Part three of Allan Barber's perspective of the New Zealand meat industry. The need to find points of difference that motivate consumers will become the key to future properity

By Allan Barber*

This is the third part of a presentation I recently gave to a Beef + Lamb Field Day about the meat industry. The first part is here, the second part is here.

The future

There are two diametrically opposing views on the meat industry’s future outlook: either the world is short of protein and has an insatiable appetite for what we produce, or meat will be replaced by artificial or synthetic proteins, much cheaper and easier to produce.

I can’t predict just where on the continuum between these two extremes actual reality will settle or which direction the trend will move.

But it’s probably worth hazarding a guess that the top end of the market will continue to prefer the real thing, produced and presented to a high quality, while the poor who are unable to afford much if anything will be happy to accept the cheaper, artificial version. It is also quite possible the increasingly global craze for fast food, especially hamburgers, could be met by synthetic beef, but here again there would be a premium end of the market demanding the real thing.

This suggests that there is a future for farmers, processors and marketers, but it will require a move away from the commodity end of the supply chain. I am not about to speculate on the future demand for dairy products, but one scenario would see cull cows becoming an unwanted by-product of the dairy industry, instead of a profitable input to the meat industry.

This would present an opportunity for sheep and beef to reassert itself as a profitable, premium farming activity, but it ultimately comes down to finding market niches instead of supplying a commodity.

For example, Coastal Spring Lamb, starting small and supplying Foodstuffs, has now combined the lamb production from 11 farms around Whanganui for export to Vietnam, Thailand and other Asian markets. They have successfully marketed their brand to chefs in top restaurants, starting with spring lamb from five farms, but have now expanded their supply to the extent that they can maintain regular supply of lamb, not just spring lamb, for most of the year. This is frozen product, shipped in containers, which gives the lie to my statement about frozen product not being able to command a premium.

This arrangement underlines the need to find a processor that is prepared to pay a premium for the lamb that meets the specifications, but it also indicates the difficulty of developing niche products that can extract meaningful premiums. Undifferentiated products will remain directly exposed to price and demand volatility.

The main opportunities rest with lamb and prime beef which can be targeted at the chefs of high quality restaurants in carefully selected markets. Unfortunately there will only ever be a relatively small proportion of our production output that can be guaranteed to meet the specifications of timing, weight and eating profile of those niche markets. There will also be opportunities for top class wool to be used in highly priced clothing and textiles, while co-products for sophisticated medical applications and health benefits can earn good money.

There remain a larger percentage of products that will inevitably come on stream during the peak of the season, whatever the impact of climate change is on our seasonal production patterns. There will be demands on farmers, as usual, to cope with these climatic conditions and to have sufficiently robust and flexible farming systems to respond to the needs and economics of the market. This will put more pressure on farming expertise and scientific input into genetics and pasture types.

Meat companies will also have to be efficient, responsive and flexible in their processing operations and marketing strategies. Those that fail to keep up plant reinvestment programmes will fall by the wayside. Government and trade negotiators must continually achieve the best possible trade agreements and our food safety and biosecurity authorities must ensure credibility of farm and plant licensing so that our trading partners accept New Zealand’s systems as meeting guaranteed food safety standards.

I believe our food safety and animal welfare standards will become a major point of difference for New Zealand meat exports.

In summary, an industry which has now produced a massive part of New Zealand’s overseas income since 1882 has challenges, if it is to continue exerting such a large influence in future. But I am confident the broader meat sector, farmers, scientists, processors and exporters alike, will innovate and achieve success in the future with a high quality, differentiated product.

There will be major challenges in handling climate change, environmental standards, sustainability issues, pasture growth, animal health, antibiotic and chemical resistance, food safety demands and addressing the question of whether New Zealand adopts GM or not.

It will be an exciting journey.

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*Allan Barber is a commentator on agribusiness, especially the meat industry, and lives in the Matakana Wine Country. He is chairman of the Warkworth A&P Show Committee. You can contact him by email at allan@barberstrategic.co.nz or read his blog here ».