Category Archives: Global Trade

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

Food price surges “worrying”

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The food price surges are worrying governments and non-governmental organisations (NGOs) around the world.

Looking at it from a global perspective, and possibly with the spectre of food riots in the back of their minds, the G20, meeting a couple of weeks ago said the food price situation is “worrying“. However, they have held back from calling an emergency meeting now, preferring to wait until late-September or early-October when Washington has assembled some more crop forecast information. It was noted, however, that rice harvests are stable.

In the meantime, European banks are cooling on food commodity speculation, as it is said to be contributing to the commodity price surges, and are considering regulation. Others, including Sumiter Singh Broca a policy officer with the UN’s FAO, don’t agree entirely.

“While speculation may have added to the volatility of food prices, it is hard to argue that the increased volume of speculation would have made food prices more volatile in the absence of real shocks,” he argues in an article written for RepRisk Insight, a new e-zine.

“Farm subsidies and protection in some OECD countries have affected the volume and efficiency in agriculture and discouraged production in some countries, increasing their dependence on imports and hence their vulnerability to price shocks.”

He suggests increasing credible information on global food markets and enhancing transparency will reduce “panic-driven price surges” and enable better informed policy decision making.

Call to ‘stress-test’ the system

Recent research released last week by major international non-governmental organisation Oxfam ‘Extreme Weather: Extreme Prices’ ahead of UN talks in Bangkok aiming to tackle climate change is said to show that the full impact of climate change on future food prices is being underestimated. The research, carried out by Dirk Willenbockel of the Institute of Development Studies, looks at the impact of extreme weather scenarios on food prices by 2030.

Spikes, such as the current US drought, would be a massive blow to the world’s poorest who today spend up to 75 percent of their income on food, says Oxfam’s climate change policy adviser, Tim Gore. He calls for governments to ‘stress-test’ the global food system under climate change to identify where the world is most vulnerable.

Bollard goes to APEC

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The New Zealand International Business Forum (NZIBF) has congratulated outgoing Reserve Bank Governor Alan Bollard on his appointment as executive director of APEC.

“This is another valuable opportunity for New Zealand to show leadership for freer trade and investment in the Asia Pacific region” said NZIBF chairman Sir Graeme Harrison.

“Alan Bollard has a range of experiences both as an economist and as a policy maker, which qualify him for this task. We wish him well for this challenging new appointment”.

Speaking from the APEC Summit in Vladivostok, Tony Nowell, New Zealand member of the APEC Business Advisory Council (ABAC), said Dr Bollard was taking up his role at a significant time.

“APEC has a broad vision to establish the Free Trade Area of the Asia Pacific (FTAAP).  Progress to this end is being made in the Trans Pacific Partnership and the Regional Comprehensive Economic Partnership.  As well as strengthening APEC’s advocacy for freer trade and investment, Alan Bollard will have a key role to play in ensuring that regional trade initiatives proceed in a way which is mutually re-enforcing, meet business needs and contribute ultimately to the FTAAP goal.”

Tony Nowell said that ABAC looked forward to working with Dr Bollard in his new role.

Asia-Pacific business organisations urge TPP completion

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As the Asia-Pacific Economic Co-operation (APEC) Economic Leaders Meeting opens in Vladivostok, Russia, today business organisations from around the APEC region have once again joined together to urge participants in the Trans-Pacific Partnership (TPP) to complete negotiations as soon as possible in 2013 and to hold to the ambitious aims set for the final agreement.

According to a joint statement, the Asia-Pacific business organisations from New Zealand, Chile, Canada, Peru, Singapore and the US, urge the negotiators to maintain the momentum in the negotiations to achieve the vision of TPP. “While substance will need to drive the negotiating agenda, we urge that all steps be taken to bring the negotiations to a conclusion in early 2013.”

Asia-Pacific business organisations have reaffirmed their view that a successful TPP will be comprehensive, high quality, ambitious “with the elimination of tariffs and non-tariff barriers on trade in goods and services and investment no later than 2020″, innovative, enforceable and a living agreement.

Amongst business leaders at APEC Vladivostok are Erica Crawford of Kim Crawford Wines, Malcolm Bailey of Fonterra and Ian McCrae, Orion Health. Members of the APEC Business Advisory Council also attending the talks are Tony Nowell of Valadenz, Wayne Boyd (Vulcan Steel Ltd), Maxine Simmons (NZBio) and Stephen Jacobi of the NZ-US Business Council who is an alternate member.

“TPP provides a potential pathway for making progress towards the Free Trade Area of the Asia-Pacific,” says Jacobi. “TPP is a complex undertaking but the potential gains to growth and jobs are simply too big to be left on the table.”

 

Organic foods not more nutritious, says study

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The argument that organic food, including meat, is more nutritious than conventionally grown food has been cast doubt on by new research, based on an analysis of several hundred studies.

The study by Dr Crystal Smith Spangler and others, published in Annals of Internal Medicine (4 Sept), is the most comprehensive meta-analysis to date of existing studies comparing organic and conventional foods. Researchers analysed 237 separate studies which compared the organic foods to conventionally grown foods. They did not find strong evidence that organic foods are more nutritious or carry fewer health risks than conventional alternatives, though consumption of organic foods can reduce the risk of pesticide exposure.

As for what the findings mean for consumers, the researchers said their aim is to educate people, not to discourage them from making organic purchases. “If you look beyond health effects, there are plenty of other reasons to buy organic instead of conventional,” noted lead researcher Dena Bravata, from Standford University. She listed taste preferences and concerns about the effects of conventional farming practices on the environment and animal welfare as some of the reasons people choose organic products.

Professor Alan Dangour of the London School of Hygiene and Tropical Medicine, says like a review he and others conducted in 2009, this latest study “again demonstrates there are no important differences in nutrient content between organic and conventionally produced foods.” It also finds no evidence that organic foods are healthier than conventionally produced foods, he adds.

Organic driven by risk aversion

The majority of people who eat organic food are driven by risk aversion not nutritional superiority, believes Liza Oates, a PhD researcher into the health effects of organic diets and course coordinator of Food as Medicine, Wellness and Complementary and Alternative Medicine for the Master of Wellness Programme at RMIT University in Melbourne.

“Our research shows organic consumers are more interested in what’s not in their food – such as pesticides and antibiotics – than what is. Most also say that the environmental and social benefits of organic food play a key role in their decision to go organic.”

She points to US research that has shown that eating organic food has a dramatic effect on pesticide residues in children. “Substituting non-organic fruits and vegetables with organics for five days resulted in an almost complete reduction in organophosphate pesticide residues. It is this kind of benefit that many organic consumers are looking for when choosing to buy organic food,” says Oates.

 

I’ll just print me a steak …

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Traditional meat exporters will need to consider future protein competition coming from outside the box in the future, as new technology is attracting innovation funding around the world.

One such piece of research, by a US company called Modern Meadow, has this week gained between US$250,000-300,000 for a tissue engineering project. Modern Meadow is said to be developing a fundamentally new approach to meat and leather production, “which is based on the latest advances in tissue engineering and causes no harm to animals.”

The news was announced by the US-based Thiel Foundation, set up by one of the founders of PayPal Peter Thiel. It was one of three new grants, awarded through its Breakout Labs programme. This is a revolutionary revolving fund to promote innovation in science and technology. The two other grants went to medical and therapeutic innovations.

According to Breakout, Modern Meadow co-founders Gabor and Andras Forgas respectively invented and helped to commercialise bio-printing, a technology that builds tissues and organ structures based on the computer-controlled delivery of cells in three dimensions. The two previously co-founded Oganovo,a a San Diego-based regenerative medicine company which applies bio-printing to a range of medical applications including drug discovery, drug testing and ultimately transplant tissues. They plan to use the Breakout Labs funding to apply the latest advances in tissue engineering beyond medicine to produce novel consumer biomaterials, including an edible cultured meat prototype that can provide a humane and sustainable source of animal protein to consumers around the world.

“Breakout Labs is a much-needed source of funding and support for emerging technologies like ours,” says Andras Forgacs. “Investors across the board have become more risk-averse and yet early funding is critical to enable truly innovative ideas.”

Modern Meadow, based in Missouri, is combining regenerative medicine with 3D printing to imagine an economic and compassionate solution to a global problem, says Lindy Fisbhurne, Breakout Labs’ executive director. “We hope our support will help propel them through the early stage of their development so they can turn their inspired vision to reality.”

Launched in November 2011, Breakout Labs provides teams of researchers in early-stage companies with the means to pursue their most radical goals in science and technology. To date, the fund has awarded a total of nine grants, of up to $350,000 each. Breakout Labs accepts and funds proposals on a rolling basis.

Although very early days as yet, the concept supported by the fund could bring printing your own steak for the barbie nearer to reality, but just don’t expect it in the near future.

The Modern Meadow innovation is not alone in attempting to solve the world’s future protein needs. New Zealand’s Riddet Institute is also working on the joint PROTEOS project with its counterpart Wageningen University in The Netherlands, “formulating novel solutions that involve extending and using more effectively future animal-based protein sources, transforming the protein supply chain” – essentially growing meat in the laboratory. Project plans involving staff from both organisations will be finalised this year.

 

 

 

Games legacy, global campaign against hunger starts

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British Prime Minister David Cameron with Michel Temer, Vice-President of Brazil, Football legend Pele (left) and Olympic double gold medallist Mo Farah (right) at the Olympic hunger summit in Downing Street, 12 August 2012. Photo: Foreign & Commonwealth Office (some rights reserved).

A more serious tone is emerging post-Games, with Britain’s Prime Minister David Cameron and Brazilian Vice-President Michael Temer taking the opportunity to put the spotlight on helping millions of children suffering from malnutrition in the the world’s poorest countries.

Olympic double gold medallist Mo Farah, Olympic great Haile Gebrselassie and football legend Pele, who have all campaigned to end the cycle of hunger and poverty by tackling their root causes, joined the leaders, along with others including non-governmental organisations and private sector, at Number 10 Downing Street last Sunday – the closing day of the Games – to highlight a push to tackle global hunger ahead of the next Olympics to be held in Rio de Janeiro in 2016.

Long term exposure to a poor and inadequate diet and repeated infections have left 170 million children in the world suffering from stunting – a condition which stops children from fulfilling  their potential because their bodies do not grow and develop properly. The United Nation’s World Health Assembly recently agreed a new global target of a 40 percent reduction in the number of stunted children by 2025.

The ‘hunger summit’ has been inspired by a declaration by the G8 at its last summit in the US in May, where President Barack Obama announced the creation of a new alliance on food security with African leaders and the private sector as part of an effort to lift 50 million people out of poverty over the next decade. Alongside three initiatives announced by the UK at the London summit. other initiatives are underway by India, the EU, the World Food Programme and the Children’s Investment Fund Foundation to make an impact on global levels of undernutrition, according to Downing Street. The UK will take up G8 chairmanship from next year.

An article in The Guardian newspaper says that the initiative has received ‘cautious welcome’. Campaigners argue that while control rests with the larger companies, it takes away the power of small farmers to feed their people.

The article quotes the Gates’ Foundation head of agriculture, Sam Dryden, who attended the summit, acknowledging the pressure of large corporations – as well as agricultural subsidies in the West – in squeezing out smallholder farmers in Africa.

“Agriculture is a local experience, eating is a local experience,” he is quoted as saying. “It is important that African countries develop their own systems and that smallholder farmers grow the crops they want to grow.”

 

 

Market will cope with extra lambs

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The market should be able to cope with the expected one million more lambs this season, suggests meat industry commentator Allan Barber.

Responding to recently released figures from B+LNZ Ltd’s Economic Service Barber points out that last year’s 4.4 percent reduction led sheep numbers to an all time low and that this season saw a bounceback of 2.6 percent, largely from an increase in ewe hoggets.

“Providing adverse weather doesn’t cause larger than anticipated lamb losses, there is every reason to expect one million more lambs on the ground this season,” he suggests, adding that this will prompt the question as to whether the markets can absorb the extra lambs, given the flat state of most overseas economies and the significant amount of inventory clogging up the pipeline.

“Past experience suggests that the pipeline will free up, so buyers will hopefully start to place orders again in the not too distant future. In addition, the growth last season meant that farmers held back stock and continued to put weight on. At the same time, meat exporters failed to give the right market signals soon enough, because they had to keep prices high to secure throughput,” explains Barber.

“Assuming the law of climatic averages reasserts itself, the coming season will return to more normal conditions. Therefore, the conflicting messages of procurement and market price will not be so far out of kilter again and supply and demand will be more complementary.

“If not, we will have to pray for an outbreak of rational behaviour from producers and processors!”

Barber notes that the changing nature of land use in New Zealand can be seen from the fact that the North Island is now home to more sheep than the South Island for the first time in living memory. At the same time, the South Island, assisted by irrigation, now has 35 percent of the country’s dairy cows, “a proportion which was inconceivable 15 years ago,” he says.

 

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).

 

Telling the story

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The meat industry needs to market itself better and tell its story, according to several presenters at the Red Meat Sector Conference.

Marketing of industry is all about building trust in the integrity of the brand, Meat and Livestock Australia’s managing director Scott Hansen told delegates.

“We’ve learned the best defence against attacks on the industry is  the farmers themselves to become advocates for their industry and their own businesses.”

“Not only do we have to sell a product, we have to sell the industry.”

Keeping consumers informed, however, has become way more complex. Consumer-driven US company Agri Beef has identified that, in the US, the 28-45 year age group – the “Digital Moms” – go online first to make decisions.

They don’t want to know how animals are slaughtered, but they do want to know the animals are treated well and that the product is safe to eat, said the company’s executive vice-president Rick Stott.

Blogs and videos are two weapons in the armoury. Three young US farmers produced a low-cost home-produced rap video about their work on the family farm that went viral after being posted on You Tube and, at the time of his speaking, Stott said had received over 4.5 million views.

The rapid rise and uptake of social media and the use of smartphones around the globe in the past couple of years is changing the way businesses communicate with consumers and was remarked on by several of the presenters.

New communication channels that retailer Progressive Enterprises is using here in New Zealand to directly interact with its consumers include Facebook, You Tube, smartphone applications and QR Codes alongside tailored emails and promotions aimed at loyal consumers, according to its general manager for merchandise Murray Johnston. This all runs alongside print and TV advertising.

Through the use of interactive technology, for a consumer, “brands are now yours. You make them,” he said.

Pinterest’s bulletin boards were also pointed to by Stott and MLA’s Scott Hansen, while B+LNZ Inc chief executive Rod Slater talked of PLUCK, which smartphone-enabled consumers can use in conjunction with television advertisements.

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