Brief Bites, 22nd May

Alliance Farmer Shareholder News

In this edition:

Processing update
Spotlight on Asia
Shareholder webinars
National Lamb Day
Associate Director applications open
Southland Woolshed Meetings
Global market update

Processing update

Processing across our network is generally back to normal seasonal capacity, and we are making progress on the backlog caused by COVID related disruption. We are also moving livestock across our network to support our farmers.

As we have mentioned previously, the global supply chain situation remains extremely difficult and unfortunately we don’t foresee any improvement in the short term. Port congestion, vessel schedule changes and a shortage of containers are causing bottlenecks and increased costs across the supply chain.

We’re doing everything we can to manage the situation and continue getting our farmers’ produce to our global markets.

Spotlight on Asia

Mathew Talbot, Alliance Group Asia General Manager based in our Singapore office, recently visited New Zealand to update the team on the challenges and opportunities across the region and the various programmes underway to drive value for the group. This visit also provided the opportunity to introduce Mathew to the Alliance board.

Across Asia, COVID-19 has driven changes in the market including a pivot from food service into retail channels. In-home consumption has increased as time-poor and discerning shoppers seek new red meat experiences. There is also a growing interest in western-style cooking methods.

Driving brand equity and the ‘premiumisation’ of the Alliance offering are key focuses for the Asia team along with value capture, category development and evolving pathways to market.

Building and evolving optimal strategic partnerships, such as Alliance’s relationship with our Chinese in-market partner Grand Farm, is vital and there is a focus on working to build on relationships with other customers with scale, capability and reach across Asian markets.

China is a major market for Alliance. There is good demand for a broad range of items, which helps the co-operative maximise the value and utility from each carcase.

Malaysia is also an important Alliance market. This market is growing quickly with sheepmeat extremely popular. Our premium lamb brand Silere is generating significant interest, and we are beginning to explore the Handpicked range for Malaysia.

Mathew and the Alliance Asia team also see good opportunities to grow the Japanese and Korean markets, particularly for beef and lamb, and is undertaking work to establish more business there.

Taiwanese demand for Alliance product is growing year on year, and strong sales rates are being achieved across multiple channels as we access the discerning Taiwanese consumer base.

The Hong Kong premium market remains a good performer, despite the impacts of the pandemic, with growth in the e-commerce trade.

Thailand sales have doubled over the past year with a greater share of the beef market captured following the lifting of quota limits. We’re working to build more brand presence in Singapore where the largest demand is currently for lamb and mutton.

We will continue to keep you informed of developments in the Asia market.

Shareholder webinars

We encourage you to sign up for one of our upcoming shareholder webinars.

Topics will include:

Alliance Asia update
Wagyu and Handpicked Beef
Farm Assurance Plus
Forecasting

There will also be an opportunity to provide feedback and ask questions of all presenters.

Monday, 30^th May 2022, 7pm: https://us06web.zoom.us/j/86144787109
Tuesday, 31^st May 2022, 7am: https://us06web.zoom.us/j/85442685076
Wednesday, 1^st June 2022, 12pm: https://us06web.zoom.us/j/82587952516

National Lamb Day

We are proud to support and provide lamb for a National Lamb Day dinner in Oamaru on 24 May to celebrate 140 years since the first shipment of frozen sheep meat arrived in the UK aboard the Dunedin. The event will also recognise the centenary of the New Zealand Meat Board.

If you are interested in attending, you can find details about the event here.

Associate Director applications open

As part of our commitment to growing the pool of talent in the industry, we are offering shareholders interested in developing a career in governance (or immediate family members) the opportunity to apply for our Associate Director Programme.

This is a great opportunity for emerging directors to gain an insight into the dynamics of the boardroom. As an Associate Director, you will attend Board and Committee Meetings and gain real world experience, including exposure to Alliance Directors and Management for networking and coaching/mentoring.

Victoria Trayner, who recently completed the co-operative’s inaugural Associate Director role, says the position was an excellent opportunity to learn more about Alliance Group.

“The role offers unparalleled insight into one of New Zealand’s most unique businesses.

“I found myself being immersed in a higher-level of thinking and complexity of Alliance Group. I have loved my time on the board and have enthusiasm and passion to be a part of the future of the co-operative”.

The appointment is for 12 months, from August 2022 to the end of the July 2023 board meeting.

Click here for further information, including details on how to apply.

Southland woolshed meetings

Alliance farmers host a number of woolshed meetings throughout the year and five are planned for Southland next month. Please speak to your livestock representative if you are interested in attending a meeting at one of the locations below and they can provide further details.

Date	Town	Time
Thursday 23rd June	Lumsden	2pm
Monday 27th June	Otautau	10am
Monday 27th June	Wyndham	2.30pm
Tuesday, 28th June	Lawrence	10am
Tuesday, 28th June	Otama	2.30pm

Update from our global markets

Lamb

Inflation and a deteriorating supply chain caused by the continuing lockdowns in China are impacting retail with consumers on some cases trading down to lower value proteins. We anticipate this will eventually work its way into the food service sector. In the UK, there is some pressure in the market due to seasonal reduction in demand and domestic production coming on stream. In the EU and North America, buying patterns are similar with retail slowing and food service steady. In the Middle East, the market remains steady for volume but there is some pressure on prices.

Mutton

Production is now 85 per cent through with the majority of our markets remaining steady for further processed cuts. The carcase market is softening due to the lockdowns in China. Our markets in North America, EU and the UK are still demanding product but there is some pressure on pricing.

Venison

Production is focused on completing key account frozen programmes. Negotiations with our key European importers for the upcoming game season are about to start and the market has improved as industry in-market inventories are back to pre-pandemic levels, however inflation is dampening enthusiasm. The global supply chain remains critical for the timely delivery of venison for this pivotal period. If this is not resolved, it could significantly impact volumes supplied. We are continuing to diversify product to China and North America to support retail programmes.

Beef

The lockdowns in China continue to cause disruption across large Chinese cities. Shipping lines are now accepting bookings for Shanghai port although congestion is still an issue. Wholesale market demand remains steady. Despite the issues in China, the underlying strength of the market means it continues to provide the best value. The US market is softer as importers minimise purchases of NZ/Australian lean beef, preferring domestic and cheaper South American beef. Our position is strong with lean meat fully contracted out to July production. New Zealand and Australia both have a lot of room left on their US quotas (NZ 27 per cent complete and Australia at 12 per cent). Asian market demand remains firm across beef cuts and lean/fatty trimmings. Korea and Japan continue to provide opportunities to move both lean and fatty trimmings at strong values.

Co-products/Specialty Ingredients & Materials

Lockdowns in China are impacting hide pricing through the closure of tanneries, as this leads to reduced demand for raw material. Bio-extracts reached new record price levels, along with tallow, as demand and competitive tension drive returns.