Such is the potential of the Chinese market there is room to grow the firm’s $350 million annual sales, chief executive Simon Limmer told 60 shareholders in Balclutha.
“China is an opportunity for us to shift the dial.”
Its partnership with Shanghai Maling will help that growth but Limmer said their agreement allows SFF to work with other partners.
Kiwifruit marketer and exporter Zespri is already registered as a wholly owned foreign entity and Limmer said that allows it to bypass third party traders and importers and track exactly where its product goes so it can connect with consumers.
“It is an effective way of getting cut through to the market,” Limmer said.
Getting registration is a long, slow process but means SFF will be responsible for aspects such as clearing Chinese customs and duty.
But the rewards are potentially huge.
“I think China is a potential game-changer. I think we are just scratching the surface at the moment.”
Similarly the United States has significant potential with consumers looking for grass-fed, antibiotic and hormone-free meat.
SFF already has $350m of annual sales to the US and this year will roll out retail packs of beef, lamb and venison.
Limmer said Brexit is creating uncertainty in Britain while the recent merger of supermarket chains Sainsbury’s and Asda is turning it into more of a price-driven market, accentuated by the entry of German discounting chains.
“Everything is becoming price-driven and that doesn’t suit us as we are quality-driven.”
Sales of high-value cuts to Germany are performing especially well and should continue to grow while the recent push to grow venison sales in Belgium and the Netherlands has been successful.
Markets in the Middle East have potential but Limmer said they require investment.
Supply chain manager Dan Boulton said meat prices across the board remain high with little likelihood of significant change till October.
In the last year 1.6m stock units, equivalent to 10% of throughput, qualified for the company’s added-value programme.
That is a 30% lift on the previous year and suppliers were paid $7.2m in premiums above the farmgate prices.
In the last nine months the national lamb kill was 3% ahead of the same period last year with most of that growth in the North Island but the mutton kill was 16% higher, a concern for the size of next year’s lamb crop, Boulton said.
The beef kill over the same period was 7% higher with cows killed to control Mycoplasma bovis accounting for about 3%.
The beef season ran late and meant plants were killing prime beef and cull cows at the same time.
In one week SFF killed a record 27,000 cattle.
The bull kill was up 8% and venison 5%.
Chairman Rob Hewett said the company is reducing the role of third party livestock suppliers. While they supply stock when numbers are short the company wants a direct relationship with suppliers.
A patronage reward being introduced to regular suppliers will not be payable to third party traders.
The company plans to spend $100m over the next five years in its 14 plants with $30m being spent this year alone.
Limmer said it will upgrade machinery such as installing safety band saws, improve environmental standards and introduce new technology.
