But it was a slow and complicated process with care needed ensure it didn’t simply add cost, he warned.
Adding value could be done in a variety of ways and could mean shifting more frozen product to chilled.
Most sheep meat exported last year was frozen at an average price of $6100 a tonne compared to chilled at about $11,000 a tonne.
Value-add could mean negotiating better trade access or farmers making management changes to supply more lambs that met the required quality standards on the shoulders of the season.
“Value-add shouldn’t be one thing or one size that fits all,” he said.
Equally, companies should follow their own value-added paths to give options to farmers but whatever path was followed had to be financially viable.
“If it costs $2 to make $1 then you are not better off.”
Holgate said companies told him it took five to seven years to develop markets for added-value products that required trade access agreements, in-market infrastructure and ethically conscious consumers with the ability to pay for products produced to their expectations.
“The hardest mile is the last mile.”
Farmers needed incentives or certainty to make farm management changes 12 to 18 months in advance and that was where companies and farmers needed to develop close and transparent relationships.
That might mean farmers having greater compliance requirements but that was needed to support a brand and the value-added qualities companies were trying to capture in markets.
“Linking attributes resonates with consumers and by using accreditation schemes verifies products produced in a certain way.”
Holgate believed the sector was adding value to sheep meat, citing Anzco Foods Kumanu Lamb, Alliance Group’s Te Mana Lamb and Silver Fern Farms retail lamb range as examples.
Other countries were encroaching on product differentiation NZ had previously captured, turning those into commodities such as electrical stunning, automation, packaging, Halal slaughter and exporting particular cuts to high-value markets.
He identified three elements needed as part of NZ’s value-added strategy:
– Ensuring NZ lamb was positioned as a premium product.
– Continuously improving quality and verifying attributes.
– Building consumer-focused value chains.
Meanwhile, NZ exporters sold a record low volume of frozen lamb to the United Kingdom market last month as they chased more lucrative prices elsewhere.
AgriHQ analyst Reece Brick said the combination of a steady decline in consumption combined with the loss of economic confidence following the Brexit vote had altered the market.
“Exporters have largely chosen to divert their product to higher-paying markets and this will be a strategy that increases over time.”
Just 1274 tonnes of frozen lamb was shipped to the UK in August but July and August volumes were 32% lower than a year ago and 38% lower than the five-year average.
It was not a case of diverting product to Europe, with August volumes to that market 11% down at 2946 tonnes, 22% below the five-year average and the lowest since records began in 2006.
Prices for chilled lamb were still solid with prices for the Christmas trade expected to be ahead of last year as consumers secured product following the shortage last year.
