1. Representing New Zealand Meat Processors, Marketers and Exporters Meat Industry update Presentation to NZ Cold Storage Association 82 nd Annual Conference Wellington 19 August 2014 Tim Ritchie Chief Executive Meat Industry Association of New Zealand

2. Representing New Zealand Meat Processors, Marketers and Exporters Presentation outline About the MIA Meat industry overview Competitive challenges Industry response

3. Representing New Zealand Meat Processors, Marketers and Exporters Meat Industry Association of New Zealand A voluntary trade association representing beef and sheep meat processors and exporters. 33 member companies (about 99% of all meat exports). Members operate some 60 processing plants nationwide.

4. Representing New Zealand Meat Processors, Marketers and Exporters Industry overview (1) 12,500 commercial sheep and beef farmers 25,000 people employed in processing sector o New Zealand’s largest manufacturing employer Export-focused and fortunes driven by world prices

5. Representing New Zealand Meat Processors, Marketers and Exporters Industry overview (2) Red meat and wool exports worth $7.3 billion in 2013/14 NZ’s 2 nd largest goods exporter - 14% of NZ’s total merchandise exports Exports 92% of sheepmeat and 83% of beef production Export to more than 120 countries

6. Representing New Zealand Meat Processors, Marketers and Exporters More than 130 years of cold storage (and exporting) The New Zealand meat industry has been built on its ability to ship perishable goods to the other side of the world. The “Dunedin”, which made the first shipment of frozen meat to Britain in 1882.

7. Representing New Zealand Meat Processors, Marketers and Exporters Historical exports New Zealand sheepmeat and beef exports in 1961 (by volume) Sheepmeat Beef Source: Compiled by MIA from Statistics NZ data

8. Representing New Zealand Meat Processors, Marketers and Exporters Market diversity New Zealand sheepmeat and beef exports, ye June 2014 (by volume) Sheepmeat Beef Source: Compiled by MIA from Statistics NZ data

9. Representing New Zealand Meat Processors, Marketers and Exporters Product diversity The industry also produces and exports a wide range of co- products Co-product export revenue NZ$1.4 billion Important in maximising the value from each carcass New Zealand exports of red meat and co-products (by value), year ended June 2014 Source: Compiled by MIA from Statistics NZ data

10. Representing New Zealand Meat Processors, Marketers and Exporters Product and market diversity (where the bits of a lamb go) To Middle EastTo UK To China To USATo Europe/UK Co-products: Pelts to China, MBM to USA, Tallow to China and Singapore, Casings to China/Hong Kong Edible offals to UK/China/Saudi Arabia

11. Representing New Zealand Meat Processors, Marketers and Exporters Changing product mix Customers have changed from butcher shop to multiple retailer Now in the disassembly business – exporting value-added products Export lamb product mix, 1970/71 – 2011/12 Frozen carcasses Frozen bone-in cuts Frozen boneless cuts Chilled cuts

12. Representing New Zealand Meat Processors, Marketers and Exporters Major destinations for NZ red meat & co-products For 2013/14, with arrows showing markets worth $50m+

13. Representing New Zealand Meat Processors, Marketers and Exporters China

14. Representing New Zealand Meat Processors, Marketers and Exporters China sheepmeat Consumption 3 kg/per capita, and rising Imports - 6.4% of demand Major impact on world market Chinese sheepmeat balance 2000-2014f

15. Representing New Zealand Meat Processors, Marketers and Exporters China beef

16. Representing New Zealand Meat Processors, Marketers and Exporters China Chinese retail meat prices (US$/kg)

17. Representing New Zealand Meat Processors, Marketers and Exporters Many markets – Many standards Regulatory standards: Domestic, China, EU, US, Japan, etc. Commercial standards: McDonalds, Walmart, Tesco, Metro, Carrefour, etc. Other: NGOs, religious authorities, consumer groups. Food safety Animal welfare Biosecurity Worker welfare Halal Biotechnology Climate change Other environmental

18. Representing New Zealand Meat Processors, Marketers and Exporters Halal exports Halal-certified exports compared to red meat and offal exports

19. Representing New Zealand Meat Processors, Marketers and Exporters Competitive challenges International competition from other proteins Domestic competition for land use Competition from other red meat producers Getting products to markets

20. Representing New Zealand Meat Processors, Marketers and Exporters Relative profitability ANZ Commodity Price Index (Jan 1990=100)

21. Representing New Zealand Meat Processors, Marketers and Exporters Pastoral land use change

22. Representing New Zealand Meat Processors, Marketers and Exporters Livestock numbers

23. Representing New Zealand Meat Processors, Marketers and Exporters Other red meat producers NZ and Australia the two major sheepmeat exporters But NZ a much smaller player in the beef trade NZ beef exports around 1/3 volume of the major exporters: Australia, United States, Brazil – and India

24. Representing New Zealand Meat Processors, Marketers and Exporters Indian buffalo beef exports Source Compiled by MIA from GTIS data Indian buffalo beef exports (calendar years)

25. Representing New Zealand Meat Processors, Marketers and Exporters Getting product to market Distance to major markets A particular challenge for high value, time sensitive chilled products NZ chilled sheepmeat exports by Region (by volume and value for the year ending June 2014)

26. Representing New Zealand Meat Processors, Marketers and Exporters Impact of slow steaming on red meat industry Normal steaming – 24 knots Slow steaming – 18 knots on Asia to Europe leg Super slow steaming – 14 knots on Asia to Europe leg Days required

27. Representing New Zealand Meat Processors, Marketers and Exporters On-farm productivity 1990-912012-13p Ewe Lambing%100.4123.2 +23% Hogget Lambs% of all lambs-4.9 Average Lambkg14.3518.00 +25% Lamb Soldkg/ewe9.7618.44 +89% Wool Productionkg/hd greasy5.285.38 +2% Average Steerkg297311 +5% Milksolidskg/cow260340 +31% Source: B+LNZ Economic Service, Statistics New Zealand

28. Representing New Zealand Meat Processors, Marketers and Exporters On-farm productivity

29. Representing New Zealand Meat Processors, Marketers and Exporters Processing productivity improvement In 1980 the volume of meat exported per worker was 23 tonnes in 2013 the volume was 43.2 tonnes of a much more valuable and further processed product: a productivity gain of at least 88%. a typical meat worker now processes 130 sheep a day, compared to 55 in the 1980s.

30. Representing New Zealand Meat Processors, Marketers and Exporters Robotics - automation An industry consortium is investing in robotics to automate the early stages of sheep processing, with two systems recently commercialised. An automated brisket cutting system An automated system to remove the viscera set

31. Representing New Zealand Meat Processors, Marketers and Exporters Getting product to markets - industry Maintaining and improving access into as many markets as possible: Industry works closely with government on market access Investment in R&D to extend shelf life of chilled meat Will mitigate impact of slow steaming, reduce wastage and improve returns to the industry Food safety

32. Representing New Zealand Meat Processors, Marketers and Exporters

33. Thank you