Massive Chinese market for red meat industry

The importance - and potential - of China as a market for the red meat industry was reiterated during the recent red meat sector conference in Queenstown.

Arron Hoyle, McDonald's senior director and head of strategy in China and Hong Kong, said the dragon was redesigning global trade and global prices.

He spoke of the "unprecedented" urbanisation in China, the emergence of mega cities and the significant opportunities the fast food chain saw. It was bullish and very excited about those opportunities.

Despite the strong growth, McDonald's projected China's supply response to largely keep pace but what was imported would still be "massive volumes", he said.

In an update on the international meat industry, Richard Brown, director of Gira, UK, said the long-term outlook for meat consumption was positive.

While growth was dominated by poultry, poultry prices had increased considerably less than red meat prices and he believed that industry globally needed to be "quite careful" in its expansion.

One of the exciting things had been the rise in prices which was very refreshing compared with the "rather gloomy" period that went before it.

Consumers around the world were spending considerably more this year and last year on meat than in previous years.

There were high grain prices and the grain markets were "incredibly volatile", affecting pork, chicken and grain-fed cattle.

There were good overall long-term demand fundamentals for beef while, in the sheep meat sector, dramatic producer price rises were restoring producer moral but marketing needed to be pitched to underpin consumer loyalty at a higher price level.

The "sad reality" was that fewer slaughter plants were needed, and better capacity utilisation, Mr Brown said.

Scott Hansen, managing director of Meat and Livestock Australia, a producer-owned company with more than 47,000 members, said the "good news" was that herd and flock rebuilding was well established in Australia.

That was due to good seasons across most parts of the country and strong prices and there would be an increase in supply.

While there was talk of emerging markets, there was some "real pain" in traditional markets like North Asia, the United States and Europe. An increasing amount of investment was being made in market access.

He was optimistic about the future for beef, although he said a lot of work needed to be done to "harness that opportunity" and translate it into sales.

The sheep flock was rebuilding and the increase in supply would be "great news" for the processing sector.

The Australian red meat industry outlook was bright, provided "conventional wisdom" held - that higher incomes and higher population equalled an increased protein demand.

Rick Stott, executive vice-president of Agri Beef in the United States, spoke of the importance of creating a brand, describing it as a contract, or a promise, with the customer.

Consumers wanted to know their food was safe. Animal welfare was becoming "huge" and they wanted to know the cattle were cared for.

They cared about consistency and taste and also wanted to know it was locally produced.

The challenge for his company and the industry was how to personalise its product.

It was all about developing brands and making sure what they did was transparent and accommodating to the consumer and personalised to the consumer.

China was a significant opportunity, he said.

Primor Produce Ltd director John Carroll spoke about the avocado industry's collaborative model (Avanza) and the value of working together.

"You've got to park egos" to achieve success with a collaborative model.

"Those involved had to also keep reminding themselves that success of the whole was more important, Mr Carroll said.

While there did not have to be rapid change, it needed to be considered about how to make "little bits better".

Rob Davison, executive director of Beef and Lamb New Zealand's economic service, said the forecast for the coming year for lamb prices was about a $95 season average with possibly some up-side to come.

This year, the average was going to be about $113.50, while last year's average was $117 and the price still kept going up.

Mutton last year peaked about $115 and prices had been heading south since, looking to average about $75, with again possibly some up-side.

The export lamb slaughter last year was 19.25 million and the forecast this year was about 19.7 million but looked likely to come in about 19.2 million, due to the retention of a lot more hoggets than was predicted.

Export mutton slaughter last year was 4.4 million and this year looked about 3.4 million, whereas the forecast was originally about 2.95 million.

A key message from the red meat sector strategy, particularly for farmers, was to keep focusing on what could be controlled - like lambing percentage, wool production, carcass weights and growth rates, loss rates, fertiliser, farm expenditure and gross margins - rather than what could not be controlled, Mr Davison said.


Add a Comment

Our journalists are your neighbours

We are the South's eyes and ears in crucial council meetings, at court hearings, on the sidelines of sporting events and on the frontline of breaking news.

As our region faces uncharted waters in the wake of a global pandemic, Otago Daily Times continues to bring you local stories that matter.

We employ local journalists and photographers to tell your stories, as other outlets cut local coverage in favour of stories told out of Auckland, Wellington and Christchurch.

You can help us continue to bring you local news you can trust by becoming a supporter.

Become a Supporter