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Brief Bites, 8th May

Alliance Farmer Shareholder News
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In this edition:

  • Global supply chain update
  • Loyalty payments
  • Southland woolshed meetings
  • Shareholder webinars
  • Shareholder advance payments
  • Associate Director applications open
  • National Feed Coordination Service
  • Global market update
 

Global supply chain update

There remains generally good demand for our products in our markets, however the global supply chain situation is deteriorating once more.

Port congestion across our key markets of China, the United States and Europe is significant with vessel schedule changes and a shortage of containers causing bottlenecks and increased costs across the supply chain. We’re working with our logistics partners to manage these challenges, but we expect the problems to continue for the foreseeable future. We need to ensure we align livestock inflows with our ability to secure available shipping containers and ship products to our global markets.

We currently have three clusters in the global supply chain:

Shanghai: due to the Omicron outbreak, 26 million people are in lockdown with local government restricting people's movements. As a consequence, full containers arriving cannot move from the port to the customers. Arriving vessels must wait for space in container yards and port workers to be available before they are allowed to berth and discharge the full containers.

Long Beach/Los Angeles: due to inland restrictions including a lack of drivers and vehicles, the ports cannot move the containers out at the pace they are arriving. The situation is compounded by high demand.

Rotterdam: Vessels are no longer calling into Ukraine and Russia so shipping companies have discharged containers in Rotterdam. This is also creating significant congestion across Northern European ports and the wider supply chain.

 

Loyalty payments

As New Zealand’s only 100 per cent farmer-owned red meat co-operative, our farmers come first. We are in business for you and we return every cent we can to you, or re-invest it back into your co-operative.

We have recently distributed more than $6.1 million in loyalty payments to Platinum and Gold suppliers who send 100 per cent of their livestock to the company.

Under the Alliance loyalty programme, platinum and gold status suppliers are paid an additional 10 cents per kilogram for each lamb, six cents/kg for a sheep, 8.5 cents/kg for cattle and 10 cents/kg for deer supplied. The latest quarterly payments cover the period January-March 2022.

Platinum and Gold suppliers also receive a host of other benefits including priority processing, prioritised access to Minimum Price Contracts and access to Alliance’s free store stock facilitation service.

If you would like to discuss your shareholder status, or understand more about our loyalty programme, please speak to your livestock representative or contact Doreen Reid, our Shareholder Registrar.
 

Southland woolshed meetings

We're looking forward to reconnecting face-to-face! We'll be hosting a number of woolshed meetings throughout the year with the first five 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
Wyndham 2.30pm
Tuesday, 28th June
Lawrence

10am
Otama 2.30pm
 

May webinars

Along with woolshed meetings, the Livestock and Global Sales teams will host three virtual meetings later this month. Topics to be covered include:
  • Specialty Ingredients and Materials - what's new in global markets?
  • Singapore office update – Omicron in China, and the Asian market
  • Wagyu and Handpicked Beef
  • Farm Assurance Plus
  • Market update
  • Forecasting 
Look out for a separate email this week with times, dates and registration links.
 

Shareholder Advance Payments

Advance payments are paid to Platinum and Gold suppliers to assist with cashflow in the spring. This is available for farmers supplying  lamb, deer, prime steer and heifer and bulls under three years for finishing (sire bulls ineligible). The Shareholder Advance for lamb and deer has now been closed after an extension of two weeks and any farmers with an outstanding balance have been sent an invoice. We appreciate the impact of COVID-19 and we will not be unreasonable in our expectations around the timing of any repayment required.
 

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.

The role "offers unparalleled insight into one of New Zealand’s most unique businesses," says 2021 Associate Director, Victoria Trayner.

As an Associate Director, you will attend Board and Committee Meetings and gain real world experience, including engagement with Alliance directors and management.

"The mentoring programme within the position enriched my knowledge, fostered insight to decision making, and expanded personal growth opportunities to learn," adds Victoria.

"The one-on-one time with directors, sharing expertise, bouncing ideas, moral support and governance insight was extremely valuable."

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.
 

National Feed Coordination Service

The National Feed Coordination Service has been activated by the Ministry for Primary Industries to support farmers sourcing feed. Priority areas are those affected by recent flooding and drought conditions. Federated Farmers, Beef + Lamb NZ and DairyNZ support the activation of the programme. Federated Farmers is contracted to deliver the feed matching service, which connects willing buyers and willing sellers The National Feed Coordination Service does not offer to organise transport.

Registering is simple.

If farmers require feed, go here 
  • If you have feed for sale, go here
  • Alternatively call 0800 Farming (0800 327646) and press opt 2 to request a call back.  
 There is also provision to register for: 
 

Update from our global markets

Lamb

The global economic situation, rising inflation and the impact of the war in Ukraine is creating market unease. There is some evidence of consumers trading down to lower-priced protein at retail level. There is evidence throughout our key markets of EU, North America and Asia that product is being re-routed from China, in light of the current challenges there. COVID-19 lockdowns in Shanghai and now Beijing are further reducing consumption and putting pressure on prices, in particular fores and legs. In the Middle East, the market remains steady for volume but there is some pressure on prices.

Mutton

Production is now 75 per cent through with the majority of our markets in North America, EU and the UK remaining steady on the back of limited supply. The lockdowns in China has affected consumption with a build-up of in-market inventory causing some negative correction in pricing.

Venison 

Production is focused on completing key account frozen programmes. There are some interesting developments with key clients making early enquiries on game season chilled availability and pricing, which would suggest improved demand. The global supply chain remains critical for the timely delivery of perishable items. If this is not resolved, it could significantly impact volumes supplied. We are continuing to diversify sales  to support retail programmes in China and North America.

Beef

The market in China is firm and wholesale pricing is well above levels experienced a year ago. Supply chain challenges continue to impact the market with lockdowns across key cities including Beijing and Shanghai worsening the problem. New Zealand’s competitors have the same challenges as we do  – South American exporters remain constrained by the heavy reliance on Shanghai port.

There has been no change in the US market. US grinders continue to bid at prices 20 cents (USD) per pound below levels we are achieving in Asia and we are exploring alternative markets for lean grinding meat. New Zealand and Australia both have a lot of room left on US quotas (NZ 23 per cent complete and Australia 10 per cent).

Asian market demand remains firm with significant sales in lean and fatty grinding meat in both Japan and Korea.

Co-products/Specialty Ingredients & Materials

We are closely monitoring the impact of the China lockdowns on the SIM/co-product category as this will dampen production and consumption, which in turn will soften demand and price. Access to the markets remain a challenge with shipping diversions compounding the limited capacity.

 

Warm Regards


David Surveyor – Chief Executive
 

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