Brief Bites, November 7th

In this edition:

Supply chain update
Taste Pure Nature promotion in China
Handpicked Lamb premium increase
Alliance supports Marlborough farmers
Beef + Lamb New Zealand Awards
Te Mana Lamb brand change
Global Market Update

Supply chain update

Changes to shipping schedules and routes, borders opening and closing and escalating global demand for goods have resulted in congestion at ports around the world and a shortage of containers in New Zealand.

As processing ramps up, we have carefully selected run modes across all plants to balance processing capacity and livestock flows with storage space and container availability. We are reviewing run modes weekly to ensure we can proactively respond to any outbound logistic changes.

Suppliers who can bring livestock forward by one week prior to Christmas are urged to do so as this will help us to manage capacity. Please keep in touch with your Livestock Representative about forecasts.

Taste Pure Nature promotion in China

We are partnering with Beef + Lamb New Zealand to promote lamb in supermarkets in China, with an initial focus on premium outlets in Hangzhou, Beijing, Tianjin and Grand Farm’s flagship store in Shanghai. The product range includes flap cubes, BBQ ribs, lamb skewers, shoulder racks, SILERE lamb skewers and legs.

In conjunction with the launch of Pure South produce in these supermarkets, we have introduced Taste Pure Nature themes through in-store activations. This includes extensive point-of-sale material on the freezers, floor and tasting booths and clear Taste Pure Nature zones. Promotional staff have also been trained on key attributes such as grass-fed, taste and nutrient-density. Feedback from partners, customers and consumers has been extremely positive.

Handpicked Lamb premium increases

A reminder that we have increased the premium we pay farmers for our Handpicked Lamb programme. The programme uses an assessment system to measure eating quality, with the qualifying lamb exported to premium retail markets in Asia and North America. We have increased the premium payment from 10c/kg to 15c/kg for all animals that meet the requirements at the time of processing. This is on top of the 15c premium we already pay for lambs raised without
antibiotics.

We are seeing increasingly discerning consumers around the world willing to pay a price premium for our lamb and the attributes guaranteed by a brand they trust. This is great news for our farmers and the co-operative as we seek to capture greater market value for our products and pass those gains directly back to farmers supplying the programme. Click on the photo of Livestock Representative Mark Anderson above to watch a video with more information about the programme. General manager of livestock and shareholder services Danny Hailes also spoke to Farmers Weekly about the premium portfolio this week. For more information on the programme, or to join, please speak to your Livestock Representative.

Alliance supports Marlborough farmers

Members of our livestock team came up with an innovative solution to help farmers get animals to our Nelson plant following heavy rainfall in the Marlborough Sounds. Wet weather in July took a massive toll on roads with access to some parts of the Marlborough Sounds cut off. Kenepuru Rd, a key route for livestock transport, was one of the roads closed. Alliance Group joined forces with Johnson’s Barge Service to support the affected farmers and put on a barge for livestock. Stock pens were assembled on barge space usually used for cars or logs. You can read more about the great initiative here.

Beef + Lamb New Zealand Awards

Congratulations to supplier Mt Linton Station, which has been named a finalist in the Innovative Farming category in the B+LNZ awards for its sheep genetics programme. The winners will be announced at an awards dinner at the Napier War Memorial Centre on 2 February 2022. We are a proud sponsor of the Significant Contribution category, where Bob Thomson (Te Awamutu), Professor Derrick Moot (Lincoln) and Dr David Stevens (Mosgiel) have been named finalists.

Te Mana Lamb brand change

Te Mana Lamb, part of our premium portfolio, has transitioned to a new name – Lumina – inspired by the term ‘luminary’ to convey brilliance of achievement, expertise and leadership. The brand shares the ‘whole story’ to the connection of land, animals and people – a community of practice, shared ambitions and common philosophy in the pursuit of absolute perfection. Importantly, Lumina also addresses the trademark vulnerabilities of Te Mana.

There has been a positive reception to the change. We expect the transition to be completed by April 2022 and encourage you to visit the new website: www.luminafarms.com

Update from our global markets

We continue to keep a close eye on the high NZ-US foreign exchange rate.

Lamb

Market demand remains strong with retailers expecting a buoyant Christmas selling period. Christmas chilled production sea freight for the UK and EU has been completed and airfreight is now underway. Food service continues to improve as COVID-19 restrictions are lifted but there are concerns a new wave of COVID-19 could slow progress.

The market in North America is strong in all sectors. Chinese New Year demand means pricing in China is firm. In the Middle East, the market has resumed buying, now there is an acceptance of the latest global prices. The supply chain situation continues to deteriorate and is a concern, particularly for chilled product. This has led to some importers moving out of chilled into frozen.

Mutton

Demand across all global markets remains strong as importers look to replenish stocks. Prices are at historical high levels but are yet to be fully tested as we move into volume seasonal production. A diversified portfolio strategy remains our priority and we are targeting North America, China, wider Asia and the EU. This strategy de-risks our exposure to one market while providing various supply chain options.

Venison

Game season chilled production sea freight has concluded with air freight supply underway to cover November and December commitments. Game season consumption is expected to return to levels approaching pre-COVID-19 levels as pandemic restrictions ease. Overall demand is improving as aged inventories have moved through into consumption, particularly in key EU markets such as Germany.

Retail programmes in North America and China are progressing well. Supply chain concerns continue to affect our ability to fulfill customers’ demand requirements.

Beef

Global markets remain firm. Chinese importers remain positive as they position their inventories leading into Chinese New Year and the ongoing issues around Brazilian beef access into the country.

We have confirmed our December Chinese New Year position and shipping schedule with high prices. US bids on beef are higher as importers react to Chinese demand for our beef. New Zealand is 68% through its US quota for the calendar year, with Australia at 26%. The US chilled retail programme is positive with Angus due to arrive this month. Inquiries from US customers about chilled beef are continuing. Drought conditions in the US are ensuring kill numbers
are high.

Co-products/Specialty Ingredients & Materials

Demand for co-products is very strong across all categories with record prices being achieved across the board. Alliance is now dealing with more end users and adding value to this category.