Friday, March 29, 2024

Affco increases EU market share

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Affco Holdings has continued expanding its sheep meat marketing tallies, with another 5%-plus increase in European Union sheep meat quota for this year.  
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Waikato-based Affco has now increased its quota figure by 33% since 2013.

It is comfortably in place as the third biggest lamb processor in New Zealand, though still a distance from market-leader Alliance, and also significantly behind Silver Fern Farms.

In the 2018 quota of the major players, Alliance has a 63,083 tonne share of the total quota of 227,914t from NZ. Silver Fern has 45,220t, Affco 36,323t, the Craig Hickson interests 23,700t, and Anzco Foods’ Canterbury Meat Packers (CMP) 21,915t.

NZ companies haven’t come close to filling the EU quota for several years since China became the largest individual market by volume, but the quota reflects overall market share because it’s based on the total rolling production over the previous three-year period.

Alliance has regained some market share, up from 62,175t last year, but is still behind its 2016 level, and about 4000t down on 2013 levels. It now has 27.68% of the quota.

There’s a big gap to Silver Fern at 19.84%, continuing a steadily falling share in recent years. The three-year rolling production period still largely covers the period when Silver Fern was in a constrained capital position ahead of its big cash-injection deal with Chinese group Shanghai Maling last year. The group has been fully-funded since last July, able to invest in its rationalised processing plant network, and should be starting to be more competitive in the market.

Back in 2006, Alliance and Silver Fern had nearly 61% of the EU quota market between them, with Silver Fern having the larger share. That combined market share is now 47.5%, as smaller, innovative companies have grown.

Affco’s share has grown from 27,508t in 2013, and the latest year-on-year increase is 5.56% from 34,409t.

Affco chairman Sam Lewis said the figures reflected the company’s growth in the South Island though it only had two small plants, in Southland and Canterbury, so there were limits on future growth there. In its North Island base, the plants were well spread geographically.

“We’ve had a deliberate strategy to improve our share, and we’ve been consistently in the market. We think we led the process on minimum-price contracts and they appealed to our traditional base of mum-and-dad farmers.”

Affco put a lot of store by operational efficiencies, and the volume growth “had not come at the expense of profitability”, Lewis said.

Given water issues, covering irrigation and “healthy rivers” regulation, it was possible that dairy cow numbers would plateau in the North Island, Lewis said. If there was an increase in livestock numbers from here, it would likely be in sheep.

Also using 2013 as a base, CMP’s quota share has grown 8.46% (1710t), Alliance is down 5.85%, and Silver Fern down 15% (7956t).

The Hickson companies – mainly Ovation, but also Lean Meats and Te Kuiti Meats – are down slightly from 2013, at 23,700t from 23,798t. The main marketing business, Ovation, has grown steadily to 16,024t from 14,671t, but the overall figure is lower because of the sale of the Lean Meats’ Oamaru business to Chinese-owned NZ Binxi Oamaru. Year-on-year, Lean Meats is down to 3124t from 4681t. Te Kuiti Meats is one of the faster growing smaller meat companies, up 6% (261t) to 4552t. 

In the mid-tier group of processors, Taylor Preston’s quota share has dropped nearly 6% on last year. Southland-based Blue Sky Meats has lost more ground in a very competitive area.

Excellent year-on-year gains have been achieved by Hawke’s Bay group Davmet, up 7% (and up 37% in quota numbers since 2013), as well as Wilson Hellaby, up 8%, and Prime Range, up 12%, both after some mixed results in recent years.

 

 

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