Saturday, March 30, 2024

Hewett sees chilled meat delay

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The lack of a reliable distribution system for chilled meat in China will delay New Zealand companies sending product there even when agreement is reached.
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The two governments recently signalled they would work towards allowing chilled NZ meat to be sold in China but Silver Fern Farms chairman Rob Hewett said the lack of a cool product temperature supply channel meant it would be some time before that market can be opened.

“I struggle to see a value proposition due to the cost and the temperature requirements at present but it will come,” he said in Shanghai where he is accompanying shareholders and media on a tour of the market.

But while that market was opening up, Hewett said China was about to impose higher regulations on frozen exports, increasing the required freezing temperature to minus 18C.

Cold products in China were delivered to retailers by motorcycle couriers, known as the last milers, in uncontrolled cold boxes attached to their machines.

That prevented accurate temperature control and compromised the integrity of products.

The agreement was hailed by meat exporters as potentially being of huge benefit and Hewett agreed but added it would require some structural changes.

Frozen NZ lamb commanded chilled meat premium prices in China, with the market last year generating sales for SFF of $350 million.

He was in no doubt a distribution system for chilled meat would be established, saying that as China showed with hosting the Beijing Olympics, where there was a will, a way would be found.

Chinese officials were already searching the world looking for the best food standards it could adopt.

Hewett said sales to food service had experienced exceptional growth, especially for low value cuts used in hotpots and stir fries.

SFF was evaluating 19 new, branded retail packs for China after consumer research revealed they wanted cuts different to those it was supplying.

Some cuts were too thick and in some cases too big and consumers wanted new cuts such as shin shanks.

But consumers loved the double packaging which Hewett said gave then certainty of quality and food safety.

The requirement for frozen product to China was about 15C but the new requirement would have a major impact on exporters, such as maintaining temperature while loading containers and increasing energy costs.

China was SFF’s largest market by volume and second largest by value and when asked about staff on the ground to service such a key market, including Hong Kong, he said they needed more.

SFF had three staff servicing the market compared to 13 in the United Kingdom.

Should the proposed partnership with Shanghai Maling, a massive Chinese retailer and processor be approved, employing more staff was a priority investment.

The Shanghai Maling deal was non-exclusive and allowed SFF to sell its meat to whichever Chinese buyer it wanted.

NZ exporters often commented at the high esteem with which Chinese rated NZ food because of its quality and safety.

In a Shanghai supermarket Zespri gold kiwifruit were selling for the equivalent of $NZ5 each and green for $2.50 each.

NZ Queen apples were selling for about $10 a kilogram.

 

Neal Wallace is visiting China as a guest of Silver Fern Farms.

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