Brief Bites, 13 February

Alliance Farmer Shareholder News

In this edition:

Omicron update including plant changes, processing waiting times, livestock pick-ups and upcoming webinars
Wet weather and flooding
Taste Pure Nature
Agriculture emissions pricing options – February roadshows
Supporting the Shear 4 Blair Shear-a-Thon
NAIT levies
Global market update

Omicron update

There are now many more confirmed Omicron cases across the country. The co-operative has contingency plans in place, but given the potential scale of the outbreak, it is likely it will affect farmers and our operations.

We are doing everything we can to mitigate the impact of COVID-19 on our workforce and meet the needs of our farmers during these challenging times for the country.

This includes physical distancing, temperature checking, rapid antigen testing, restricting access to plants and offices to essential visitors only and separating day and night shifts at plants.

Our processing capacity has yet to be directly affected, however we can expect disruption to come at some point. Processing capacity at a plant will likely be constrained if employees test positive for COVID-19 or are considered close contacts and need to self-isolate.

As a multi-plant co-operative, we will act to limit the impact by leveraging our extensive plant network and move livestock between different regions, if and when required.

As a guide, we will be managing our processing capacity on the following basis:

Priority processing for platinum, gold shareholders and other shareholders
We will not be taking non-shareholder supply while capacity is full and we will take action if we see people trying to jump the queue
Animal welfare issues will be considered
Access based on forecasts

We have established livestock booking allocation forecast plans for our platinum and gold shareholders supplying lambs and cattle. These booking allocation forecast plans are available through your Alliance livestock representative.

Like any plans, they will need to be reviewed and changed, as necessary. For example, if capacity is reduced by 50 per cent, then booking allocations will be reduced across suppliers in an effort to be equitable to shareholders.

Plant changes

We are implementing a range of measures across our plant network to maximise the number of animals we can process for our farmers. Unfortunately, this may mean we have to sacrifice some value by not processing complex cuts or offal but the priority is about getting your animals processed when you need them off the farm.

We are also exploring ways to mitigate the impact of our people having to self-isolate by training and upskilling employees. Our staff are being offered a $600 incentive payment if they refer friends or family to work for Alliance in an effort to ease our labour shortage.

Processing waiting times

Average waiting times will vary depending on plant, region and livestock mix requirements, so the following times are intended as a guide only.

North Island as of 13^th February
Two weeks for lamb and ewes
Four weeks for cattle

South Island as of 13^th February
1-2 weeks for lambs
Three weeks for ewes
2-3 weeks for cattle
Three weeks for deer

These waiting times could change due to weather conditions, labour availability, the need to balance livestock inflows with global supply chain challenges and seasonal processing requirements such as the availability of cull cows after Easter.

We are asking farmers to keep in regular contact with their Alliance livestock representative to ensure planning information is up to date and changes in circumstances are well communicated.

Livestock pick-ups in the event someone on a farm tests positive for COVID-19
Farmers should immediately let their livestock representative know if they, their family or workers have contracted COVID-19.

Livestock can continue to be booked in for processing, however anyone who tests positive for COVID-19 positive (and transport providers) must take the following precautions:

the farmer notifies their Alliance livestock representative of the situation
the person or people infected should not be present at the time of pick-up, everyone observes physical distancing at all times, wears masks and uses the COVID tracer app

We also encourage our farmers to register and use eASD to eliminate the use of paper and minimise the risk of COVID-19 transmission.

You should consider different scenarios to look after your animals, staff and business. Beef + Lamb New Zealand and other primary sector groups have developed this plan. Please also refer to this useful guidance.

If in doubt, please speak to your Alliance livestock representative.

Government Guidelines

The Government has announced guidelines enabling farmers to continue operating in a “bubble of one” if identified as a contact. Under the guidelines, farmers must be vaccinated, not have symptoms and should have no contact with anyone else. These guidelines do not require farmers to return regular tests.

There may be multiple bubbles of one in some workplaces (e.g. a farmer, contractor fencer or mechanic). However, they all still have to meet all the requirements around spacing, wearing appropriate masks, not lunching together etc.

Farm businesses can also register for a new exemption scheme, which will allow vaccinated and asymptomatic close contacts to keep going to work instead of isolating, so long as they return a daily negative rapid antigen test and follow strict safety protocols. These changes come into effect when the country enters Phase 2 of the Omicron response. You can find more information here.

Webinars

We will be hosting a series of informal webinars over the next fortnight. These online sessions will provide information on a range of topics such as processing capacity in your region, how we are managing demand, global market insights and pricing. You can also provide feedback on what we can do to support you.

Please join us for a chat by clicking on the relevant link below:

Eastern: 16th February, 5pm
Northern: 23rd February, 12pm
Central: 23rd February, 5pm
North Island: 24th February 11am
Southern: 24th February, 5pm

Wet weather and flooding

Our thoughts are with those rural communities affected by the wet weather and flooding, particularly those on the West Coast and top of the South Island where the Government has classified a medium-scale adverse event, unlocking support for farmers. If you are impacted by the adverse weather conditions, please speak with your livestock representative.

Taste Pure Nature campaign in China

In the lead up to Chinese New Year, Alliance Group partnered with New Zealand’s country of origin brand Taste Pure Nature to promote our Pure South brand across retailers in Beijing. Trained brand ambassadors and in-store displays were used to educate consumers on the benefits of grass-fed lamb and the New Zealand grass-fed difference. You can see the campaign in action here: https://youtu.be/CTd3zwwTKd4

Agriculture emissions pricing options – February roadshow

We encourage you to attend one of the roadshow meetings on the options developed by the He Waka Eke Noa Primary Sector Climate Action Partnership as alternatives to the Emissions Trading Scheme (ETS). It is important farmers participate in the consultation and the sector lands on a preferred option because otherwise the Government has made it clear that it will bring agriculture into the Emissions Trading Scheme.

The Meat Industry Association has prepared a useful fact sheet on the options. For dates, times, and locations, or to register for an event, please click here.

Supporting the Shear 4 Blair Shear-a-Thon

Before Blair Vining passed away from bowel cancer, he and his wife Melissa worked tirelessly to reform the system and make access to cancer care equitable for all Kiwis. One of the greatest legacies created by their work is the formation of the Southland Charity Hospital.

The Southland Charity Hospital does not receive any Government funding. Instead, they rely entirely on donations, grants, and the generosity of the wider community. We were proud to support the Shear-4-Blair Shear-a-Thon on 5-6^th February. Over the two days, four shearers completed 12×2 hour runs. The $50,000 raised will be donated to the Southland Charity Hospital. For more information, including how to donate to the Charity Hospital, please visit the Facebook page Shear 4 Blair.

NAIT levies

NAIT Limited is consulting on proposed increases to NAIT levies. Together with proposed increases in Crown and deer industry contributions, these levies will be used to continue the work NAIT Limited has been doing since the M.Bovis outbreak in 2017 to improve the traceability system so that it is easy for farmers to use and so it performs in the event of a disease outbreak. For more information, please visit: www.ospri.co.nz/get-involved/ospri-consultations/nait-levy-consultation

Update from our global markets

Lamb

Easter chilled sea production has concluded for the UK and EU with the focus now shifting to fulfilling frozen key account programmes. The low in-market inventory in the EU is positive, but nervousness remains about maintaining current price levels when the supply improves. COVID-19 restrictions are being lifted in the EU, which will further stimulate the food service sector. In North America, the retail and food service remains steady but inflationary pressures are a concern as some consumers trade down to lower valued protein. Consumption over Chinese New Year is in line with expectations as supply and demand at this stage remain in sync. Demand in the Middle East is steady.

Mutton

While China remains a pivotal market, we are continuing our diversification strategy by supplying Malaysia, Taiwan, UK and North America. With the mutton season well advanced, there is some confidence that present demand and pricing will hold. However, we are keeping a close eye on the US dollar as the majority of product is sold in this currency.

Venison

Post-game season negotiations for volume frozen product are continuing with key partners confirming improved levels compared to last season. This market confidence is influenced by our strategic diversification to move product away from established EU markets into developing markets such as China and North America. The global food service sector continues to rebuild as COVID-19 restrictions are lifted, creating more opportunity with the main focus North America.

Beef

Interest is continuing post-Chinese New Year holiday with wholesale market values increasing across a range of cuts for imported beef. We expect the chilled market to decline slightly as the risk profile with supply chain fragility is creating caution. Based on values we see in China across beef cuts, we expect the volume of grinding meat for the US to be reduced. The US market continues to be firm due to the capacity of domestic processors constraining local cattle processing. We are well forward sold with bull meat. Lean meat from New Zealand and Australia remains at a premium as processing plants delivering in-specification cattle is challenging for US farmers.

Co-products/Specialty Ingredients & Materials

The majority of wool types saw a rise in the North Island sales. Green runners demand and pricing remains strong for sheep and lamb. Market competition for tallow is driving pricing up with the US underpinning demand. Single species meal prices remain strong with constrained supply and mixed meal price strengthening, as US and Canada lose Indonesian market access again. Hides and pelts demand and pricing remains steady.

Warm Regards

David Surveyor – Chief Executive

For more information about Alliance, visit alliance.co.nz

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