MARKETING UPDATE
USA
The United States is currently in its fifth year of declining beef cow numbers with another 2.5% drop over the past 12 months. The current inventory is the lowest since 1961 and may not recover for another 3-4 years as high prices for young cattle incentivize breeders to sell rather than retain females for herd rebuilding.
The US market for lean trimming (85cl to 95cl) remains historically very strong despite a significant increase in imported volumes from Australia, Brazil, and NZ. The strength in this base trimming market should remain through 2025. The only negative of the strength in this market is the potential for NZ to over-use the quota allocation. It appears very likely that most NZ companies have undertaken some form of diversification strategy this year, and this strategy is likely to be necessary to continue next year. There is a potential significant cost to this diversification as alternative markets become aware of the need for NZ companies to find a home for trimming outside of the United States.
Greenlea’s chilled business into this market is very strong with a minimum of one container per week shipped that achieves the most competitive pricing from all of our global chilled programs.
Canada has also been a valuable market for Greenlea (and NZ) this season, and this situation should continue, although they tend to focus on South American product for Q1 while quota is available (similar to USA).
CHINA
Greenlea sales volumes to this market are down by 16% for the season. China is now significantly behind the USA after being our number one destination since 2019. The market has begun to improve over the past two months with inventory depleted and domestic production reducing. Our customers are competing strongly for the reduced portfolio of products that are
saleable (with several cuts from Bull and Cow not competitive with USA trimming levels). The expectation is that this market will continue to slowly improve through the remainder of 2024 and into 2025 but that Trimming sales will continue to be difficult to achieve.
ASIA
The next tier markets (South Korea, Malaysia, Taiwan, Japan, and Indonesia) are strong to steady, with regular sales and with currently no price decreases. Demand is expected to be firm as various holiday periods occur through the next six-month period leading up to Lunar New Year and Ramadan.
EU/UK
EU / UK FTA trade – business has certainly improved for beef in terms of volumes and pricing. The EU deforestation reporting requirement will be a huge challenge to overcome for farmers, processors, and EU importers.
Shipping remains challenging due to the Red Sea crisis (and periodically the Panama Canal restrictions). Most of the bottleneck is for East – West trade and the NZ North – South trade is relatively unaffected apart from access to empty containers.
A FARMER’S PERSPECTIVE
THE SEASON SO FAR
It’s been a great start to the new season, pasture covers are better than expected, and I can see a lot of happy livestock around the Eastern Bay of Plenty. It doesn’t take much rain before the ground is wet, and it’s easy to turn the paddocks into mud, so we have been focussing on minimising pasture damage. I notice Corrie’s just gone past my office window with the undersower, so I guess he’s stitching in some seed.
We have been break feeding our beefies since May, and come the 1st September, I think Corrie is looking forward to putting the strip fences away. He must be doing 9,000 steps before 9 am, with 8 mobs to move, so he would have been keeping fit without knowing it.
We have had a good run of AB heifer calves and the dairy beef calves are looking a picture. We have over 260 calves outside which on a sunny day is a delight.
The beef prices are looking good for the season ahead, with the schedule paying over $7 per kilogram. We aren’t getting ahead of ourselves though; we think the market looks supply constrained rather than demand going gang busters. It’s also good to see interest rates coming off 25 points, and more to come hopefully.
It’s been busy … we have had a herd manager with a broken leg. Teamwork has got us through. We even managed a 60 km bike ride on Sunday, so bring on Summer!
FARM ASSURANCE PROGRAMME
During calving, I don’t know how, but we managed to fit in a Farm Assurance Programme audit and are now accredited. Our Livestock Rep, Richard Baird, invited us to a FAP meeting where we learned what was required, and we signed up to get audited at the meeting.
The process was relativity painless. We had to lift our game on a couple of areas … recording animal treatments for the beef farm, a sharps container, and a stock take of our agri chemicals with batch numbers and expiry dates … were the main things. We also put another Health and Safety sign at a second entrance to the farm.
We believe there is value in supplying what the customer wants, and if our customers want more transparency on what happens on farm and if they are prepared to pay for it, then the extra paperwork is a small price to pay. Having gone through Globalgap on our kiwifruit orchards and Co-operative Difference on the dairy farms, the beef FAP is just another audit. Our QCONZ Auditor, Lorraine Jones, is lovely. Sometimes you can get overzealous auditors, but she is not one of these people, so I encourage those who aren’t accredited to give it a go. If it all sounds a bit daunting, contact your Greenlea rep, they will help.
Corrie
& Donna Smit CORONA FARMS
AARON’S COLUMN
With Greg taking some wellearned annual leave, at the end of a very challenging season, it has fallen to me to put pen to paper for this edition.
The long-predicted reduction in available cattle supply, due to land use change, decreased calf rearing the previous two seasons, and consolidation of the national dairy herd, coupled with the non-arrival of a predicted dry summer for most of the country, has meant filling hooks from February through to now required an elevated amount of leg work from what we had become used to over the previous few years. Greenlea has maintained our fair share, but the flow has been more evenly spread throughout the season, as opposed to coming in big bow waves, requiring everyone to be on their toes and react to what is in front of them. The strength of the relationships our buying team have developed with you, our suppliers, has been critical in this operating environment, and we thank you for your continued support and contribution in that regard.
Spring has sprung early over most of our procurement region. On the back of reasonably benign winter conditions, except maybe for those in the east, the lack of moisture and its resulting mud, has maintained above average feed levels and conditions on farm. These conditions have sent store market prices skywards to historic heights. Most have been under no pressure to unload at the traditional times, coupled with the cost and availability of replacements this has significantly challenged, and in some cases changed, on farm decision making. Where and when this situation ends are anyone’s guess, but undoubtably, the good old market dynamics of demand and supply, as opposed to common sense, will remain in charge of this decision.
Our sales team have recently returned from trips to the market, where discussions with customers closely mirror what in being reported in the rural press. Green shoots and positive sentiment are coming out of China, but the reality is, it is still a way off yet until that will be reflected in increased demand and pricing. Inquiry out of the US is at very high levels, but pricing is stagnant due to the lack of competition. The additional factor that has been in play here is quota. On paper at least, pricing for secondary cuts traditionally sent to other markets could achieve better returns by being put into a grinding pack for the US, but if this was done to its full extent, NZ would have reached our quota limit well before the end of the season and then have no ability to send the remaining, genuine trim, into the best paying market at current pricing levels. Our sales team have done an excellent job of walking the fine
line between maximizing volume into the best paying option, and finding alternative avenues for these secondary cuts at the next best market price. Details like this are often overlooked when reporting export prices, and returns are taken at face value only. This scenario demonstrates why it is vital to maintain and service multiple markets throughout times when pricing differentials, on the surface at least, would appear to not make sense to do so.
Environmental obligations/commitments
There has been plenty of discussion in the media about the coalition government’s slow down and reform of pending environmental regulation related to greenhouse gas emissions (GHG) and fresh water farm planning (FWFP). It appears there may be a commonly held perception forming that this can be parked up and forgotten about for now, and even that it might go away all together. Taking this view, in my mind, would be ill advised as there are legislated obligations that are not going away, and therefore will come into play at some stage down the line. A more prudent position, I would suggest, would be to take the opportunity this delay has provided the sheep and beef sector, to start working on the core components of these requirements, the ones we know will not change, so they are ready in time in a “least cost” manner. Doing these things in silos, with a “just in time” approach will have the greatest impact and only be a cost and a burden on your business. If you would like some independent advice on what you should be working on, talk to your livestock buyer, and they will put you in touch with someone who can assist.
If you are a Greenlea Prime supplier, you will be aware of the push we have made in recent months to have you become New Zealand Farm Assurance Program (NZFAP) certified and would have received the recent email from Greg signaling our intentions to commence dedicated NZFAP processing days when we start up the new season in October. We use the records created from the NZFAP process to provide third party verified evidence to back up label claims we make in certain markets. These types of label claims; “Grass Fed”, “GMO Free”, “Antibiotic and Hormone Free” are nothing new and are business as usual requirements for many customers we supply. The recent push comes on the back of the need to divert product from currently, low demand/lower price markets, into alternatives as mentioned above. To do that they require these label claims to be applied. Non-NZFAP certified prime cattle, will have restricted availability of space until market conditions fundamentally change, so if this affects you, contact your livestock buyer to discuss options.
Our “Farmers Perspective” segment this month is from Corrie and Donna Smit of Corona Farms in the Bay of Plenty who run a dairy farm, beef finishing, and orcharding operation. It details their take on the start of the season as well as how they found the NZFAP certification and audit process.
We are delighted to share some absolutely incredible news: an Airbus H145, twin-engine, rescue helicopter will be taking to the skies in your region from early 2025.
This incredible, state-of-the-art aircraft will make a world of difference to the rescue missions we fly out on - improving both efficiency and performance.
Greenlea Rescue Helicopter pilots will soon be able to navigate with ease through poor weather conditions, enabling your crew to fly out on missions that previously would have been considered unsuitable.
FARMERS HELPING FARMERS
In 2012 the Greenlea Flight for Life programme was introduced. This is where livestock suppliers can donate livestock at the time of processing, and the amount for the cattle is then donated to your local rescue helicopter service. If you are a livestock supplier and you would like to know how you can get involved or donate to the Flight for Life programme, contact your local livestock agent for full details or visit greenlea.co.nz/farmers/findan-agent.
But…This incredible new helicopter is missing a vital piece of equipment: a rescue winch. Many rescues require a winch to lower a Critical Care Flight Paramedic down to a patient, and a winch to lift the patient back up into the helicopter. It’s an essential piece of equipment for every rescue helicopter. Our challenge is to raise $616,071 to buy a new rescue winch for your H145 helicopter. But wait we have MORE amazing news - Greenlea Trust Foundation have agreed to DOUBLE every gift given up to $300,000, to our upcoming Greenlea Challenge to Lift Appeal... Doubling your donation, and doubling the impact for your community.
Please head to rescue.org.nz/grh to donate, or call us on 0800 11 10 10 to support your community, and help us buy a rescue winch for your new H145 Rescue Helicopter.
*Concept livery
