Covid-19: The strange upshot for Kiwi meat processors

Thursday, 24 September 2020

Alliance Group plant manager Shahank Pande (left) inspects a cut with senior supervisor Paul Weston at the co-operative’s Lorneville plant. A lot of the beef from the facility is now heading for American plates.

The Covid-19 pandemic and subsequent meat shortages, have created an unintentional advantage for Kiwi meat businesses exporting to North America.

Consumer behaviour is changing and grass-fed, antibiotic-free meat from New Zealand is in high demand, meat processing businesses say.

An Alliance Group spokesman said New Zealand was one of the few countries that could still provide grass-fed meat.

“The way we farm in New Zealand is completely different to the rest of the world. It’s a bright spot.”

* Meat processors look to increase production at alert level 3

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As a result, beef exports to the United States grew 89 per cent to 14,796 tonnes in July 2020, compared with July 2019, with the value up 100 per cent to $144 million, the spokesman said.

Alliance was diverting stock from markets under pressure to the US to meet this demand, he explained.

Alliance Group general manager of sales Shane Kingston says Covid-19 has led to a reduction in production capacity at a number of North American meat processing plants.

Meat and poultry processing facilities in the United States have become hot spots for Covid-19.

According to the Food and Environment Reporting Network, at least 42,708 meatpacking workers from 496 meat processing plants in the US have tested positive for Covid-19 since the beginning of the outbreak. More than 200 of them died from the virus.

The spokesman said Alliance was already seeing growth in its American beef exports earlier this year, but general manager of sales Shane Kingston said widespread lockdowns, Covid-19 and civil unrest had challenged the North American market over the past six months and led to considerable changes to retail shopper behaviour.

“There is a growing demand from North American consumers for products that are more natural, healthy and better for the environment than grain-fed farming systems commonplace overseas,” he said.

Silver Fern Farms chief executive Simon Limmer said the business was seeing strong demand for its antibiotic-free beef in the US, but he expected this demand to grow as consumers became more conscious of their choices.

Demand for lean grinding beef, however, was down, as Americans were able to source cheaper mince meat from South America, Limmer said.

A shortage of supply from Australia meant more interest in chilled cuts in most of Silver Ferns’ export markets, he added.

Limmer expects the lower Australian supply to underpin beef prices into 2021.

Silver Fern Farms chief executive Simon Limmer says beef prices will likely be based on shortages until next year. (File photo)

Last month, Silver Fern Farms teamed up with its US distributor Marx Foods, and Beef and Lamb New Zealand to launch a line of Angus beef sampler boxes for online purchase, to take advantage of the boom in online food shopping in America.

Not all Kiwi meat processors are benefiting from the changing market, though.

Blue Sky Pastures chief executive Todd Grave said the struggles of North American plants mainly related to beef.

“We only process ovine, which is a very small share of the North American meat market’s consumption,” he said.

Disruption to supply chains had made it difficult for Blue Sky to distribute the higher-end cuts like French racks, which is what it sells to the American market, Grave said.

But the situation may create an opportunity for sheep meet in the future, he said.

As North American beef becomes more scare and pricier, Grave expected Americans might “expand their meat eating repertoire”.

Alliance Group chief executive David Surveyor signalled in April that reduced production in the US could become an opportunity for the co-operative and that the group would need to be agile to respond to rapidly changing market needs amid the pandemic.

Kingston said Alliance would continue to monitor the North American market where the ongoing Covid-19 outbreak, growing unemployment, and reduced discretionary spend were likely to impact the economic environment.

It was focusing on sales of antibiotic-free meat and premium products for the North American market and its presence in premium retail, he said.