Global Update

The complete disruption of the global village continues. And the spin offs are affecting trade in many unanticipated ways. Take for example the stouch between the Australians and China which can only benefit New Zealand from an ag trade point of view. I’m glad Jacinda is a little more diplomatic than Scott Morrison. The Aussies are reported to have committed to 300 billion in defence spending to build up capacity against threats from the Asia Pacific region (reading between the lines, China). Morrison obviously doesn’t care much for farmers with regard to his approach with China although dare I say it, he might be right to be concerned. America’s going really hard too at China, which ironically is the second biggest holder of US Sovereign debt, after Japan. Different rules apply with farm debt I guess – we can’t abuse our bankers like America does.

Talking to Angus Pure’s representative in Los Angeles, Gwith Thomas, he says it is dire there. The impacts of Covid are huge on commerce as well as people’s private lives and wellbeing. However, Angus Pure has continued to strengthen its brand, with sales increasing 33% over the same period last year. Even as Covid restrictions have eased, the new demand levels for Angus Pure have been sustained. Some of the restaurant cuts have slowed, but this has been mitigated by repackaging them and selling them to retail, for people to take home and cook themselves as a treat. Broadleaf, as the major importer of Angus Pure has seen frozen stocks drop and chilled rise in response to the faster turnaround of product.

Brand ‘New Zealand’ has had a part to play in this too, as well as excellent market representation and a superb product. Gwith says that moving product in the meat industry, especially non-prime cuts, is hard, until you say you’re from New Zealand. Then it becomes easier. The way we have come through Covid has not gone unnoticed. People just feel product from New Zealand is safe. And people don’t feel safe in the States, the Government’s priority is re-election, not so much Covid. News today, Gwith said, Trump reported the 1917 Spanish flu (it was 1918) probably ended WWII (it didn’t). Oh Dear. Wrong war. Gwith also reports the quality of beef arriving from New Zealand is getting better and better, including the marbling. This is great, as it shows the genetics are working, and this along with demand improving, means the returns from the US market will be compounding going forward.

Angus Pure Steak marketed in the States.

On a broader, more commodity based view, Darren Drury, Category Director Beef at Alliance Cooperative, reports global markets are soft across the board as uncertainty and conservatism shape buying decisions. The Chinese market is moving increased volumes of beef inventory, although South American producers continue to export large volumes. NZ product continues to sell at a premium over South American product, with reduced NZ volume enabling some upward price pressure. ​

The US market is sluggish as importers prefer to stay on the side-line rather than commit to imported volume. The US domestic beef industry has many challenges around capacity and concerns remain around processors having healthy workers and Covid free plants. Retail continues to dominate sales with food service/restaurants continuing to struggle. Meat sales at retail are up in 2020 by 35% in value & 22% in volume for the period March-July when compared to 2019.  ​ The message is the same from all those I speak to, we can compete on the commodity markets on price with other countries, or we can double up on quality and create a pull strategy, which leveraging New Zealand’s antibiotic and hormone free, plus the flavour of natural grass feed, we will not have to compete on price, and ultimately secure a safe, high value segment of the market.