sign up log in
Want to go ad-free? Find out how, here.

Allan Barber explains that successful red meat marketing will require processing efficiency of consumer driven products backed by skillful marketing and state of the art logistics and distribution

Allan Barber explains that successful red meat marketing will require processing efficiency of consumer driven products backed by skillful marketing and state of the art logistics and distribution

By Allan Barber

The Meat Industry Association issued an enthusiastic press release at the beginning of February, lauding the continued strength of the red meat sector’s export performance which saw exports reach a historic high of $9.2 billion in 2020, up from $7.6 billion in 2017.

In a year dominated by COVID-19 which saw food service business reduce dramatically, coupled with the inexorable rise of the New Zealand dollar, this bordered on the miraculous.

It is a huge credit to meat exporters and producers who have demonstrated an ability to be flexible and nimble in meeting customer demand. The dairy industry also played a big part by supplying a key raw material, cull cows, as a necessary by-product of what was also a highly successful year for dairy farmers. While companies are always obliged to budget for an improved performance year on year, otherwise shareholders are entitled to ask hard questions, it is becoming increasingly difficult to see how this trend can continue indefinitely without a serious change in scientific research, advances in technology and the current business model.

Genetic improvements, specifically developed grasses and feedstuffs, breeds with inbuilt parasite resistance and reduced methane emissions, coupled with judicious use of fertilisers, and all of this supported by sound scientific principles, will be essential components of farming in the 2020s and beyond. Most farmers understand this intuitively and are already making changes to the way they farm, embracing the principles of sustainability, using technology to measure, monitor and control their livestock, planting trees where appropriate, carefully applying fertiliser and constantly striving to comply with regulations.

None of this is particularly good news for the meat processing industry which, if the Climate Change Commission’s recommendations are adopted, will be compelled to process fewer head of livestock, whereas their whole business model has been volume based since it started. Processors will justifiably argue they have adapted to whatever volume requirements they have faced, with plant size and number of chains being reduced as change has dictated. Plant efficiencies have improved, labour levels have come down, and tallies adjusted to meet throughput targets. Relations with unions have generally got better, although there have been hiccups along the way.

But, for all the work on value added cuts, robotics and automation, it remains essentially an industry dependent on the skill of an ageing workforce paid for slaughtering and cutting a given number of head. A major traditional success factor is the ability to procure the right livestock in the right quantity at the right price which is then processed and sold at a profit.

In the future a change to the business model is inevitable to adapt to lower throughputs and consumer demand for consistently more sophisticated product presentation. The emphasis will still remain on disposing of the whole carcase because that is the only way to optimise revenue and the pressure on marketers to find the best markets for the different parts of each carcase will become even more intense. The overall returns from sheep meat will be boosted by the success of initiatives to reintroduce wool to tomorrow’s consumers, while leather will need to find new end uses to compensate for the declining demand for luxury cars and leather clothing.

At the Red Meat Sector Conference in 2019 there were presentations predicting how critical the online channel would become and, less than two years later, it is already a reality. Covid has accelerated the trend to online purchasing and the largest market China is the global leader in this trend. The market is now hugely diverse, stretching from traditional butchers through supermarkets to online channels, while food service, if it ever recovers from the pandemic, requires products specifically tailored to specific business segments. The pressure on marketers to source product which satisfies ever more selective consumers, combined with farmers who can supply to specification, will only intensify.

On the other side of the Tasman pressure on livestock supply has already seen plant or chain closures in Victoria and New South Wales for several reasons: drought breaking rains mean farmers can hold onto stock, dairy farmers exiting the industry, and seriously negative margins on cattle slaughter. Processors have been losing at least $130 per head as a result of the reduced cattle kill, exacerbated by a fall in US prices because of herd liquidation there. For the 2021 season Meat & Livestock Australia is forecasting a 2% growth in the national herd size which is currently the smallest it has been since the early 1990s. The Australian lamb flock is set to increase by 5% or 3.3 million head which will ultimately flow through to a higher lamb kill.

New Zealand’s meat processing industry is certainly not under the same pressure as its Australian counterpart, but in the longer term it will face similar issues which will cause processors to analyse their operating model carefully and assess how well aligned they are from their suppliers right through to the marketplace and increasingly diverse end consumers. Processing efficiency – skilled labour, modern plants, scrupulous standards of health, safety and hygiene – coupled with consumer driven products backed by skilful marketing and state of the art logistics and distribution will be what distinguishes the successful from the also rans.

The companies that do all this successfully will flourish in this new environment, while the others will be left behind.


Current schedule and saleyard prices are available in the right-hand menu of the Rural section of this website.

P2 Steer

Select chart tabs

cents/kg
cents/kg
cents/kg

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

10 Comments

Yes the cull of capital stock continues unabated (leading to this rise in exports). These stock are to be replaced with pines and people as urban sprawl and carbon farming comes into effect. We'll make this a good news story for now, but in the near future, when stock shortages impact on the over capacity of the processors things will seem a little different.

Thank goodness China loves chewing on our tough old ewes - with the mutton kill up over 20% yoy

Up
0

Was talking with an established farming family in Nth Canterbury. This is traditional sheep country, where the wool barons used to rule. They are now reaching back on their history to fine wool for which they will run mostly merinos and they are developing a strain of corriedales as well. Either of which of course are hardly suited for meat premiums. In any case, getting a prime lamb to the works nowadays in an unstressed state suitable of chilled lamb, ph considerations etc, on a hot nor wester day, is nigh on impossible, considering all the Canterbury works in the Christchurch area have gone, the journey now that much further to Sth Canterbury. The sad and inevitable signal is, that if there was any likelihood of the sheep meat industry, recovering and/or growing, works and capacity would be being built, not closed and/or reduced.

Up
0

I’ll have to disagree with the statement about merino and corriedales not suited to meat premiums. I also farm in North Canterbury and have developed a breed blended with merino and halfbred genetics. Wool averages 21 micron. A quarter of my lambs go the the works off the ewe at 18 kg carcass. And since then I have fattened over another half at 19.6kg carcass. Growth rates over the summer on rape crops have been over 300 grams per day. Although the flock tailed only 120% this year I have done 140% before. The earning potential for these sheep given a $35 fleece is pretty darned good.

Up
0

Thanks. Noted. Excellent positives!

Up
0

Meanwhile in Hawkes Bay livestock trucks are being turned away due to labour shortages at meat processing plant. On The Country radio show today it was also said that there was a shortage of empty containers for product storage.
https://www.nzherald.co.nz/hawkes-bay-today/news/livestock-trucks-turne…

Up
0

CO,
We would rather perish than accept that shipping meat to the motherland is not worthwhile and the future is a return to the past.
But it is inevitable that we should be farming carbon credits.
Distance dictates the outcome.

Up
0

Yes, but it’s a cartoon.
Shall we dare ask what the customers think?
https://www.foodnavigator.com/Article/2021/03/09/Supermarkets-pressured…

Up
0

Ah yes, the completely neutral NGOs, not at all indebted to the organic industry or PETA or other activists. Completely neutral.

Up
0

Just another NGO by their own admission but consider it is a food industry site that mostly promotes additives in the advertising, not a conservation site at all.
They are trying to look at food trends pointing away from meat and dairy, and towards manufactured alternatives.
The tide is turning against beef and to some extent, dairy.
Also if you read some of the articles there is an emphasis in the EU legislation on short supply chains, country of origin and other matters that
May act for or against us.
But let’s swim against the tide anyway.

Up
0