Brief Bites, January 16

In this edition:

Processing update
Agriculture emissions pricing options – February Roadshow
Reverse osmosis water recycling trial for Levin plant
Tall Livestock
Global Market Update

Happy New Year We hope you all enjoyed a relaxing time with family and friends over the summer. Despite ongoing supply chain challenges, we are continuing to ship product to customers across the globe and are confident we can maintain our current momentum.

Processing update

Livestock inflows are strong across all species. Our plants resumed processing last Wednesday (5 January). To meet demand, we are bringing on additional capacity and working overtime as required. We would encourage you to send in livestock as soon as they are at an optimal weight and condition so we can meet Easter chilled lamb programme requirements for the UK and Europe, where we can capture greater value. We are currently providing priority processing to shareholders.

Agriculture emissions pricing options – February Roadshow

DairyNZ, B+LNZ and Federated Farmers are running a roadshow next month on the options developed by the He Waka Eke Noa Primary Sector Climate Action Partnership as alternatives to the Emissions Trading Scheme (ETS). For dates, times, and locations, or to register, please click here.

Reverse osmosis water recycling trial for Levin plant

We are committed to meeting high standards of environmental practices at all our plants and we’re constantly looking ahead to make sure our practices enable us to be in business for the long term, regularly monitoring our plants’ environmental impacts and assessing opportunities for improvements. At our Levin plant, we are trialling an innovative reverse osmosis water filtration system to allow for better and more recycling of water. Currently, the plant is constrained by the daily allocation of water provided from the town supply, particularly during dry summer months. This means it is sometimes difficult to operate the plant to capacity and also limits potential for expansion. The plant’s current water recycling system produces water that is suitable for outside work only. Reverse osmosis produces highly purified water by using pressure to force water containing organic and inorganic contaminants through semi-permeable membranes. The recycled water could potentially be used more widely in the plant. Water produced in the trial will be analysed to assess appropriate uses. If the trial is successful, there is potential to install a large-scale reverse osmosis system at the plant. This would ensure the plant could work consistently within the limitations of the town water allocation and provide environmental benefits and cost efficiencies, with less water being taken from rivers, and less wastewater being produced by the plant.

Tall livestock

Tall livestock are more susceptible to injury during transport and transporters can be fined $500 if they carry an animal in a manner that causes backrub. The Ministry for Primary Industries has released guidance for farmers on the issue – click here. Please speak with your livestock representative if you have any questions.

Update from our global markets

Lamb

Consumption in the UK and EU over the Christmas period was positive with all stocks cleared. The focus has now shifted to Easter production with early indications suggesting another strong performance from retail. The latest COVID-19 outbreak is impacting the food service sector and creating unease in the market. With 50 per cent of Europe expected to be affected by COVID-19 before the end of this month, the food service sector will come under pressure with retail likely to pick up the shortfall. North America continues its strong run in the retail and food service sectors, but there is some concern as inflation grows, which could reduce consumption and ultimately put downward
pressure on pricing. Demand and pricing in China has peaked with a market re-set underway. Prices for lamb and mutton in China are easing, principally for forequarter and flap products, which constitute approximately 40 per cent of the carcase. We are monitoring the situation closely.

Mutton

Demand remains firm throughout key markets but there is some resistance to the present levels, in particular in China where pricing is easing for some products. Our aim is to ensure we have a strategic geographic spread across all countries.

Venison

European game season consumption is positive, but concerns remain around the food service sector due to COVID-19. Our recently established retail programmes are helping to place product and are providing a viable option to the traditional restaurant trade. Volume business has concluded into North America and China. In the EU, enquiries for frozen product are being made earlier than usual, suggesting lower in-market inventories and a recognition that available supply from New Zealand is lower than previous years.

Beef

As expected, the lifting of the Brazilian beef embargo created some downward price pressure in Chinese wholesale domestic prices. Nonetheless, the market remains strong and we expect the prices to be steady up until Chinese New Year. The US market remains firm but hesitancy continues with importers concerned about confirming prices and volume with present levels at a 30-year high. With COVID-19 affecting North America production, the market is in exporters’ favour, which will assist in some business being concluded in the short term. The latest increase in demand and price from China is putting pressure on grass-fed beef inventory for the rest of Asia. Japan, Korea and Indonesia have seen a surge of demand and record spot prices are being achieved.

Co-products/Specialty Ingredients & Materials

Shipping of hides and pelts remains challenging. We are in a good position to meet customer demand as we head into the peak period though. We are monitoring outbreaks of COVID-19 in China to mitigate any disruption.