Silver Fern Farms selective about market partnerships

Silver Fern Farms’ partnership with Shanghai Maling isn’t keeping it from exploring partnership opportunities with other meat companies.

SFF chief executive Simon Limmer and his team are on a supplier roadshow throughout the country this month, with stops in Southland this week.

Limmer said the meat company’s business in China was worth $350 million and growing and continued to be its largest reserve beef market. Shanghai Maling bought 50 per cent of the company in 2016.

However, Limmer sees opportunities for further partnerships in China outside of its partnership with Shanghai Maling.

He said Shanghai Maling gave the company far more access to the Chinese market.

But there were restrictions on who the Dunedin-based company would be willing to work with.

"We don’t want just anyone, we don’t want to work with everyone," Limmer said.

Partnerships would only be formed with businesses with integrity and a consumer focus, he said.

Limmer also has his eye on expanding existing markets.

SFF has a diverse business in the Middle East, supplying high-end food services in wealthy areas such as Dubai and core products to other areas.

Limmer said there plenty of opportunity to expand business in the Middle East, with strong premiums already achieved for reserve cuts.

"They’re discerning consumers willing to pay more."

Opportunities outside of traditional markets come as the red meat industry faces more and more pressure in traditional markets in the United Kingdom and North America.

Limmer said Brexit had cast a cloud of uncertainty over what would happen when it came to selling into both the UK and European Union (EU) markets. Silver Fern Farms chief executive Simon Limmer.

New Zealand lamb producers could face more problems selling into the UK market with more competition from local producers, while it was not certain whether the UK would be able to continue to sell into the EU in the same volumes as it previously had, he said.

Alternative proteins were also becoming a challenge in the UK, with products such as chicken selling far cheaper than NZ lamb, he said.

North America is already a profitable market for SFF, worth about $300m.

Bigger volumes of American beef going into the market, following the rebuilding of herds and drought conditions, was putting pressure on New Zealand beef sales into

North America, Limmer said. However, there was a consumer-oriented opportunity in the US, with consumers looking for 100 per cent grass-fed guaranteed products. SFF is already selling guaranteed grass-fed products into the market.

Closer to home, a challenging season has lifted livestock slaughter numbers.

SFF supply chain general manager Dan Boulton said the sheep kill for the season so far was up three per cent on last year, with a 17 per cent lift in lambs killed between October and December.

The South Island mutton kill was also up 16 per cent on last year.

Boulton said it could be a problem for the coming season as there was potential for less lambs coming through from a smaller breeding flock.

The beef kill is up seven per cent. Culling Mycoplasma bovis cattle only accounted for about 2.5 per cent of the national beef kill, Boulton said.

The company has processed about 5500 animals in the M. bovis cull so far.

Boulton said there had been additional staff employed and extra lines put on at plants, with staff working overtime to process.

He expected the Ministry for Primary Industries phased cull would cause less disruption to processing in the future.