Brief Bites, 23 October

Alliance Farmer Shareholder News

In this edition:

Roadshow Meetings
Emissions Pricing
Handpicked Venison
Alliance Group Directors’ Election Nominations
Seasonal Recruitment Opportunities
Global market update

Roadshow Meetings

It has been a pleasure to reconnect face-to-face with shareholders around the country over the last four weeks. We held 20 roadshow meetings across the North and South Islands and appreciated the feedback from farmers as we discussed the progress of the co-operative over the last 12 months, our future programmes and pricing outlook for the first six months of the year. It’s pleasing that 2022 has been our most profitable year to date and farmers will be rewarded farmers with a profit distribution and bonus share issue. However, we are also moving into challenging times with geo-political tensions and global economies under pressure. Collectively, we must be agile and fit enough to respond to the situation. One thing that really shone out in the roadshow meetings was the passion our farmers have for the land and their co-operative. We think the two profiles of Alliance farmers below speak for themselves:

The Rishworth Family

The Watson Family

Emissions pricing

By now you will have seen the Government’s response to the He Waka Eke Noa Primary Sector Climate Action Partnership proposal on agricultural emissions pricing last week.

Like you, we are extremely disappointed with the Government’s proposal, which will have a disproportionate and inequitable impact on the sheep and beef sector, affect the livelihoods of hard-working Kiwis in rural communities across the country and increase the cost of food for all New Zealanders.

Although the Government agreed to a number of the He Waka Eke Noa proposals — including a farm-level, split-gas levy– it changed several key areas which fundamentally alter the balance of what was put forward by the sector in May.

The Government proposal includes:

Reducing the sequestration categories that farmers can get recognition for

Changes to the process for setting of methane and nitrous oxide prices

Linking the nitrous oxide price to the carbon dioxide price. An escalating carbon price could have significant cost implications for farmers

As a farmer-owned co-operative, we would of course prefer farmers didn’t face a price for our emissions, however the Government insists pricing will begin by 2025 and it has already passed a law to bring agriculture into the Emissions Trading Scheme if the sector does not land on a credible alternative.

The He Waka Eke Noa recommended option was designed by 11 primary sector groups to be as equitable as possible across all parts of the industry. It was not perfect and was acknowledged as needing further refinement over time as the sector worked together.

However, the Government’s significant changes including removing the key foundation pillar – genuine recognition for on-farm sequestration from day one – effectively destroys the integrity of the sector’s plan.

It’s baffling that while the Government’s own modelling shows that the sheep and beef sector (and deer) is most heavily impacted by a price on emissions, it’s diminished the value of a key tool many of our farmers can use to mitigate the effect of emissions pricing.

New Zealand farmers produce nutritious and highly quality food and are willing to play their part in addressing emissions– farmers are making positive progress on improving their environmental footprint.

Over the next few weeks, we will be fighting for the interests of farmers, urging the Government to make changes to its proposal and lodging our own submission.

We encourage all farmers to read the consultation document and have a say during the emissions pricing consultation, which ends on November 18.

There is also a series of information sessions:

3 November, 2-3.30pm
9 November, 6.30-8pm
25 October 6.30pm-8pm
31 October 4pm-5.30-pm

Please visit the Beef+Lamb New Zealand website for additional information and details of sector meetings.

Handpicked Venison

One roadshow announcement that has prompted a lot of interest from venison farmers is the launch of our new Pure South Handpicked Venison programme.

The programme uses an assessment system to measure eating quality. Farmers will be paid a 20c/kg premium above the ruling schedule to all qualifying animals that meet the requirements at the time of processing.

Only hinds less than three years old and weighing between 55kg-75kg will be eligible for the programme. Deer must meet a strict criteria including being raised without antibiotics, meet the required pH levels and be grass-fed. Suppliers must also be accredited with the New Zealand Farm Assurance Programme (NZFAP).

Handpicked Venison will be exported to Alliance’s traditional markets such as Europe, but also to burgeoning markets such as North America where the demand for the product is growing.

As New Zealand’s only 100 per cent farmer-owned red meat co-operative, Alliance Group now has a differentiated premium portfolio across venison, beef and lamb. That means every farmer now has the chance to partner with us on our premium range and be rewarded for producing quality animals aligned to the needs of our customers across the globe.

We are seeing great opportunities to connect our farmers with discerning consumers around the world who are prepared to pay a price premium for red meat with certain attributes guaranteed by a New Zealand brand they trust.

This investment also reinforces our commitment to New Zealand’s deer industry. In 2018, we commissioned a new venison processing plant at our Lorneville plant in Southland. We are investing heavily in sales and marketing and seeing increased sales of venison in supermarkets and online and stronger brand recognition among shoppers.

Please speak to your livestock representative if you are interested.

Alliance Group directors’ election nominations open

Nominations are open to fill two vacancies for the office of Director of Alliance Group Limited. Murray Taggart and Don Morrison are retiring by rotation, and both are standing for re-election.

Nominations must be made on the official form, which can be obtained from the Returning Officer:

Warwick Lampp
Returning Officer – Alliance Group Limited
Phone: 0800 666 032
Email: iro@electionz.com
Address: PO Box 3138, Christchurch 8140

Each nomination form must be signed by the nominee. Nominations must be received by the Returning Officer by 3pm on Thursday 27th October 2022. Completed forms can be emailed to nominations@electionz.com.

The election result will be announced in Timaru on Friday 16 December 2022 at our Annual Meeting of shareholders.

Seasonal Recruitment Opportunities

Are you or someone you know looking for holiday work over the summer period?

We have opportunities across our seven plants. Previous experience is great but more so is the right attitude and a willingness to work. We will provide all the training required for successful applicants to succeed in a wide range of roles including working in the yards and meat processing.

Roles attract a minimum of $26.52 per hour (including allowances). For more information, please visit www.alliancejobs.co.nz.

Update from our global markets

Lamb

Global unease in our markets is continuing with rising inflation, interest rates, China’s zero-COVI19 policy and the Ukraine conflict. In this environment, people’s discretionary income is reducing with food service sector spend down, grocery expenditure declining and consumers trading down proteins. The need to meet market expectations is critical in maintaining sales velocity and in-market confidence. While there is downward pressure on pricing, the changes we are seeing are currently in line with our forecasts/expectations for price movements.

Mutton

China remains the key market mutton with volume uptake required to ensure stability in other key markets such as wider Asia, EU and North America. To meet market demand requires a balance of commodity and further processed cuts. This is providing flexibility and maintaining sales velocity.

Venison

Game season sea freight chilled has been completed this week and will be complemented by airfreight programmes in November and December. Demand for venison during this period remains firm. Frozen 2023 programmes for key customers are to be negotiated in February/March next year. The success of the game season will determine the New Year market direction.

Beef

There has been a shift in the beef market sentiment in the last few months as global conditions worsen and persistent inflation constrains consumer spending. The Chinese market continues to slow as the zero-COVID-19 policy has created a sense of uncertainty with consumers. We continue to trade light volumes to the US market with lukewarm demand and softening prices. Markets in Asia (excluding China) for Alliance beef have experienced tough economic conditions in the last three months. Both Japan and Korea have gone in and out of lockdowns with the food service sector being heavily impacted.

Co-products/Specialty Ingredients & Materials

Offal pricing is increasing for the coming season. Casings pricing is steady as negotiations for coming season commence. We are seeing pricing weakening as demand falls for old season shorn woolskins in China as the country continues its lockdown strategy. Pricing for the pharmaceutical sector is firm with an outlook for growth.