Friday, March 29, 2024

SFF takes cautious forecast approach

Neal Wallace
A trade deal between Europe and the United Kingdom looks unlikely by the end of the year, which a New Zealand meat exporter fears could disrupt the movement of product between the two markets.
Reading Time: 2 minutes

Silver Fern Farms supply chain manager Dan Boulton says customers have secured early orders and apart from the possibility of disrupted movement of product between Europe and the UK, he did not expect issues for NZ meat, at least in the coming few months.

Boulton told suppliers at a company road show in Balclutha that customers were playing a short game, which gave the company confidence to only forecast prime stock prices through to January.

Its forecast ranges are prime beef $5.20-$4.90, bull $5.10-$4.80, cow $4-$3.60, lamb $7-$6.30, mutton $5.30-$4.50, venison $6.20-$5.

With the demise in demand from restaurant and food service, meat exporters have been forced to divert product to retail outlets, but Boulton says consumers still want safe food sourced from a secure, credible food chain.

The impact of covid-19 has been devastating for meat exporters.

Before Christmas 2019, 50% of SFF lamb was going to China. By February that had fallen to less than 10%, but by May it had recovered to 60%.

Beef exports to China halved between Christmas and February.

With between seven to 10 days cool storage capacity, Boulton says maintaining product flow was crucial to assisting farmers through autumn.

As China shut down, Boulton said its shareholding in freight logistics company Kotahi allowed product to be quickly diverted to markets such as the US.

“That was a big part of why we were able to maintain our processing levels,” he said.

“It highlights our need to be agile.”

Boulton says it was not simply a case of diverting product to other markets as relationships had to be built with retailers, new formats developed, specifications met and new packaging.

For example, food service buys larger format cube rolls, whereas retailers want smaller portions which have to be prepared, packaged and labelled.

Shanghai-based online and e-commerce retailer Good Farmer sells SFF meat but has become a key outlet and the first to stock SFF-branded product.

Boulton says the growth in online and e-commerce sales of SFF product in the last three months has exceeded total sales for the last five years.

US speciality meat retailer Marx Foods has increased its instore and online capability to sell SFF meat, while the number of retail outlets in three West Coast states stocking product has increased from 40 to 200.

SFF was also looking to develop other Asian markets.

Boulton says with the South Island cattle herd increasing 100,000 in three years, the company last season took steps to reduce the space bottleneck created by the cow cull.

They began the season earlier, made changes to shifts, maintenance and downtime so by the time covid-19 struck, the kill was 12% ahead of the previous year.

Delays caused by the virus meant those gains were soon lost, but a similar approach to ease congestion has been taken this year.

SFF Co-op chair Richard Young told shareholders increasing numbers of suppliers were wanting to become fully-paid-up shareholders.

He welcomed the interest saying last season 65% of stock came from shareholders, up from 62% three years earlier.

Ideally, he wants 80-85% of stock to come from shareholders, saying that level of product flow will enhance the company’s performance.

This year SFF is investing $55 million in its plants including extending cold boning, its value-added programme, environmental compliance and health and safety.

The company is also increasing its international presence, employing 10 people in China, up from one a year ago, and looking to add staff in the US.

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