Representing New Zealand Meat Processors, Marketers and Exporters

1. Meat Industry update • Presentation to NZ Cold Storage Association • 82nd Annual Conference • Wellington • 19 August 2014 • Tim Ritchie • Chief Executive • Meat Industry Association of New Zealand • Representing New Zealand Meat Processors, Marketers and Exporters

2. Presentation outline • About the MIA • Meat industry overview • Competitive challenges • Industry response

3. Meat Industry Association of New Zealand • A voluntary trade association representing beef and sheep meat processors and exporters. • 33 member companies (about 99% of all meat exports). • Members operate some 60 processing plants nationwide. • Representing New Zealand Meat Processors, Marketers and Exporters

4. Industry overview (1) • 12,500 commercial sheep and beef farmers • 25,000 people employed in processing sector • New Zealand’s largest manufacturing employer • Export-focused and fortunes driven by world prices

5. Industry overview (2) • Red meat and wool exports worth $7.3 billion in 2013/14 • NZ’s 2nd largest goods exporter - 14% of NZ’s total merchandise exports • Exports 92% of sheepmeat and 83% of beef production • Export to more than 120 countries

6. More than 130 years of cold storage (and exporting) • The New Zealand meat industry has been built on its ability to ship perishable goods to the other side of the world. • The “Dunedin”, which made the first shipment of frozen meat to Britain in 1882.

7. Historical exports • New Zealand sheepmeat and beef exports in 1961 (by volume) • Source: Compiled by MIA from Statistics NZ data • Beef • Sheepmeat

8. Market diversity • New Zealand sheepmeat and beef exports, ye June 2014 (by volume) • Source: Compiled by MIA from Statistics NZ data • Beef • Sheepmeat

9. Product diversity • New Zealand exports of red meat and co-products • (by value), year ended June 2014 • The industry also produces and exports a wide range of co-products • Co-product export revenue • NZ$1.4 billion • Important in maximising the value from each carcass • Source: Compiled by MIA from Statistics NZ data

10. Product and market diversity(where the bits of a lamb go) • To Middle East • To USA • To Europe/UK • To UK • Edible offals to UK/China/Saudi Arabia • To China • Co-products: • Pelts to China, MBM to USA, Tallow to China and Singapore, Casings to China/Hong Kong

11. Changing product mix • Customers have changed from butcher shop to multiple retailer • Now in the disassembly business – exporting value-added products • Export lamb product mix, 1970/71 – 2011/12 Frozen carcasses Frozen bone-in cuts Frozen boneless cuts Chilled cuts

12. Major destinations for NZ red meat & co-products • For 2013/14, with arrows showing markets worth $50m+

13. China

14. China sheepmeat Chinese sheepmeat balance 2000-2014f • Consumption • 3 kg/per capita, and rising • Imports - 6.4% of demand • Major impact on world market

15. China beef

16. China • Chinese retail meat prices (US$/kg)

17. Many markets – Many standards • Regulatory standards: Domestic, China, EU, US, Japan, etc. • Commercial standards: McDonalds, Walmart, Tesco, Metro, Carrefour, etc. • Other: NGOs, religious authorities, consumer groups. • Food safety • Animal welfare • Biosecurity • Worker welfare • Halal • Biotechnology • Climate change • Other environmental

18. Halal exports • Halal-certified exports compared to red meat and offal exports

19. Competitive challenges • International competition from other proteins • Domestic competition for land use • Competition from other red meat producers • Getting products to markets

20. Relative profitability • ANZ Commodity Price Index (Jan 1990=100)

21. Pastoral land use change

22. Livestock numbers

23. Other red meat producers • NZ and Australia the two major sheepmeat exporters • But NZ a much smaller player in the beef trade • NZ beef exports around 1/3 volume of the major exporters: • Australia, United States, Brazil – and India

24. Indian buffalo beef exports • Indian buffalo beef exports (calendar years) • Source Compiled by MIA from GTIS data

25. Getting product to market • NZ chilled sheepmeat exports by Region • (by volume and value for the year ending June 2014) • Distance to major markets • A particular challenge for high value, time sensitive chilled products

26. Impact of slow steaming on red meat industry • Normal steaming – 24 knots • Slow steaming – 18 knots on Asia to Europe leg • Days required • Super slow steaming – 14 knots on Asia to Europe leg • Representing New Zealand Meat Processors, Marketers and Exporters

27. On-farm productivity Source: B+LNZ Economic Service, Statistics New Zealand

28. On-farm productivity

29. Processing productivity improvement • In 1980 the volume of meat exported per worker was 23 tonnes • in 2013 the volume was 43.2 tonnes of a much more valuable and further processed product: a productivity gain of at least 88%. • a typical meat worker now processes 130 sheep a day, compared to 55 in the 1980s.

30. Robotics - automation • An industry consortium is investing in robotics to automate the early stages of sheep processing, with two systems recently commercialised. • An automated system to remove the viscera set • An automated brisket cutting system

31. Getting product to markets - industry • Maintaining and improving access into as many markets as possible: • Industry works closely with government on market access • Investment in R&D to extend shelf life of chilled meat • Will mitigate impact of slow steaming, reduce wastage and improve returns to the industry • Food safety

32. Representing New Zealand Meat Processors, Marketers and Exporters

33. Thank you • Representing New Zealand Meat Processors, Marketers and Exporters