jack then: to innovate we must create the right mindset.”

Since then Tesco has been leading innovation in retail “everything from new formats like Express to centralised distribution, which have revolutionised the supply chain here in the UK,” said Clarke.

The digital revolution is heralding a new era of retailing. While the customer always was king, thanks to digital technology, today’s customers are more powerful than ever. “Not just with more information and choice of goods and services to buy, but a choice of ways to shop at whatever time they like,” he said, adding that social media creates fashions in seconds, making or destroying brands within a day.

In the wake of the change has come data. “The vast, almost infinite quantities of data now available means no retailer has any excuse not to abide by the first law of business: know your customer.”

The insights gleaned by Tesco by its Clubcard, launched in the 1990s, turbo-charged Tesco’s growth. Data is now helping Tesco to drive innovation: “Which is why we own Dunnhumby, our marketing services business.”

While data is important, experimentation is vital. “Try, try and try again. And in the face of failure look for what is good about the experiment. Encourage your people to try again, to build on the success, not blame them for the failure.”

People said, when Tesco.com was launched in 2000, it would not work. “Today it is the world’s largest and most profitable online grocery retailer and we are rolling out the service across all our markets. Already more than five years old in Korea and Ireland; we have launched it in Slovakia, Czech, Poland. Thailand follows very soon.”

That roll out has been made possible thanks to an innovative IT platform that has been developed by Tesco’s Hindustan Service Centre, the company’s global services arm based in Bangalore, said Clarke.

“Employing over 3,000 technologists, this is where we develop new web services and systems so they are on a common operating platform, allowing is to set them up easily in markets around the world.”

Clarke described Tesco as a ‘blueprint led organisation’. “Once innovations are proved successful, a blueprint is developed and managers trained to speed adoption around the world.”

In each of their markets, Tesco.com’s offer has to be tailored to meet the local culture and tastes. New innovations to aid speeding delivery to the customer include Mapster, an application which tracks Tesco vans in real time and is being piloted in some stores around London. Tesco has also created a virtual store in Seoul, Korea, where commuters can use their smartphones on the platforms of the city’s underground to scan the barcodes of the products they want – and then their shopping gets delivered to the address of their choice later on the same day.

“Our Korean colleagues lead on digital innovation for the Group – not because we asked them but because we fostered a culture of innovation; we encouraged innovation and recognised colleagues for trying.”

Clarke liked to think that Jack Cohen would be proud of what Tesco did with Facebook, asking customers what ice-cream flavours they wanted – the 21st century equivalent of his 1930s store tours in Hackney. “Asking customers what they want isn’t new, but doing it the digital way is.”

Looking to the future, Clarke said for retailers it’s no longer going to be sufficient to innovate simply to meet an existing customer trend. “We need to innovate to anticipate what customers want. Successful retailers will not be those who meekly follow the customer like some obedient puppy. They will be one step ahead, offering people new ways to make their lives that bit better.”

Those innovations have to fit a powerful trend created by the power of digital technology,. “People want and increasingly expect personal service, a personalised choice, a sense that a brand – be it a retailer or media organisation – has tailored what they offer to fit their own unique needs and wishes.”

The drive to personalisation will be propelled even further by the internet of things. “Everything from the light bulb in your house to the car you drive will be connected to the internet… Mass personalisation, plus the internet, will determine everything, from pricing and promotions to the internet.”

Innovations depend on much more than just clever people who are experts at technology; and they rely on much more than just using customer insight in an intelligent way, Clarke said.

“From the perspective of any CEO, a company that truly excels at innovation is a company whose culture rewards innovation. It is a culture where people understand that, to change, to create something new, means taking risks. A culture where people know that innovations can certainly fail, that mistakes happen, but you learn from them; where aiming high, having a big, bold idea is not frowned upon, but encouraged. A culture in which the leaders think the biggest mistake is not trying, not experimenting, not taking a risk.”