Venison has been the “star of the team” for Alliance Group, says chairman Murray Taggart.
“We’ve seen very strong prices in market for venison, supported by more aggressive demand for some of the lower value cuts than we’ve seen previously, which are going into the petfood market,” he says.
This has been market price driven, he noted, but there has not been a compression of margins for the processor to deliver the high farm-gate prices of the last season.
“The processing margins have been perfectly acceptable as far as we’re concerned. As a co-op, we’re making acceptable margins and we pass the rest on to the farmer. That’s our job,” he says.
He sees no pressing reason in the coming year for a dramatic change.
“However, it is an expensive meat and there has been some customer push-back on prices,” he said, adding, however, the co-operative is feeling “reasonably confident at this stage.”
Taggart was speaking in the early stages of the co-operative’s annual four-week roadshow of 24 meetings around the country. He and Alliance colleagues, including chief executive David Surveyor and general manager livestock and shareholder services Heather Stacy, have been updating the shareholders, including deer farmers, about their co-operative’s activity. This includes its continued strategic push away from being seen as a meat processing facility for commodities towards a food business, capturing more value from the carcase via its products and adding it to its bottom line to benefit farmer shareholders.
Most recently, this has manifested in a new brand and strapline ‘Farmers’ Produce’ (left) – only the second time the logo has been changed in the co-operative’s 70 year history.
The food business has been focusing on improving plant performance and is now seeking extra workers to enable it to capture extra value from products, Surveyor says, adding Alliance is not alone. He pointed to calculations from the Meat Industry Association suggesting an extra 2,000 workers are needed for the entire processing sector.
Surveyor has also been telling shareholders venison has been a great example of a co-op operating exactly the way it should.
“We broadened the markets we play in, we had terrific prices in global markets and had well above budgeted profits for it, he said, adding the extraordinary profit was immediately passed back to Alliance deer farmers.
Shareholders can expect to receive a bonus payout for deer supplied in 2017-2018 in December, which for venison is set at at $4 per head.
Alliance has also rolled out a major upgrade to its Farm Assurance Programme and a new app to support compliance and is trialling electronic Animal Status Declarations in its plants.
Showing its further confidence in the future of the deer sector, Alliance invested $15.9 million in its new venison processing plant at Lorneville, Southland, which processed its first deer on 17 September. This features improved handling facilities and enhanced configuration, with a larger slaughterboard, boning room and offal area than at Alliance Smithfield and the old Makarewa plant.
“We think we’ll be able to capture products and create value from venison that we haven’t been able to do so far because of this new plant,” Surveyor has told roadshow goers.
Alliance is working hard to capture greater value for Pure South venison in the co-operative’s global markets. In addition to marketing venison in Germany and Europe for the game season, the food business is selling it into the US and UK with value-added propositions.
“Our goal is to increase out of season chilled consumption, while at the same time continue to grow sales of our seasonal chilled consumption,” says Surveyor.
For the 2018 season, Alliance is forecasting its venison price range to be between $11.00-11.75 per kg for the first quarter, settling back to $10.40-11.00 in Q2, once the chilled season is out of the way.
While there may be some livestock procurement pricing tensions in play in 2018, the company believes the biggest risk in the year ahead for venison will be the exchange rate – which will be largely outside of everyone’s control.
This article first appeared in Deer Industry News magazine (October/November 2018) and is reproduced here with permission. Check out the magazine for more in-depth deer industry specific news.