23 Mar

A bit of tongue (alternative protein) in cheek

Posted by Mick Calder in Meat Industry.


Ever since the advent of burgers made from Textured Vegetable Protein (TVP) in the 1960s, and now with the hype being generated about alternative proteins, I have wondered why the creators feel the need to make their alternative protein product look and taste like meat. Are they secret meat eaters or are they genuinely interested in a protein substitute?

A recent report commissioned by Beef + Lamb New Zealand (B+LNZ) noted that consumers are looking for alternatives to red meat. Chief Executive Sam McIvor commented that “The technology to produce a consumer-ready alternative protein burger is here and is pushing for commercial scale.”

Archer Daniels Midland, the initial inventor of TVP (according to Wikipedia), developed his soy protein using an extruder to make the product in cylindrical form. The TVP was used as an additive or extender in the manufacture of food products; but then some users decided to make it into substitute hamburger patties, with similar colouring and texture to the original meat burger – but not quite the same. The current alternative protein developers are also reported to be aiming at producing alternative forms of ground beef burger patties and meatballs.

But if it is an alternative protein does it need to look and feel like meat? Is it to satisfy some primeval human desire to eat meat while lulling the senses to the fact that it is not the real thing?

If those who espouse the merits of the artificial product on environmental grounds, or even because of a personal distaste for the idea of red meat, then why does the substitute need to take on all or most of the attributes of the stuff they are trying to replace? The products are reported to have more protein, less fat and no cholesterol, which are claimed to be good for you. They also have less calories, so one would question why you would bother to eat it?

If it is so good, why not present it in the form of a log or biscuit, or cornflakes shapes, or even a yeast extract and develop recipes to match, rather than pushing it into the meat sector? It is a processed product so it could be produced in the same form as luncheon sausage slices and then it would look processed. Just think, the main course could be perfectly rounded protein biscuits or deli-style log slices with healthy vegetables, instead of medium rare steak and chips.

Of course, with all the claimed advantages of the alternative proteins, it raises the question of why the B+LNZ report also noted “an untapped demand for naturally raised, grass-fed, hormone-free and antibiotic-free red meat, with consumers prepared to pay a premium for such products”?

The other issue I have with alternative proteins is that they rely on the supply of soy beans and other such plants which will need to be produced in large quantities if the demand for alternative proteins increases. There are geographical and agricultural limits to the extent to which grassland used for grazing animals can be converted to productive arable land, so the prospects for alternative proteins taking out pastoral land are constrained.

Land available for increased production of such crops, over and above the current requirements, is limited unless more tropical rain forests are sacrificed, which implies large scale destruction, conversion, cultivation, additional fertiliser and herbicide use, and genetic modification of seeds, as is happening already in parts of South America and Africa.

So, are alternative proteins going to change the world, or are they just another flash in the pan?

13 Mar

Fund Raising Made Easy – Stay Alert

Posted by Mick Calder in Opinion.


One of the real “delights” of being treasurer of an organisation in this digital age is fending off the impertinent intrusions of scammers attempting to relieve the unwary of the organisation’s funds.

Fortunately I have not been inundated with such offensive behaviour, until recently.

The approach takes the form of an email headed “Quick One” or “Payment” from the President of the organisation – in this case the NZ Guild of Agricultural Journalists – and “signed” with their name. It’s all very polite, the salutation addresses me by name, is reasonably formal with good English and no spelling mistakes, as follows:

“Hello Mich,

I need you to set up a bank transfer for a payment ,let me know if you can handle this right away so I can send you the bank details and can you please confirm to me the recent available account balance? Waiting for your reply.

Thanks,
(President’s name)

So far, so good apart from misspelling my name and a misplaced comma.

But, the President has never asked for any funds in the past; we don’t conduct business in Australia on any regular basis; a payment of that amount is somewhat out of the ordinary; and as a reasonably well managed organisation we would need a tad more documentation than a barefaced request such as this. There is no mention of what the funds are for, nor is there any explanation of the need for urgency.

To see how far this would go I asked for details and immediately received this:

“Hello Mick,

Amount….$4,250,Its for financing an urgent project and the account will reimburse next
week Thursday unfailingly.please kindly send the swift copy after the payment.”

When I did not respond for a couple of hours it was followed by this

“This is the account information below,kindly to me the swift copy after you have made the payment,for Board record keeping and also i can send it to the beneficiary for proof of payment.

Bounyadeth Viora, Bank West, Account number: 0224484, Bsb: 302969, Bank Swift Code: bkwaau6p, Bank Address: 179/180 Macquarie st Liverpool nsw 2170

waiting to hear from you”

This reply was a little bit sloppy – the word spacing and capitalisation deteriorated, and the account holder’s name looked a bit dodgy (maybe he/she was getting over-excited by the prospect of easy money). The bank details checked out, but I suspect the account would disappear, along with the funds, if any payment were made. The kicker comes when you look at the reply email address – an innocuous looking, and probably untraceable impersonation in the form <ChiefExeOfficer1@mail2visionary.com>

The President of the Guild was astounded to learn that she had allegedly asked me to transfer funds to Australia, especially with no explanation. So the ChiefExeOfficer1 was advised to “Fuck off”. Sadly there was no response to this gentlemanly instruction.

What brasses me off is that despite being told to stop bothering me in basic Anglo-Saxon terms, as above, he or she waited a couple of weeks and decided to have another go with a slightly different message, again “signed” in the name of our president but with a different return email address.

“I need you to initiate a bank transfer or cash deposit in amount of $9,780 AUD for me today. Let me know if you are available, so I can forward the beneficiary details.” <presidentp@mail-me.com>.

The expletives were not deleted from my response. But the problem is that they cannot take a hint and I am now getting requests on a weekly basis – only the email addresses are changed to fool the naive. I have tried the approach by listing fabulous amounts of money available in various currencies including bitcoins, but the irony is lost on them. They keep asking for more.

As if this isn’t bad enough I have also been harassed by dodgy share-broker calls. In the last couple of months I have been on the receiving end of serial cell phone calls from a London number, only to be greeted by a very Asian sounding person trying to flog shares in international companies. Do they think i am Warren Buffet? At least they quickly mumble the name of the company they represent. But they get the short shrift as well.

I guess you just have to become suspicious, cynical and very tight fisted.

25 Jan

Lost Sheep?

Posted by Mick Calder in Meat Industry.


You might have been as surprised as I was to read that the national sheep flock has declined dramatically – again.
Statistics New Zealand’s Agricultural Production Survey 2016 indicates that the total sheep numbers in the country at 27.6 million, a drop of 1.5 million since June 2015. This brought forth all sorts of useless comparisons about the number of sheep per head of the human population. There was a time in the days of Supplementary Minimum Prices when there were 22 sheep for every human; the number is now about 6 – if that means anything.
More to the point the sheep numbers dropped by nearly 12 million head, or more than 30 per cent in the last decade. The agricultural production statistics indicate that the total sheep numbers at June 30 had plateaued at around 40 million head in the first five years of the 21st century; since then the rot set in.
There used to be some comfort taken in improvements in sheep and lamb productivity due to the combination of increasing lambing percentages and higher carcase weights, but even that movement has tapered off in recent years.
All of which leads to the depressing conclusion that the sheep meat processing and marketing sector face some hard decisions about further reductions in processing capacity or the whole system will spiral ever downwards and the lamb kill is going to come to a shuddering stop in the very near future.
And it is all very well announcing a breakthrough with new markets, new products or brands, but if the prospects for improving volumes are slim to non-existent, and the new venture can only proceed at the expense of reducing sales in established markets, then the breakthrough celebrations may have a bit of a hollow ring to them.
But maybe the reports on the sheepmeat industry should be less about the decline in the number of sheep per head of the human population and more about the effect on export earnings, and what if anything is being done to reverse this alarming trend. Where are the industry leaders with a strategy for the future growth in production, and more particularly improve returns to the producers.
The trouble is that there are few signs emanating from the various industry associations or the meat companies themselves encouraging sheep farmers to take action to reverse the declining trend. The industry gives the impression of acquiescence and/or resignation to the inevitable downward trend.
By the way, what has happened to the much heralded Red Meat Sector Strategy announced in 2011 by Beef & Lamb NZ and the Meat Industry Association? Its aim was “to identify ways in which the profitability of the red meat sector can be increased.” Three areas with the greatest potential to sustainably increase profitability were identified at the time of the strategy’s release, which were “in-market coordination, aligned procurement and sector best practice” but with the rather intriguing rider that the aim was to put “other long-held beliefs about known issues, including processor over-capacity and stock transport, into perspective.”
In the five years since the announcement there has been some progress with PGP projects for individual companies most of which aim at the production inside the farm gate and the processing side of the industry. The recently announced B+LNZ new market development strategy developing a red meat sector story targeting new and emerging markets is a move to address the activities in export markets. But there has been very little activity that might be construed as being the result of the strategic co-ordination of activities of all the players in the sector.
The decline in sheep numbers and production is attributed to the switch to dairying, the progenitors of which can be traced back to the late 1980s when the agricultural subsidies were removed and the spectre of overcapacity first loomed over the meat companies. However the splurge in centre pivot irrigation systems pushed up dairy conversions and numbers in the last 15 years, but even that trend has flattened out.
Such irrigation systems and the dairy milking facilities are expensive, so it seems that dairying was flavour of the month with bankers and investors with everyone jumping on the money-go-round. But dairy cow numbers have stuck at around 6.5 million for the last 5 years, which suggests that slump in prices and the slow recovery to the $6.00 per kg of milk solids may have dampened some of the euphoria. Bankers and investors can usually be regarded as fair weather friends.
If the NZ lamb export sector is to be revived perhaps the stakeholders should refer back to the words of their 2011 strategy regarding co-ordinated market behaviour. This advocated “Creating a strong brand position in premium markets”, and “Acting with scale through greater co-ordination of exports in target markets”. But it will need actions rather than words.

11 Nov

Update

Posted by Mick Calder in Meat Industry, Opinion.


After a long period of complete blogging indolence I have finally decided to get back to it. One of the reasons for my absence has been a shift back from the provinces to Wellington, with all the attendant issues and frustrations. More recently I have been involved in the editing and publishing of aa memoir written by a retired stock and station agent – see below.

“All in a Day’s Work” A Wairarapa Stock Agent tells his Stories

John Griffith has been a stock agent for over 50 years his book recalls his interactions with the many farmers, livestock traders,occasional rogues and others operating in the livestock sector of the Wairarapa.

John Griffith is a gentleman, in the old sense of the word, and a stockman through and through. Handling and trading in livestock as well as riding, owning and training ponies and racehorses took pride of place in his life from an early age.

John grew up in a semi-rural environment in Masterton but hard times during the 1930s and 1940s saw him milking cows and delivering papers to generate income. His father Jack worked as a shepherd and a drover in the area and introduced John to the art of dealing with livestock as well as providing ponies for the family to groom and ride in the local competitions.

Living near, and occasionally working at, the Solway Showgrounds and Saleyards, John became infatuated with handling stock and the livestock auction system, which eventually led to his determination to become a stock and station agent.

The dream came true when he Joined his first stock and station company and he started his journey through various agencies learning the skills and lessons of his career choice.

John started work at a time when deals were made on the nod of the head, or by shaking hands, rather than written contracts. Personal integrity was part of the skill in developing good relations with the cohort of farmer clients necessary for success in the stock agency business.

Each time John moved to a different firm he took most of his clients with him, which meant he had a sound customer base when he went out on his own and established John Griffith & Co. Ltd.

John has handed the reins on to his son Johnny, and he now devotes his time to Probus and his continuing interest in racehorses at the Castlepoint and Masterton Racing Clubs. He is a Life Member of both these organisations. He has also devoted time to playing, coaching and administering rugby in the Wairarapa, principally with the Red Star Rugby Club of Masterton where he is also a Life Member.

John’s many friends, acquaintances and clients urged him to document his life and times, but it was the request from his eldest daughter jackie which spurred him into action.

ALL IN A DAY’S WORK is published by Mick Calder, WorkinWords, Wellington.

125 pages, over 100 photographs. Fully indexed.

Soft cover: NZ$ 35.00 (incl GST) plus P & P

24 Jul

Collaboration in isolation?

Posted by Mick Calder in Uncategorized.


While a great deal of fuss has been made about the suggestion that the meat industry needs to restructure along the lines of the dairy industry and Fonterra, there has also been a plethora of commentators (present company included) pointing out that there is a more than a tankerload of difference between the form and structure of the two industries.

Setting up a meat industry equivalent of Fonterra would be far from easy, and if the Fonterra history is anything to go by it would take about 100 years, with World Wars, Government Purchase and a helluva lot of industry politics and in-fighting. That is not to say that the meat industry has not been through some elements of that history, but the difference is that the dairy industry has stuck with the co-operative and largely centralist model.

In the current circumstances both industries obviously face the same problems with exchange rates and interest rates. But the recent announcement of the new dairy industry strategy provides some pointers for the stakeholders in the meat industry to ponder on. While some of the detail of the strategy could be useful, it is the way it was developed that is of much more significance.

The media release notes that the strategy was developed by the industry body, Dairy NZ, in partnership with the Dairy Companies Association of NZ, Federated Farmers of NZ dairy section and the Dairy Women’s Network. In other words, the impression is (rightly or wrongly) the various sectors of the industry collaborated to develop the strategy, with only a modicum of assistance from a consultancy firm as a project manager. So all of the dairy industry stakeholders had a hand in the development of the plan and as a consequence they all own it.

Compare and contrast this with the recent Red Meat industry Strategy, which virtually relied on outside consultants to analyse the industry problems and come up with their suggestions for a strategic plan. As such the strategy is really a consultant’s report which the industry stakeholders acting separately or together, can accept (as a whole or in part) or forget as they choose. Their major contribution to forming a collaborative strategy was basically just paying for it. By the way,what has happened to that expensive strategy?

But that is only part of the story. The Meat Industry Excellence group, like others before it, became disenchanted with the state of the industry and agitated among farmer suppliers to deliver some change in structure. And, apart from the attendance of some company directors at the meetings, it was and is a farmer led initiative. Farmers are now endeavouring to formulate a strategy for structural and operational change with only minor contributions from the prcessors. And where are the marketers?

At the same time the four major meat companies have been meeting to develop some new ideas for the future development of the industry. But they have only been talking to themselves with little or no communication with other stakeholders as to what is being considered, and how it may or may not affect their operations. They can probably claim that competition law prevents them from too much covert collaboration, but where is the transparency and trust they all talk about?

All signs pointed to some form of co-operation in processing, which will cost many millions of dollars to achieve, with consequent implications for farmer and shareholder returns. Then there were suggestions of a reincarnation of the Tradeable Killing Rights proposals, but that would require some legislative intervention, which is usually eschewed by the red meat industry.

Now it appears the solution for the companies is to swing the onus for change back to the farmer/suppliers with the exhortation that they should each commit their product to one meat company for a definite period. There is no suggestion of any offer from the companies to encourage this altruistic move.

So the differences in approach between the two industries are quite stark. It is possible there were some aspects of the dairy industry strategy talks that were commercially sensitive and needed to be discussed in camera, but the overall impression is that they involved all parties. The meat industry has been mouthing the word collaboration for the last six months but all they do is go into their own little huddles and talk among themselves.

24 Jun

Where has the heat and light gone?

Posted by Mick Calder in Agribusiness, Meat Industry.


There are occasions when commenting on the current state of the meat industry you might as well skim through one of the many recent company or industry histories. It is déjà vu all over again.

With just about any development or proposal you can flick through the history pages and find an instance to enable you to say that the industry has “been there, done that”.  And almost invariably the outcome was that unless it was something proposed or introduced by one or more meat companies it did not stick.  It has to be their idea; its part of their management style. So they haven’t got the T shirt.

So, much of the action from the Meat Industry Excellence group which generated a lot of heat and light in the media a few weeks ago has happened before (several times in the last 40 odd years) in both the meat and the wool industry.

And if history is anything to go by, the heat will cool and the light will grow dim, particularly if the saga drags on. There could be some marginal adjustments, so the stirrers can claim they had achieved some of the changes they were aiming for. In some instances the radical conservatives will weigh in and vote for the retention of the status quo.

Generally the causes for slow or no change have been either one, or a combination of the following: the inbuilt inertia of the current structure, the recognition by those advocating change that altering the established system is a daunting prospect, or farm gate prices begin to improve. As result the pressure for change diminishes, until the next time.

Those engaged in the industry have a vested interest in protecting their own organisation and their position in it, so any industry restructuring moves by the companies are likely to be marginal and slow. As economist John Kenneth Galbraith stated, “Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.” It is always easier to show that change is not really necessary.

There have been reports about four major meat companies discussing possible adjustments to improve the industry performance. It is likely that the deliberations are centred on possible collabaration relating to livestock supply and/or processing; after all they are production oriented managers. Marketing collaboration is usually left out in the cold, when it should be to the forefront.

But the resounding silence about the form, content or outcome of these discussions speaks volumes. It is difficult therefore to know whether they are making progress or just stalling for time. A cynic would suggest that if the meat companies can drag the discussions on long enough the new season will be upon them with attention swinging on to different and possibly more urgent issues.

The Meat Industry Excellence group has backed away from their original agenda for a united processing and marketing structure, and their stated aims now read like a wish list largely being left to the companies to implement, rather than an action plan.

Perhaps the MIE have discovered that changing a monolith is a tough ask. Some of the original aims might have required some form of regulation but there is little or no appetite for such interventionist activity these days, so it will have to be persuasion which takes time, and that is in short supply.

Looking at it from the outside there not a lot of urgency, and there is no inspirational or even evangelical leader standing up to lead the charge and beard the meat companies. So anything that happens is likely to be the result of a long winded process and the results could be minor and cosmetic.

To add to these woes some industry commentators are now talking about an improvement in prices for the coming season as a result of shortages from the drought and because of a drop in value of the NZ dollar. There are also suggestions of a lower lamb kill, so there are likely to be shortages in markets that have been diligently developed over the recent past. Will this put upward pressure on prices, again?

If this happens then the momentum for change that has been building will quickly and quietly dissipate. The meat companies will sail on their merry way and everything will be forgotten until next time; just as they have done several times in the past.

6 Jun

Collaboration continuum

Posted by Mick Calder in Agribusiness, Meat Industry.


This could be construed as shutting the stable door after the horse is five furlongs down the track but I have a couple of concerns about the “Collaboration for Sustainable Growth” (CSG) programme.

The programme received a symbolic seal of approval when farmers agreed in March that Beef & Lamb NZ could dip into reserve funds to contribute the producers’ share of the cost of the scheme.

The CSG is explained on the Beef and Lamb NZ website as follows: “A group of agribusinesses and the government have partnered up to invest in a collaborative programme to drive sustainable, long-terms profits for New Zealand’s red meat sector. All partners plan to work together to support the adoption of best practice behind the farm gate, and between the farm and processor.”

My concerns are that in order to achieve “long term profits for the red meat sector” all of the emphasis is on the producer end of the supply chain. The focus for improvement in productivity is still behind the farm gate with the presumption that farmers have been neglecting their duty to drive for profits in the red meat sector.

For my money, the farmers have done an amazing job of improving on-farm productivity and keeping the red meat sector going in the face of fluctuating weather conditions, inconsistent prices and returns, unfavourable exchange rates, opportunist selling activities, and pressure from bankers and other advisors to convert to dairying or some other capital intensive pursuit. The inconsistency in wool returns and the demise of wool promotion and R&D have not helped, but that is another story.

Despite these adverse conditions, the productivity of the average sheep and beef farm has continued to improve, as shown by the 83% increase in the weight of lamb produced per ewe over the last 20 years. Admittedly sheep numbers have declined but that cannot be entirely related to unproductive farming practices.

In order to achieve the continuous increase in productivity, and despite the fact that they are all operating in a competitive environment, farmers have been quietly collaborating and sharing information on most aspects of best practice behind the farm gate.

Back in the day (as the saying goes these days) the Department of Agriculture used to employ sheep, wool and beef advisors to keep farmers up to date with developments in science and technology that would assist in improving productivity. In this age of self help and private enterprise these officers have gone the way of most MPI services.

Farmers have relied on their own resources, farm discussion groups, field days and just plain sharing of information, which has continued with or without assistance from government agencies. Beef & Lamb NZ have been contributing as part of their farmer funded activities, using current income derived from levies, but now they are going to dip into the reserves.

In essence the farmers have been getting on with information gathering and sharing to maintain a steady improvement in productivity for the past twenty years.

But now the various meat companies and agribusiness groups associated with the PGP schemes have the temerity to propose that farmers spend some of their reserve fund, via B&LNZ, to encourage them to continue to get together to collaborate and share information to keep improving their productivity. It is as if the farmers are the root cause of the problems of the industry.

When did the meat companies or the banks last get together and share information to improve productivity? Will they be using reserve funds or current income to fund their contributions to the CSG?

The outstanding feature of the various PGP projects that have been announced so far is that they have been proposed by individual companies, and there is a strong hint that any benefits derived will be held fairly close to the chest of the company at the centre of the particular scheme. The idea of information sharing to improve the productivity of the processing and marketing sectors is an anathema to them. Collaboration among processing companies has never been their strong suit.

While the four major meat companies claim they have been meeting to discuss possible structural changes for the future meat industry there is little evidence so far of them sharing any of this information with the other stakeholders involved – the farmers.

Farmers react to incentives and the best one is consistent pricing. Not the run away boom followed by three years of austerity while the companies and the banks recover from their excesses. So maybe there should be a move to encourage the companies to collaborate to improve their market intelligence and marketing efficiency.

P.S. I have deliberately ignored the word ‘sustainable’ since I consider it is just another multi-syllable word that has become fashionable, and can mean what I say that it means.

27 May

The TKR Irony

Posted by Mick Calder in Uncategorized.


It is somewhat ironic to learn that the meat companies may be considering the idea of Tradeable Killing Rights (TKRs), when the original proposal was rejected with some disdane nearly 30 years ago.
TKRs were proposed in a 1985 report from Pappas Carter Evans and Koop (PCEK) for the Meat Industry Council, which had highlighted the problem of overcapacity of slaughter and processing facilities as well as the cost of exiting as one of the significant issues for the industry at that time. Procurement pantomimes were also in vogue; the fairy tale where the good fairy with the slightly higher price prevails over those who should know better.
The TKR scheme aimed to stimulate stronger, lower cost competitors to acquire the right to killing capacity from weaker or uneconomic plants that would presumably close.
All plants would be allocated a kill quota as a percentage of the kill, which companies could buy, sell or lease via a central register. The transfer price would compensate for the cost of closure of the uneconomic plants, while establishing a stronger operating environment for those remaining.
The idea was panned by the Meat Industry Association as not providing anything “anything new or profound”; the industry decided to rely on the efficiency of market forces and its own negotiated arrangements rather than accept a controlled form of rationalisation. Unfortunately many of the proposed negotiated settlements ended up in the waste paper bin.
The irony of the review of the TKRs now is that while there were some similarities in the problem of overcapacity then as now, the whole financial and regulatory environment was quite a different box of bananas. Thirty years ago the government was intent on deregulating almost anything that looked like a quango, but the opportunity to set up a central registration body was probably still achievable; the Quota Management System for fishing was introduced by the Fisheries Amendment Act 1986.
These days, while the rule is not completely unfettered free enterprise, the prospect of introducing a centralised, interventionist and regulated system will require some political pressure with a few industry people having to be persuaded to swallow a dead rat or two.
Its all very well for the four major companies to be talking about industry solutions but history and experience shows there are always mavericks who will kick against any suggestion that they just cave in to some scheme the big boys have developed for their own benefit. Achieving industry agreement on any scheme to rationalise the system is a big ask.
Even if the control idea is accepted the catch will be getting agreement on the size of the lamb, sheep and cattle “crops” for each year, and allocating the TKRs on an equitable basis. And then there is the issue of new entrants; how do they qualify for TKRs? It is likely a central organisation equipped with the necessary regulatory authority and powers to deal with transgressors will be required. This means legislation.
While it is a mere shadow of its former self maybe the New Zealand Meat Board could fulfil the role. It is a statutory body governed by the Meat Board Act 2004, which could possibly be tweaked to facilitate a TKR system.
Strengthening the powers of the organisation that has been so diligently stripped of them over the last thirty years would just add to the irony.
But, whether it is TKRs or any other regulated system, it is still only addressing the production side of the problem. What about a serious collaborative approach to efficient marketing?

26 Apr

Are we better than Oz?

Posted by Mick Calder in Marketing, Meat Industry.


After ranting on about the need for a more collaborative approach to the marketing of NZ meat exports it is refreshing to be told that our marketing efforts are streets ahead of the Australians.
I am in Australia for a couple of weeks and quickly became aware of the impact of extremely dry conditions, a high dollar and the drop in export market prices from the heady levels recorded last year, which was having a devestating effect, both in terms of morale and financial returns rural Australia.
But the difference was the advice from a prominent Aussie beef and sheep farmer that Kiwis were doing so much better than the Aussies; in particular the bilateral trade agreements easing access into Asia, and our marketing organisation.
The comment rgarding marketing was a bit of a surprise to me and I immediately countered with the view that our meat was generally sold rather than marketed. However the main focus of the comment on our marketing was related to the impact of Fonterra in intenational markets, but then the operations of the Lamb Company in North America were also touched upon.
A natural reaction would be to bask in the glow of these laudatory comments, but I had to remind my host that we were a long way from an efficient marketing operation for the majority of our sheep and beef markets.
As I am biassed I advised that sorting out the marketing should be the priority for the NZ meat industry and could be achieved given that the collaborative models are already available. Any ideas of improving collaboration in the procurement and processing sector, whether it be by mergers or even Tradeable Killing Rights or any other consultants’ proposal, would be a hard commercial slog to ovecome the ownership and cultural differences.
Still, it is encouraging to think that the Aussies consider are better than them at something.

22 Apr

Its all about marketing

Posted by Mick Calder in Marketing, Meat Industry.


One of the Strategic Themes of the Red Meat Sector Strategy (RMSS) was a call for ‘Increased co-ordinated in-market behaviour’. For all the puffery surrounding the strategy an ordinary bloke like me, sitting in the provinces, would be at a loss to discover any increase in co-ordination in the markets for red meat.

All I could find was a Quarter 4 2011 report released in October 2011; where is the 2012 report?

That report notes an increase in co-funding by processor partners in the Meat Promotion Group, but the Group was in existence prior to the RMSS, so it was hardly a new co-ordination initiative.

There is the NZTE Red Meat Sector Market Development Contestable Fund which is designed ‘to encourage market development projects that lead to profitable and sustainable growth for the NZ Meat Industry’, with projects that can have a transformational impact for the wider red meat sector. But they are individual initiatives, rather then co-ordinated approaches. So one is led to conclude that the co-ordination of in-market behaviour is just plodding along.

It should be recognised that the RMSS report described the ‘Marketers’ as being predominantly within processor companies and had the following characteristics:
They are often only a small team,
They undertake very little investment in marketing and market development activities, and
They share some common customers in key markets.
This description raises the question as to why there has not been a greater focus on the marketing activities, rather than forever trying to wrest better returns from improving productivity of already stretched producers, or from processor mergers, closures and restructuring.

Looking at the developments in the fortunes of other sectors of the primary sector the one major difference is there is a distinct lack of marketing co-ordination or co-operation in the sheep and beef sector. Its all about marketing, not only for the red meat sector but also for wool.

At the risk of being labelled a ‘market socialist’ I would suggest that as the red meat industry is predominated by two co-operatives maybe attention should be focussed on the advantages of the formation of a marketing co-operative. It may even be possible to persuade some of the privately owned companies to participate.

If you are looking for guidance on the pros and cons of marketing co-operatives then the best place to look is that hotbed of capitalism – the USA – where co-operative agricultural marketing organisations flourish. However the Danes, Dutch, German and French are also avid supporters of co-operative corporations; not just in the form of farmer owned organisations, but centralised co-operatives undertaking marketing and other services for its regional or smaller member co-operatives. NZ has its marketing co-operatives in the form of Fonterra and Zespri.

The benefits of co-operative marketing are generally recognised:

Economies of Scale – the economies of joining forces with the consequent reduction in costs, and marketing under a strong brand;

Marketing expertise – a larger co-operative marketing organisation enables processors with predominantly production skills to engage marketing managers with the expertise to develop profitable market channels and brands;

Bargaining power – the establishment of a larger group provides a greater degree of market power in dealing with customers and probably other service providers such as transport companies and even bankers;

Flow of Product – a joint marketing organisation would assist in meeting the requirement from retail customers these days for a consistent flow of product despite adverse events, droughts or floods or even seasonal volatility which disrupt that flow;
Product returns – the net income generated by the marketing organisation is returned to the members in proportion to the volume of product supplied adjusted to take account of different product formats.

There can of course be some challenges such as agreeing on a common mission and recognising that there has to be some give and take between the processor members and the marketing organisation so that one does not predominate. As directors of the marketing co-operative are invariably representatives of the processor members they should be reminded they are there to work for the good of the marketer not the directors’ own companies.

The biggest challenge however is to develop trust in the other members particularly with respect to sharing of information relating to both processing/production issues and market intelligence. Such trust is essential to ensure that the members remain loyal to the organisation and do not try top circumvent it for their own advantage.

I am an advocate for the co-operative marketing model because I have seen it working well. The New Zealand Lamb Company was established to market lamb in North America, and had a volatile history, but in the late 1990s it was restructured along co-operative marketing lines. Despite some issues with declining supplies from NZ and changing membership due to the restructuring of the industry here, the co-operative organisation has thrived and produce reasonable returns for its members.

So the model exists and I reckon it would be worth considering either a co-operative marketer for other key export markets or even a central buying and marketing organisation for all markets. But that may be too close to the NZ Power proposal.

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