AFFCO Newsletter May 2021

AFFCO

FARMERS’ UPDATE

MAY 2021

QUARTERLY UPDATE

TINY PUB VISITS BARRETT’S FARM The sun shone at the foot of the majestic Mount Taranaki in Pungarehu on Monday the 12th of April for a fun event. The team from NZME’s The Country, Emerson’s and AFFCO combined to broadcast the show from The Barrett’s farm.

The food prepared by chef Jeff Dunstan, on behalf of AFFCO, featured a plethora of cuts from nose to tail, and was thoroughly enjoyed by the guests alongside the Emerson’s Tiny pub. AFFCO Livestock Buyer Kane Barrett and Regional Livestock Manager Marcus Henson, both had their 5 minutes of fame being interviewed by Jamie

Listen to Radio Show

MARKET UPDATE

A MESSAGE FROM OUR CEO & NATIONAL LIVESTOCK MANAGER It’s certainly been an interesting Autumn so far. A number of topical discussion points have come up at AFFCO over the last few months. Top of the list has been handling ongoing supply chain problems caused by COVID 19. Just when we think COVID is starting to become less of an issue, something comes along to make life challenging again (think of a large container boat jammed in the Suez Canal for 2 weeks)!

Global demand for red meat remains healthy and we have solid demand for our quality NZ product. Demand for higher value food service items is slowly increasing as restaurants in major export markets reopen for business following COVID related closures. This is good to see but this positivity is tempered by ongoing supply chain problems which are adding significant cost and disruption to our business. There are lower than normal volumes of refrigerated containers reaching NZ. This is a problem with the Autumn period being a time of great demand from the dairy, red meat, seafood and horticultural sectors.

AFFCO is more fortunate than some processors with large on site freezing and storage facilities so at present we are able to handle the volumes of livestock being booked for processing.

Just like the red meat sector, demand for dairy products is also high and this is reflected in a healthy dairy pay out.

Consequently, dairy farmers, where able, are electing to milk their cows for as long as possible and capture as much of the high pay out as they can. Please make sure you keep your AFFCO livestock buyer informed of your requirements for your manufacturing dairy cows. Don’t leave it until the last minute!

With parts of both the North and South Islands remaining much drier than normal, this will obviously constrain pasture growth rates and make it harder to carry the normal numbers of livestock through the winter.

For those of our suppliers who supply lambs through the winter months, we recently offered a market-leading contract for supply from the middle of May until the end of June. For those of you who could supply in this period, we hope you took the opportunity to put some lambs on this contract.

Remember this contract is a guaranteed minimum so your downside is covered and you have unlimited upside if the spot market is stronger than the contract price. This contract was well supported by our farmer suppliers and has helped underpin livestock market values for both prime lambs as well as store lambs.

The team at AFFCO has been working with other processors and other organisations such as Beef + Lamb NZ and the Meat Industry Association, to ensure that the red meat sector is pulling its weight from a climate change perspective.

Going forward, farmers will need to have a Farm Plan and be able to calculate their greenhouse gas emissions. Ultimately this will mean more compliance work for farmers and meat companies. However, this is something we all need to take seriously and be prepared to act on quickly. In the near future, you will receive more information on what you will need to do along with assistance to guide you through meeting the requirements.

All in all, demand for NZ primary products remains strong and if we can feel our way through the next few months from a logistics perspective, the new season will get off to a positive start.

Before finishing up we would like to take the opportunity to thank all of our clients for your support. It doesn’t matter whether you are a big or small operator we value your business and appreciate you choosing AFFCO as your processor of choice.

Beef: Demand in the USA for our grass-fed steak programs has been exceptionally strong this year, on the back of retail and online growth during the COVID pandemic. We believe this demand will continue with consumers buying behaviour changing along with their understanding of the health benefits of grass-fed versus grain-fed beef. Likewise, the grinding-beef market is strong on the back on high retail and QSR (quick-serve restaurant) demand. Unfortunately the high NZD (over 15% higher year-on-year) somewhat diminishes the realised returns, but we expect firm conditions for the remainder of 2021 due to lower supply volumes into this market from Australia.

Ovine: The impact of African Swine Fever (remember that virus??) remains in China driving a continued need for additional protein. Lack of lamb supply from Australia is also adding to the overall demand, with markets such as USA also starting to show shortages.

Shipping: The biggest issue facing the industry as a whole currently remains poor supply of containers and irregularity of shipping schedules. Currently the leadtime to book a shipment is well over a month, and the net result is that all sites are holding large volumes of inventory. While demand and orders are strong, the ability to convert these into invoiced shipments is extremely constrained adding to the overall cost-structure we face. This, on top of added freight surcharges, takes the gloss off some of the firm market conditions. At time of writing AFFCO have maintained production levels and have not needed to limit site capacities. This has come at significant additional cost for storage and freight; however, the priority has been to maintain processing levels through until the end of the season.

Market Conditions: Domestic and export markets, in general, continue to show strong demand. China and USA are leading export demand levels on the back of good internal consumption and lower supply from Australia and South America.

USA buyers are seeing good levels of demand on the back of President Biden’s recent fiscal stimulus package, a strong vaccine rollout, and the onset of Spring. The foodservice sector is as buoyant as it has been for well over a year as American consumers regain the confidence to return to restaurants and sporting events – albeit still maintaining social distancing rules.

China has likewise continued to show the strong demand seen after Chinese New Year. The domestic Chinese economy is showing stronger than expected growth forecasts, creating a lot of consumer confidence. While still implementing strong protocols around social distancing, and displaying a willingness to implement regional lock-downs when required, China is showing growing demand for food products.

Europe/UK has been the standout poor performer in the current environment. Both markets continue to be slow on the back of repeated COVID outbreaks and stringent lockdown periods. It is difficult to see improvement in foodservice demand in the short-term from this part of the world, albeit retail programs continue to run at a normal level.

Domestically, sales have been consistent as foodservice has lifted and confidence has returned. The impact of the travel bubble with Australia will be interesting to watch in coming months.

NEW WEBSITE CHAMPIONS FARMERS’ EFFORTS

FIELDAYS TICKETS

The environmental impact of red meat has been highlighted in a number of international studies and reports; however, this research does not reflect the different and more sustainable farming methods in New Zealand.

There is a growing negative perception of red meat’s impact and the noise and conversation is influencing policy development at a government level. In response to this, a new website has been launched by the Meat Industry Association, Beef + Lamb New Zealand Ltd and Beef + Lamb New Zealand Inc. The making meat better website (makingmeatbetter.nz) is aimed at informing and educating domestic and international audiences about the production and consumption of New Zealand red meat. The website provides science-backed resource to help people make an informed decision around eating red meat.

The website aims to pull information together from a wide range of research with the following goals: • Facts about red meat are widely seen and shared by New Zealand consumers, influencers and decision makers • The website and content is referred to by processors, exporters and retailers in their communications with customers • The efforts of New Zealand sheep and beef farmers are championed

It has been with great relief that we have managed to attend three out of four of our planned Field day events for 2021 – unfortunately Northland Field days were cancelled at the last minute- however we have managed to catch up with many of you at Wanaka, Central Districts and South Island Field days. We have successfully trialled a new ‘pass’ system at these events and we thank all of you who came prepared with either a printed pass or the AFFCO Livestock app downloaded and activated.

As we get ready for the National Fieldays®, to be held at Mystery Creek from the 16th – 19th of June, we ask that if you are thinking of joining us for some fabulous AFFCO hospitality throughout the event, you prepare by clicking the button below to find out how you can get your entry pass. This will speed up your entry to the hospitality section of the AFFCO site.

Get Your Entry Pass

The beef and sheep industry plays an enormous role in the fabric of New Zealand’s society. The new website will be a vital tool in helping to share this message in a constructive way and bring more balance to the conversation.

Check out the website

AFFCO ON THE ROAD DANGER TIME FOR SHEEP MEASLES Duck hunting brings lots of visitors onto farms and is a danger time for spreading sheep measles. Duck hunting season is starting on the first of May so now is the time to check that duck hunters bringing dogs onto farms have had them dosed for sheep measles.

Dogs must have been treated for sheep measles within the past 30 days or no more recently that 48 hours before coming onto sheep pasture.

For information and resources check out the Ovis Management Sheep Measles website or contact them on 0800 222 011.

2021 sees us visiting the regions below to take the opportunity to have a chat and let you know what is happening at AFFCO. If you are interested in attending, make contact with your livestock buyer or the regional manager listed below. We’ll see you there.

Paeroa, 29th June. Contact Gerald Scantlebury Whakatane, 1st July . Contact Gerald Scantlebury Kerikeri/Kaiwaka, 6th July. Contact Brett Innes Gisborne/Wairoa, 13th of July. Contact Wayne File Waipukurau, 14th of July. Contact Wayne File Taihape, 15th of July. Contact Wayne File Masterton/Whanganui, 20th of July. Contact Marcus Henson

MEAT INDUSTRY AND FARMERS FIGHTING CLIMATE CHANGE The team at AFFCO are working with other red meat processors and are collaborating through the Meat Industry Association and B+LNZ to help our sector achieve the first He Waka Eke Noa climate change target.

If you are not already familiar with the He Waka Eke Noa partnership, they work alongside farmers and growers from a range of primary industries to reduce emissions and build resilience to climate change. You can visit their website here: www.hewakaekenoa.nz The first step in this process will be for all farms to hold a documented annual total of on-farm greenhouse gas emissions. This information will be reported back to He Waka Eke Noa and the government to help our sector meet its commitments.

AFFCO SUPPORTING YOUNG ATHLETES AFFCO have been supporting deserving young athletes for the past year and a half. We work with the Adastra Foundation and Rob Waddell to select 7 young athletes who need help to achieve their dreams. We love following the careers of ‘our’ athletes.

Three athletes who have done very well this year are Charlisse Leger-Walker, Charli Millar and Akiva McBirneyGriffin. Visit our website for bios on all the athletes we support.

Basketballer Charlisse Leger-Walker has moved to the USA to take up her scholarship with Washington State University and play for their team, the Cougers. Charlisse was the youngest Tall Fern ever to wear the jersey, at just 16 years of age. Charlise was recently named the 2020-21 Pac-12 Freshman of the Year for the Washington State Cougars. She’s following in her big sister Krystal’s footsteps who’s also at Washington State.

To help you achieve this, B+LNZ are in the final stages of developing a process and simple on-line tool to calculate on-farm emissions. This collaboration means every New Zealand red meat farmer will be able to access the same purpose built tool regardless of which processor they use.

Yes, this process will add to the compliance work you already do on your farm. However, everyone in the industry has known for some time that we’ll need to do our share towards the impacts of climate change. It is great to finally get the ball rolling and for red meat processors to join forces to address the challenges ahead of us. As soon as the process and tool are finalised, AFFCO will contact our suppliers to let them know what is required.

AFFCO supports young athletes including from left; Akiva McBirney-Griffin, Charli Miller and Charlisse Leger-Walker

Charli Miller is a talented track and cross country runner. She is looking forward to competing against the best in the world and challenge herself to see how far the sport can take her. Charli’s short-term goal is to compete at the World Cross Country Championships at Bathurst, Australia. She has already met the qualifying time for this event. She also aims to qualify for the World Under 20 Track and Field Championships in Kenya August 2021 in the 5000m and/or 3km steeplechase. Representing New Zealand at the Commonwealth and Olympic Games is Charli’s long term goal.

Akiva McBirney-Griffin has helped bring the Otago Nuggets their first National Basketball League win. “The teenager, who measures in at 2.06m and 100kg, has a bright future ahead. He has been offered sporting scholarships in the United States and, Covid-19 willing, will take up one of the opportunities in August” (Otago Daily Times). We look forward to getting to know ‘our’ young athletes this year and cheering them on as their careers progress.