A steak from a limousin-angus heifer raised by sisters Kathy Child and Yvonne Hill, of Whangarei, was judged the overall winner while an angus steak from Chef’s Choice, Whanganui, won the overall best of brand section for retail and wholesale butcheries. Angus also took out the first three places in the best of British breeds section. The four-day expo in Feilding is a shop window for many breeders who will be hoping to lure breeders and commercial farmers to their on- farm sales over the next two months reports The Dom Post.

Scottish cattle judges and angus breeders John and Marion Tilson chose a hereford as their champion bull of the sale, with an angus as reserve. The hereford, owned by Charles and Margaret Lee, of Leelands, Elsthorpe, was described as “a powerful bull with a lot of meat on it”, and later sold for $9000 to Bruce Robinson, of Kokonga Stud, Waikato.

When the angus bulls came up for sale the auction venue was filled to overflowing, reflecting the breed’s sudden lift in popularity since its steak of origin success in recent years and last year’s McDonald’s angus burger deal which has seen a premium paid for beef meeting the AngusPure contract conditions. The high point of the angus sale was a line of bulls from an evaluation trial, a group of young bulls gathered from throughout NZ and run together for 12 months while they were weighed, analysed and evaluated. One of the best of these, Turiroa Power, from Rick and Andrew Powdrell’s Turiroa Stud at Wairoa, fetched the sales’ top price of $26,000. The buyers were Colin Williams and Charlie Dowding of Kaharau Stud, Gisborne.

Auctioneer Bruce Orr, of PGG Wrightson, said the bull had good growth figures and was well- muscled, but what most excited bidders was what he described as its x-factor, an air of supreme self- confidence. Nine other angus bulls sold for five figures and the sale average for 34 bulls was $8425, well above last year’s $6650 average.

The expo’s other sales, of shorthorn, murray grey, simmental, south devon and charolais, were tame by comparison. The simmental sale was the most disappointing, with only seven of the 14 animals catalogued selling.

The Nuffield scholar and M&WNZ director says in the EU supply chain funnel, the power lies with the big supermarkets. In the UK, the big four supermarket chains – Tesco, Asda, Sainsbury’s and Morrisons – have boosted their market shares and collectively hold about 75% of the market. Because of their power in the supply chains, these supermarkets are able to pressure suppliers to discount prices, resulting in lower returns for farmers.

This has led to other players, like processors, in the supply chain looking at consolidation. Parsons says a good example is the Brazilian beef processor JBS, which started as a small abattoir in Brazil’s Midwest. It has ballooned in size in recent years through a series of acquisitions in the US, Europe and Asia to become the world’s biggest beef exporter, processing an average of 35,000 head of cattle a day.In Australia, JBS already has an extensive presence on the eastern seaboard.

The operations of its Australian subsidiary Swift Australia, includes 10 meat processing plants and five feedlots. Parsons says JBS also has the advantage of sourcing beef products globally and concerns around foot and mouth disease in Brazil is not an issue for the company. “Who wouldn’t want such a company to come to NZ,” he says. “I wouldn’t be surprised if JBS is not in NZ soon.” .Parsons says it all comes down to who controls the supply chain.

Normalised earnings figures – with exceptionals taken out to leave only meat industry activity – for the four largest meat companies over the past five years show combined earnings in 2008-09 were well below the five-year average even though turnover and assets employed increased.Average margin on sales was just 0.7%.“You can all see from these numbers a train crash is coming.”

In 2008-09, 19 companies and 36 plants killed 25.6m lambs. Average weekly kill is just 42% of potential capacity. The picture for beef, Anzco’s core business, is only marginally better: export processing plants fell from 36 to 32 with an increase in annual kill from 1.96m to 2.22m over the same time period. Average kill is 56% of capacity.“The train crash is coming because there’s too much capacity in regards to the livestock supply and the second thing is lack of profitability,” He told the monitor farm meeting only two players in the NZ meat industry have paid tax every year in the past decade “and they are Alliance and Anzco”. Harrison also highlighted market share statistics based on EU sheepmeat and US beef quota allocations.“There’s been a huge drop for Silver Fern Farms (SFF) and Alliance has now overtaken Silver Fern Farms as the largest sheepmeat company. Affco’s flat and Anzco is climbing. That tells you some story.” Beef trends are similar, with SFF having suffered “a huge loss of market share” to the US, though it remains the largest player at about 56,000 tonnes..

For all the talk of fragmentation, the NZ meat industry today is the most consolidated it has ever been in its 128 year history, with SFF, Alliance, Affco and Anzco handling 75% or more of both the sheep and beef kill. However, there is no point trying to create a Fonterra-type model, or even having that debate, because sheep and beef farmers have never backed collectivisation, he says. “In the end farmers will come back to choice.”

Shelf life had been extended from nine weeks to 11, which meant the meat was on retail shelves for longer, offering more sale opportunities reports The Southland Times. Speaking at M&WNZ’s new Meat the Future field day last week, Mr Behrent said the co-operative knew farmers wanted $100 for a lamb now and were unhappy with returns lower than last year. But if the NZ dollar was the same as last year, farmers would be getting between $112 and $115, because of record prices being achieved in British retail markets.

When questions about a price that farmers might expect in five years, Mr Behrent said the target had to be $120. But he warned farmers not to run their business expecting that. Returns to farmers could be increased if the prices obtained for co-products such as wool and tallow could be lifted. Five years ago, they brought an extra 25 per cent above the meat price. It was about 7 per cent at present. Lifting co-product prices could help put another $10 in farmers’ pockets, he said. He praised farmers for doing a good job adapting to meet the changing market demands. In the 1983-84 season, the average carcass weight was 13.3kg – last season it was 17.7kg, Mr Behrent said.

Companies were getting better returns than for beef, so for lamb to be so well placed in price suggested someone had done something right, Dr Woodford said. “I think they’ve got Europe pretty well sussed but always, of course, they could do a little better.” He told attendees at Meat & Wool NZ’s new Meat the Future field day last week that he expected New Zealand’s meat industry would need restructuring to survive, but did not believe that would lead to a Fonterra-like mega-company. It would probably lead to two large companies – one a co-operative, the other an investor-owner – and maybe some other smaller niche businesses, he said.

While currency exchange and recession concerns had created problems for the meat industry, Dr Woodford was optimistic about the global market for lamb and the opportunities for NZ farmers. Lamb production was static or declining in most developed and developing countries, which meant no-one was going to flood the market. That created opportunities but also challenges, he said. There were about 1 billion sheep in the world, but many were in countries such as Somalia or Nigeria, which would never have an impact on where New Zealand sold its product.

Sheep numbers have been declining in New Zealand for about 25 years – about 35 million compared with 70 million in the 1980s. Australian numbers peaked at 150 million about 20 years ago, but that had dropped to about 75 million, while Argentina’s numbers were down from 24 million to about 12 million. Uruguay had 9 million, down from 24 million, while China had shed 15 million to about 135 million. Many of those countries’ stocks would never recover because of extensive land degradation, such as on the Mongolian grass plains, he said.

The lamb market in the United States was more complex but sheep numbers were down from 50 million sheep 60 years ago, to about 7 million. Most young and middle-aged Americans had probably never eaten lamb, he said.

He believed there was a rebalancing occurring in the industry, and those farmers who remained carrying larger numbers of animals would be more productive. DINZ chairman John Scurr, of Wanaka, said the forecast kill was lower than the board would like, but that was a factor of supply and demand which was beyond its control. The sector had been hit by changing land use, and much of its traditional finishing country was now being used for dairying. That meant deer herds were being pushed into the high country foothills. This was despite deer farming being financially competitive with lamb finishing and wool and dairy grazing, he said.

The head of the country’s largest venison processor said he feared a declining kill could force market prices beyond what consumers were prepared to pay. Silver Fern Farms chief executive Keith Cooper said the European market was already finely balanced, with supply matching demand. It is not a case of the market screaming out for more production,” he said. The impact of recovering velvet prices was also affecting the flow of prime animals.

Wills says he “supports the WPI concept and many other farmers left the meetings with more confidence and optimism. But appalling wool prices now are forcing many growers towards deciding to move out,” he says. “Farmers were saying ‘It sounds good, but how long to the money?’ Eyes were rolling at the answer ‘three-five years’. Many can’t wait that long despite their goodwill towards WPI chief executive Iain Abercrombie and his team.“We understand you can’t create a brand overnight but some growers are desperate… three-five years seems half a lifetime. And if prices don’t pick up soon, when WPI says ‘Now where’s your wool?’ they’ll hear only… silence.”

Abercrombie was upbeat about farmer numbers attending the meetings, “except for the first two meetings at Rotorua (20-30 a farmer told Rural News) and Gisborne (25-30). Since those venues we’ve been sold-out – standing room only”.

“We pushed to growers the need for demand creation, then it was under-the-bonnet stuff… ‘This is what we need to be doing….’ “Wools of NZ is powerful but now we’re looking for a 1+1=3 leap which is about wool supply. And farmers must ask ‘Are we selling to someone with capability in the marketplace?’ ”

Last week’s sales included a 112 hectare dairy farm near Whakatane which sold for $5.1 million, a 170 hectare drystock farm at Waimana in the eastern Bay of Plenty which sold for $2.4 million and an 82 hectare dairy farm near Whakatane which sold for $3.85 million. Bayleys marketing agent Rhys Mischefski said the sales were clocked up in the space of two hours and were a surprise given the “sparse year for rural sales in the Bay of Plenty”.

“That’s the sort of interest and bidding activity we would normally expect to see in the proverbial ‘boom times’, so it was rather unexpected to see such strong and sustained followings across all three properties in a relatively quiet market,” he said. There was multiple bidding on all properties, with the $5.1 million farm receiving 55 bids, the $3.85 million property receiving 23 bids, and the Waimana unit recording 13 bids.

While the rural sector was far from showing what could be termed “healthy signs of activity”, the auctions showed sales could be made if vendors had realistic price expectations, he said. “The demand for rural real estate is definitely still out there in the country market, but that demand has become far more discerning and price sensitive over the past 18 months as bank funding has become harder to secure.

“One Thursday night, which is like our Saturday night, we did the equivalent of the average NZ store’s weekly turnover,” Mr Mason said. Friday in Saudi Arabia is the religious equivalent of NZ’s Sunday. In accordance with Saudi culture, the outlet has a separate entrance and dining area for male diners without family members.  A 280sqm outlet is about to open in the United Arab Emirates tourist resort Dubai. Mr Mason said more than 20 more outlets were planned in Saudi Arabia.

Not surprisingly, given the Middle East’s world-beating capacity for cheese consumption, cheese burgers – using Fonterra cheese from NZ which BurgerFuel buys in bulk and slices on site to its specifications – are the biggest seller.  Kiwi relish and vegetable patties also feature on the menu.  Mr Mason’s dearest wish is get Watties beetroot in his burgers. His meat source is confidential but is thought to include NZ beef. The appeal of NZ produce is “very strong” in Saudi Arabia, Mr Mason said.

After this season’s poor start its meat plants were running at full capacity in March and April and the co-operative has already recouped the losses of the first six months and is now in a profit position. Trading was complicated initially by farmers holding on to livestock from a good growing season in combination with low seasonal flows to stunt meat processing, with SFF having to wear the cost of plants performing under capacity. The co-operative has taken some comfort from retaining its market share as the meat industry adjusts to the national kill dropping by 1.5m lambs.

Large inroads have also been made into its debt levels, reduced by $102.8m, to improve its equity-to-debt ratio from 29 per cent to 43 per cent. SFF chief executive Keith Cooper said the result was acceptable considering the lower stock throughput, the international trading climate and against the loss recorded for the first half of last season. He said the co-operative was heading towards a profitable position by the end of the financial year with the second half often performing better than the first.

“There is still a lot of water to go under the bridge and it depends on margins and market and procurement prices until the end of September.” The half-year result was “not miles away” from the co-operative’s target, which was not publicised, he said. Mr Cooper said livestock volumes had come later than usual and SFF would be carrying that cost, and the higher dollar had lowered values. However, that had also reduced working costs, he said. SFF is confident the equity-to-debt ratio will be between 50 per cent and 60 per cent by the year’s close.