Meat Packing Journal, Jan-Feb 2018, iss 1 vol 5 by Reby Media

Meat global

data

January~February 2018 Volume 5, issue 1 ISSN 2054-4685

and

analysis

for

processors

p a c k i n g

and

exporters

J o u r n a l

blockchain basics Why you'll soon be using it

58 | Georgia on your mind – the republic – that is

76 | using metal detectors to cut food waste

42 | insect protein – can 2million people be wrong

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le ad e r

We don’t see borders – only opportunities

o survive in the market place, whether you’re a supplier of canned pork shoulder, boneless/ skinless chicken thighs, beef jerky or beautiful steaks, you need to evaluate your company from time to time. You need to ascertain what are you doing right; what can

you improve on; and what sets you apart from all the competition out there. At MPJ we have recently soul searched and what

you’re holding in your hands is the product of this selfevaluation. In looking at ourselves, we realized that

editor's choice

what sets us apart from the competition is our staff and

The interview with Keti Vashakidze of Georgian chicken producer Chirina is one you don't want to miss. See page 66

attitude; we’ve all lived and worked internationally. This global perspective means we don’t see borders; we only see opportunities for you, our readers. In each issue, we will now be giving you country reports in more detail than can be found in any other meat/poultry publication. These reports will not only will look at the major global players, but some completely off

of the UK Recycling Association. The UK sends 500,000

your radar that deserve consideration, giving you the facts

tons of plastic every year to China and is already hitting

you need to make an intelligent decision as to whether to

the panic button; the USA exports 1.42 million tons to

invest or not.

China. Looking into the MPJ crystal ball, what I see is your

But, let’s say you have no plans on ever expanding

processing company being told that it better start doing

past your comfort zone and that your map of the world

something this year to cut down on the amount of plastics

shows only your country with everything beyond written

used in packaging.

‘There be dragons.’

As a New Zealander once told me, companies that

Why then should you care?

keep their heads stuck in the sand, end up being buried

It’s because of this; while politicians try to paint the

in the sand. “You need to keep your finger on the pulse of

world as “us and them”, the business community sees the

the world.”

world as just one global village, with everyone interlinked

Along with the country profiles, we will also be giving

in one fashion or another. You’ve all heard of the butterfly

you more insight in the news, explaining why the stories

effect – a butterfly flaps its wings in Brazil causes a

we pick matter to you.

tornado in Texas. McDonald’s announces all day breakfast in LA and egg prices start peaking in South Africa. Don’t believe me? Let me paint this story to illustrate

And, there will be a completely new feature as well, Future Proteins. Look at the big players such as Tyson and see where their money is going. Plant proteins, lab

my point. China has recently announced that it will

meat, insect meal, and like is what’s coming down the

no longer be the dumping ground for all the world’s

pike. Sounds impossible? If 30-years ago someone told

recyclables – their growing middleclass is making plenty

you that all major supermarkets around the world would

on their own, thank you. This means that your town,

soon be offering Japanese-style raw fish, you would have

county, or state will have to find another place to send off

thought they were crazy as well.

all those plastics that you cram into your green bin every Thursday morning before pushing it out to the curb. Officials will then be left with two choices; the first is to find another sucker to take it all; the second is to reduce

The question is: when these changes take place, are you going to need a bigger wallet to hold all your profits, or are you going to be on the outside looking wishfully in? MPJ will be your guide to future earnings.

their city’s waste considerably. “It’s a huge blow for us…a game-changer for our industry,” says Simon Ellin, CEO

meatpacking.info

Velo Mitrovich, Editor

January~February 2018

co ntac t s

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SUBscriptions Meat Packing Journal is a bimonthly magazine mailed every January, March, May, July, September and November. Subscriptions can be purchased for six or 12 issues. Prices for single issue subscriptions or back issues can be obtained by emailing: subscribe@meatpacking.info

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The content of Meat Packing Journal is subject to copyright. However, if you would like to obtain copies of an article for marketing purposes high-quality reprints can be supplied to your specification. Please contact the advertising team for full details of this service. Meat Packing Journal is printed at Stephens & George, Merthyr Tydfil, UK.

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage or retrieval system, without the express prior written consent of the publisher. Meat Packing Journal ISSN 2054-4677 is published bimonthly by Reby Media, 42 Crouchfield, Hemel Hempstead, Hertfordshire, HP1 1PA. Subscription records are maintained at Reby Media, 42 Crouchfield, Hemel Hempstead, Hertfordshire, HP1 1PA. Meat Packing Journal and its Editorial Board accept no responsibility for the accuracy of statements or opinion given within the Journal that is not the expressly designated opinion of the Journal or its Editorial Board. Those opinions expressed in areas other than editorial comment may not be taken as being the opinion of the Journal or its staff, and the aforementioned accept no responsibility or liability for actions that arise therefrom.

Rome. 1/2pg 1 4MPJ.inddJanuary~February

2018

8/25/17 10:37 AM

Meat Packing Journal

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contents 26

18 54

COVER: blockchain 18 Forget the hype about Blockchain and Bitcoin – it's in food safety and traceability where you're going to be using it. We give you the basics and a warning about rushing in

wto rules against indonesia 9 - US beef wins the battle, but who will win the war of opening up this nation to imports

will nafta be next? 10 - This longstanding deal between Canada, Mexico, and USA is next in Trump's sights

marketing expert Elliot Begoun 17 - You need connection, just not innovation when it comes to launching a new product

future protein – insects 38 - MPJ opens this new feature with insects. Will grilled crickets become the new sushi? Doubtful but cricket powder is coming to a store near you

potential in Georgia 54 - A pro business government, low cost labor, natural resources, what's not to love? If only it was that easy in the Caucasus

Wonder Chicken plant Brexit – many questions remain 26 - Country profile UK answers your questions about coming Brexit, with the big one being – are there profits to be made in the UK?

66 - State-of-art Chirina would be amazing anywhere – but Georgia?. How did the company happen to get it so right.

reducing waste UK Agriculture hit hard 31 - High tariffs, reduce labor pool, and no deals in sight. So why did Britain's agriculture industry vote for Brexit?

72 - Developments in packaging and xray technology are both helping reduce waste

back page 76 - Jason Kay of IMS Evolve explains why we don't need more production to feed the world today or tomorrow, just better distribution

January~February 2018

Meat Packing Journal

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WTO rules against Indonesia

he World Trade Organization (WTO) has ruled in favor

Trump quashed US participation in the deal. “The allure of

of the United States in a trade dispute with Indonesia

the TPP for Indonesia was the fact that the US was part of

over its complex import requirements for beef and beef

the deal,” said Indonesian Vice President Jusuf Kalla in a

products such as offal..

conversation with Nikkei. “Without the US, we feel that the

This should in turn make it easier for other beef producers to also export to the island nation. WTO’s report found that all 18 of Indonesia’s import

benefits on the trade front for Indonesia aren’t that big, and we have lost interest.” In many ways, Indonesia seems a strange target for US

measures challenged by the USA were inconsistent

beef exports. Nearly half the population lives below the

with WTO rules and obligations. The US Meat Export

national poverty line, which is set at $25 a month – about

Federation (USMEF) is pleased with the result and sees

0.82 cents a day. However, with a population of 261.1

Indonesia as a very promising market for the future.

million people, while the middle class might be a slightly

USMEF CEO Philip Seng said that the report sets the stage for expansion of Indonesia’s beef market. “We are

small number percentage wise, in real numbers it’s large. Euromonitor International’s Indonesia Income and

excited about the opportunity to play a big part in its

Expenditure Country Briefing says that Indonesia is one

development by introducing US beef to a much wider

of the key emerging markets with the best middle class

group of Indonesian customers.”

potential. In 2016, the country recorded the world’s fourth

Seng said that the USMEF sees Indonesia as a very promising market for the future. It is the fourth most populous country in the world, but with per capita beef

largest middle class with 19.6 households and is expected to rise to 23.9 million by 2030. In a bid to further expand consumption levels and the

consumption of only 3.4 kg, it has “almost unlimited

middle class, the government has been implementing

potential” to become one of the world’s largest beef

various reforms. Under the country’s current (2015-2020)

importing countries.

five-year development plans, the government is focusing

In 2016 US beef and beef variety meats exports to

on investing in programs that have a direct positive

Indonesia were valued at $39.3 million, making it the

impact on the lower income earners via spending on

USA’s 9th largest export market and 15th largest by value.

infrastructure, education, and healthcare.

Indonesia is currently the third largest export market for US beef hearts, following Mexico and Hong Kong. WTO first considered US complaints about Indonesia

Although few give it a chance for success, the Indonesian government says that it will eradicate all slums across the nation by next year. These measures

in 2015, ruling in favor of the USA in 2016. Indonesia

should help the country’s middle class further expand

appealed that ruling in 2017. WTO’s decision is the final

going forward generating a significant consumer base to

step in the dispute process.

drive demand and spending in the country.

Indonesia was part of the Trans Pacific Partnership trade deal but pulled out after US President Donald

meatpacking.info

For more on Indonesia, see MPJ's in-depth country guide later this year.

January~February 2018

n e ws

Mexico, Canada, and USA faceoff over NAFTA A

s part of US President Donald Trump’s election

is a bit of truth in this. However, there is an argument as

pledge to “Put America first”, trade treaties that

well that the two countries now build cars together and

he believes are unfair to US industry are going to re-

has generated savings for the average American family.

examined. His aim is to replace existing trade deals, which

Support manufacturing jobs that make car parts,

he considers “a disaster” and “one-sided” and adopt a new

electronics, or appliances went south to special zones

approach of “fairness and reciprocity.”

directly across the border – maquiladora assembly plants.

With the Trans Pacific Partnership quashed within his first month of taking office, his sights are now on the North American Free Trade Agreement, better known as NAFTA.

This created over a half million jobs in Mexico. The deal, however, was definitely not a win-win for Mexico. With NAFTA removing tariffs on imported corn and

What each of the three trading partners – the USA,

beans, an estimated 1.3 million agriculture jobs were

Mexico, and Canada – are hoping for is that the other two

lost in Mexico, according to Geo-Mexico. When massive

will cave in first to preserve the deal and then swing a

amounts of US corn and beans flooded the Mexican

sweetheart deal for themselves.

market, small farmers who formerly were protected by

The US agriculture industry was licking its lips in

tariffs, were forced off the land and into the major cities

anticipation of the Trans Pacific Partnership treaty under

where they have disappeared into the "urban informal

President Barrack Obama. The TPP would have opened

sector" – another way of saying poverty.

more of Asia’s markets for US pork, chicken, beef, and

As with Mexico/USA trade, Canadian/USA trade did

grains. However, pulling the US out of negotiations was

not deliver on Canada’s highest hopes but neither did

one of the first acts of Trump to fulfill a campaign promise

it bring about its opponents’ worse fears. US pork has

– something Hilary Clinton and Bernie Sanders also

gone north, with a slightly higher number of Canadian

promised to do if elected.

pigs going to the USA where they are fed and finished.

For most of 2017, the remaining 11 countries floundered

So far Canada’s poultry industry has been able to fight off

in attempts to get it back on track. But then in November,

the onslaught of US poultry, which would decimate its

a way forward was seen, without the US taking part

industry. While Canada’s auto industry has seen jobs go to

in a trade bloc worth $350 billion. Now called the

Mexico, Canada’s crude oil and agricultural industry have

Comprehensive and Progressive Agreement for Trans

been winners.

Pacific Partnership, the final deal could be announced early this year. US meat producers can only look at it and dream about what might have been. Now NAFTA might go as well. If the US agriculture industry was less than pleased at losing out on TPP, they

At risk

fter 24-years, few would argue that NAFTA doesn’t need an update. According to the US National Pork

will be fuming at having their trade disrupted even further

Producers Council – who are strong proponents of NAFTA

– especially since Trump had their vote.

and of the TPP – subsequent US free trade agreements

Background

have included stronger provision in such areas as sanitary and phytosanitary measures in agriculture, labor, the environment, and regulatory coherence to name a few.

AFT was negotiated during the presidency of

So why not NAFTA? Each of the three NAFT countries will

George Bush and went into effect in 1994 while Bill

have its own list of priorities for a modernized agreement.

Clinton was president, replacing a previous US/Canadian

What worries the Council is during the renegotiations

free trade agreement. Clinton said that the trade deal

of NAFTA the deal ends up getting completely scuttled.

“means jobs, American jobs, and good-paying American

Despite criticism of the treaty, NAFTA can be credited

jobs.” It didn’t exactly work out that way.

with some important accomplishments not only in trade,

Although US agriculture products increased in sales

but in improved relations between the three countries.

both in Mexico and Canada, US car jobs went to Mexico

In 1994, US/Mexican trade was roughly in balance

as well. US critics has often said that the US middleclass

at about $50 billion each way. By 2016, US exports to

was destroyed by this treaty and like with anything, there

Mexico had nearly quintupled to $231 billion, and these

January~February 2018

Meat Packing Journal

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now support 5 million jobs. Imports from Mexico have

a senior vice president at Albright Stonebridge Group,

grown even more, to $294 billion, and these also support

says: “NAFTA is the biggest game in town for Mexico, but

millions of jobs in Mexico. While Trump seems to believe

it’s not the only game in town,” he said. Both Canada and

that trade needs to be as equal as possible – or in the US

Mexico see much to get excited with a US-free TPP.

favor – it’s hard to argue against $231 billion as opposed

For Canada, long reliant on trade with the

to $50 billion, regardless if Mexico is ahead in the game.

United States, the new American-free TPP is a lot

And even that is hard to prove one way or the other. Much

more appealing than the old one. For the first time

of what Mexico is assembling and shipping back to the

ever, according to Canada’s Angus Reid Institute, the

States is manufactured with parts coming from the USA.

majority of Canadians support the new pact, and twice as

In a bid to make its hand stronger and to plan for a worse case scenario, Mexico is working on a possible EU trade deal, though differences remain over agricultural

many want expanded trade with Asia versus more trade with the United States. What Trump doesn’t seem to realize is that by laying

market access, according to Mexico’s Economy Minister

out hard-to-meet demands and believing that the USA’s

Ildefonso Guajardo. While a seemingly obvious problem

economic heft allows him to browbeat trade partners into

with this deal is the difference in shipping costs between

accepting his changes, he’s poisoning the well for future

Mexico and the USA as opposed to Mexico and Europe,

trade deals around the world.

this could turn into a no issue. While now Mexican long-

Claude Barfield of the American Enterprise Institute

haul truckers can bring agricultural products from Mexico

says: “One of the things that will really undercut the Trump

in the USA, Trump wants this stopped. The added costs

administration is the demands that they have made in

might make Europe the better option for Mexico.

NAFTA, beyond the normal demands. If you’re Vietnam,

Antonio Ortiz-Mena, the former head of economic

now you’d think twice before entering talks with the

affairs at the Mexican Embassy in Washington and now

United States.”

Namibia to increase poultry

Zarechnoye, which markets a premium brand of cornfed marbled meat from Black Angus steers, 85 percent

he southern African nation of Namibia is expected

of Russia beef still originates from the slaughter of spent

to show an increase in poultry consumption and to a

dairy cows, with only 15 percent of the supply coming

lesser degree, an increase in beef and pork. Namibia consumers around 40,000 tons of poultry per

from specialized beef cattle operations. Despite some anticipated growth in specialized beef

year, with an increase in consumption per capita growing

operations, this increase will not offset the reduction

from 10kg in 2006 to almost 16kg in 2016. This growth in

in meat produced from dairy cattle. Weak consumer

consumption is due to the relative affordability of poultry

demand for expensive high quality beef constrains

meat and changing dietary preferences of consumers.

growth in specialized beef production, with high end beef

The growth in consumer demand for chicken is

beyond the average Russian consumer.

likely to be supplemented with imports, as Namibia’s

Cattle prices also remain high, squeezing producer

primary poultry producer is currently unable to meet

profit margins. New packing plants in the Central Federal

local demand. Only around 50 percent of the market is

District (CFD) are operating below full capacity, building

supplied locally; the rest from imports, primarily from

demand for slaughter cattle. High prices for slaughter

South Africa. With South Africa not able to produce

animals are stimulating the development of the mid-size

enough poultry to meet its own local demand, there

beef cow-calf operations, a development that is relatively

could be an opportunity for importers of low-cost frozen

new to the Russian market. Amendments in state policies

chicken such as the USA and Brazil.

at federal and regional levels are anticipated to address

Pork and beef consumption has increased only modestly over the same 10-year period.

Beef to remain costly in Russia

attle inventories are forecast to decline in Russia this year by 18.3 million head, a decrease of 1.4 percent

from 2017, according to the USDA. Despite some outstanding beef produced by

meatpacking.info

the lack of small and medium size cow-calf operations. Pork production is forecasted to grow this year, with competition among top Russian producers and importers is intensifying as production begins to exceed demand. This trend is expected to continue throughout this year and probably into 2019. For more on the opportunities in Russia, see September and November 2017 MPJ or listen to MPJ's podcast series Meat Talk.

January~February 2018

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Self-driving trucks a reality in USA

hile all media attention is on self-driving cars,

number could actually be much higher since near-misses

autonomous trucks have quickly become the

are seldom reported. Part of the problem in the UK is

real-deal. Since October, 2017 self-drive trucks have been

that truckers coming in from the Continent have their

hauling Frigidaire-brand refrigerators along Interstate 10,

steering wheel on the cab’s left side, which puts them in

from El Paso, Texas, to Palm Springs, California.

a disadvantage when driving on the left-hand side of the

A human driver rides in the truck’s cab for the 650-mile trip to monitor the ride. Once the system proves itself, however, the human will go.

road. If trucks were self-driving, this would no longer be an issue. With the current arrangement in the States, the self-

In the USA the truck industry has been hurting for

driving trucks are only used on freeways (motorways),

years. While in the 1970s truck drivers were seen as the

where issues with pedestrians, cyclists, traffic lights, or

knights of the road and were the subjects of movies,

other variables are not a factor. All the big rig has to do is

those days have long since passed. According to the

to stay in its lane and keep a safe distance.

American Trucking Association, the US industry is short

One each trip, a human driver picks up a load of

50,000 drivers. This same driver shortage is also seen

refrigerators in El Paso and drives them to a rest stop off

in Europe. In the States the fear is by 2024, when many

the highway and unhitches the trailer. Then a driver in

current drivers retire, the shortage could hit 175,000.

the autonomous truck hooks up the trailer, drives to the

In the USA, Australia, Russia, and other countries with

interstate, and lets the truck do the driving. Once in Palm

a large land mass, the majority of meat and poultry

Springs, the driver pulls off the freeway, unhitches the

is transported by trucks. This could turn into a major

trailer, and passes the load to another driver who takes

distribution issue.

it the last few miles to Frigidaire’s southern California

But this isn’t the only problem with the current industry. In the USA, more than 4,000 people die in crashes every

distribution center. According to the company responsible for the trucks,

year involving trucks, with almost all caused by human

Embark, the company needs to do more testing. CEO

error on the part of the truck driver.

Alex Rodrigues said that Embark needs to make sure the

In the UK, almost a quarter of injuries caused by

trucks can handle things like merges, construction zones,

crashes with trucks are fatal or serious, compared to

and lane changes. Bureaucracy, too, is a major issue to

one in eight car crashes. One in three of UK car drivers

contend with, especially when the truck crosses state

have had a crash or a near-miss with a truck and this

lines. It took Embark six months to clear these regulations.

January~February 2018

Meat Packing Journal

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Making Light Work

n e ws

China expands big into pet food participated in the transaction. New Hope Group will use Real Pet Food to expand further into the Chinese market and to give them more credibility. Chinese pet food has a poor reputation. . “New Hope Group is a professional in the animal nutrition field, and the acquisition is an important strategy of the company in this sector,” said Liu Yonghao, chairman of New Hope Group. “Nowadays, more and more [Chinese] families take pets as their family members, which generates more diverse consumer requirements. I am optimistic about Chinese pet food industry in the next few years.” According to date from Askci, a Chinese market research company, the pet industry in China is rapidly growing. In 2017, 59 million families in China have pets, accounting for 17 percent of all families in the country. The market size of the pet industry is RMB134 billion ($20b) and is expected to grow at a rate of 31 percent to reach RMB188 billion ($28b) by 2020. At last year’s Petfood Forum China, attendees learned that natural and grain-free products account for more

euters is calling China’s booming pet market an

than 30 percent of China’s pet food market, according

investor’s best friend and it is hard to argue against

to Alfred Zhou, managing director of GfK Retail and

this. While the US pet market might be larger with sales of

Technology China. Zhou was the opening speaker during

$44.4 billion in 2017 as opposed to China’s $7 billion, the

Petfood Forum China 2017. China’s pet food market is

Chinese market is expanding at around 20 percent a year;

also seeing growth in ecommerce, which now accounts

the USA’s expansion is a measly two percent.

for 48 percent of pet food sales, and increased sales for

Chinese domestic players, in line with the expanding market and aided by internet sales, are developing fast

domestic Chinese brands. “Overall the Chinese pet food market has huge

to compete with multinational companies, which used to

opportunities with increasing volumes, sales and product

overwhelmingly dominate pet care in China, according to

development,” explained Debbie Phillips-Donaldson,

Euromonitor International.

editor-in-chief of Petfood Industry. “The Chinese pet food

China’s largest private agriculture company, New Hope Group, has bought out Australia’s Real Pet Food Company for A$1 billion ($770m). Singapore’s Temasek Holdings and Beijing-based Hosen Capital, and two others also

Beyond Meat to triple production

market closely watches mature markets, like the US, for ideas and trends.” The next Petfood Forum China will be held in August at the Shanghai New International Expo Center.

CEO of McDonald’s Corp. Tyson, which took a five percent stake in the fake steak back in 2016, has increased its stake.

yson Foods must see the writing on the wall. The company known more for chicken is upping its stake

in plant-based burger maker Beyond Meat. The fake burger manufacture said it has raised $55

The burgers are sold in more than 5,000 stores in the US, including Safeway, Kroger, Albertsons, and Whole Foods Market. Close on the heels of the plant-based burgers are

million in funding. According to the Wall Street Journal,

venture companies which are working to create meat

the funding was led by venture-capital firm Cleveland

grown in a laboratory. For more on this, see the March

Avenue, which was founded by Don Thompson, former

issue of MPJ.

January~February 2018

Meat Packing Journal

n e ws

Global chicken looking strong – but keep production in check

he outlook for the global poultry industry in 2018

market conditions, supply discipline will be important.

is promising, with relatively positive fundamentals,

China’s industry is struggling. This situation could

according to Rabobank’s Poultry Quarterly Q1 2018 report.

negatively affect prices and global trade. The industry

This is being helped by strong consumer demand, expansion of the industry, and feed prices which should remain low or drop even further this year due to nearglobal grain glut. But Rabobank said a disciplined supply growth

needs to further reduce supply in order to rebalance supply and demand. The Brazilian industry is recovering from the ‘weak flesh’ meat scandal, and exports have returned to 2016 levels after significant drops in Q2 and Q3. However,

strategy will be needed, especially as uncertainties are

the risk of Brazilian imports being substituted by new

rising – such as the possible return of avian influenza (AI)

suppliers remains.

during the northern hemisphere winter and a rising supply of competitive meat proteins like pork and beef. “The outlook for the global poultry industry for 2018 is promising”, says Nan-Dirk Mulder, senior analyst, Animal Protein at Rabobank. “This promising outlook includes

The EU poultry industry is performing relatively well. This is based on a favorable supply/demand balance in the European market. Eastern Europe – especially Poland – will keep growing fast, becoming a major trade hub. Currently, the fastest-growing global regions are

ongoing demand growth in most markets – except

Southeast Asia and Eastern Europe. Subcontinent Asia

China – and lower feed prices in 1H 2018, if not longer.

and Southeast Asia will remain very bullish this year,

But a disciplined supply growth strategy will be needed,

with ongoing growth of more than five percent in most

especially as uncertainties are rising.”

countries like Indonesia, India, the Philippines, and

Prices for chicken have remained strong, especially

Thailand, driven by strong local demand and Thailand’s

for whole chicken and breast meat, but dark meat prices

clear leadership when it comes to global trade. However,

have fallen. Competition from red meat will grow next

recent expansion of the industry, at seven percent, has

year, amid rising supply and softening prices.

probably occurred a bit too fast, says Rabobank.

Global poultry trade will again be hit by volatility, driven

The US poultry industry is expected to keep

by AI, exchange rate volatility, and changes in traders’

performing well, driven by ongoing strong local market

procurement strategies in response to earlier scandals

conditions and improved exports, combined with a

in trade. New suppliers will continue to enter the market.

predicted record-high US corn and soybean harvest. This

Given these growing, but uncertain and more competitive

will likely push feed prices down.

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Meat Packing Journal

c o mm e n t

Why Tech and Food are not the same

t its core, food serves a very basic purpose to sustain life, to nourish. But, it’s so much more than that. Food

is how we celebrate, love, explore, gather, comfort. Personally, I have an odd relationship with food. It is both my passion and my nemesis. Food has been my life’s work. That wasn’t my plan or my dream, it just happened. Like so many who find themselves involved in the food business, I fell in love with the industry, its people, the products and I never left. Yet, I’ve been challenged by my own relationship with it. I’ve struggled with weight my whole life. At times, I’ve had the upper hand, at others food has held that advantage. I love to eat, but often hate the way I feel once I’ve eaten. Every one of us has our own connection to food. In fact, in many ways, our lives revolve around that association. We have self-described foodies, others who identify themselves as vegans, vegetarians or my new favorite, flexitarians. Don’t forget the 20 billion dollar US diet industry for those who, like me, struggle. So much of who we are and how we spend time with others revolves around food. Our holiday experiences, our cultural identities, our family traditions, are all deeply intertwined with food. That emotional, cultural relationship was very visible walking through St. Josep La Boqueria, the famous food market in Barcelona. Families were strolling by the booths as their young kids pleaded for some of the

products we buy. We buy food for comfort, function, and

sweets. Modern day fish mongers were selling their day’s

nostalgia. We choose products for their smell, look, feel,

catch. Brilliant colored fruits and vegetables were artfully

and taste. We treasure hunt and bargain shop. We attend

displayed, and of course, there was booth after booth

farmers’ markets and cooking classes. We agonize over

of carnicerias selling Jamon Iberico, the famous cured

Yelp reviews trying to decide where to go for dinner. We

pork from the acorn fed pigs of the Iberian Peninsula.

plan vacations around eating and even take food tours.

Barcelona to me is food. To describe the city without

Food is more than its function, it’s us, it’s who we

its markets, tapas, and cafes would be like describing a

are. As we bring change to the market, as we introduce

sunset without the use of color.

the next great brand or product, we need be mindful of

There is a lot of innovation and disruption occurring in

the uniqueness of food. We can’t just treat it like a tech

the food and beverage industry. It is exciting, and to be a

innovation. We need to think about the relationship we are

part of bringing some of those new products to market is

trying to establish with the consumer and the product we

awesome.

are asking them to break up with.

However, it is important to recognize the difference

Elliot Begoun is the Principal of The Intertwine Group, a

between food and other sectors where there has been

practice focused on helping emerging food and beverage

a lot of innovation and disruption. It may have been hard

brands grow. He works with clients to design and execute

for some to give up their Blackberries or PDA’s. It could

customized route-to-market and go-to-market strategies

have been scary to migrate to Windows 10 or upgrade to

that build velocity, gain distribution, and win share of

the latest iOS. But, tech doesn’t have the same visceral

stomach. His articles appear in publications such as the

connection to culture, tradition, and emotion that food

Huffington Post, SmartBrief, and FoodDive. Go to www.

does with us.

theintertwinegroup.com for tips that will accelerate your

We experience food differently than a lot of the other

meatpacking.info

food brand’s growth.

January~February 2018

d i s tr i b uti o n

blockcha i n

The future of the supply chain is here now Blockchain, a system created for keeping track of Bitcoin in cyberspace, might offer the best way of ensuring full food traceability in an ever-growing, worldwide complex network of producers, distributors, and consumers. However, donâ&#x20AC;&#x2122;t jump on the bandwagon yet. Editor Velo Mitrovich reports.

n August 27, 2006, an 81-year-old Nebraska woman was rushed to the hospital in so much pain, she was given morphine. Four days later she died from a food-borne infection that was

later identified as E. coli. Over two weeks later, with hundreds of people getting ill across the USA, fresh spinach was identified as being a strong possible source of the pathogen. On September 16, the Food & Drug Administration told Americans to stop eating bagged

by velo mitrovich

January~February 2018

spinach. All spinach was pulled from supermarket shelves, restaurants, and salad bars across the entire

Meat Packing Journal

blockcha i n

nation, from Alaska to Florida.. Five deaths later, the source of the infection was

d i s tr i b uti o n

Along with the deaths and 209 recorded people becoming ill – some serious – the outbreak cost the food

finally found on September 29, a small 2.8-acre plot of

industry over $350 million, created tons of food waste,

farmland in California’s Central Valley whose fields were

and caused sales of bagged spinach to stay 20 percent

contaminated with feces coming from either wild pigs or

lower for years.

neighboring cattle.

The problem

The 1,002 lbs of spinach harvested from Paicines Ranch were processed within a day by Natural Selection Foods, one of the USA’s largest processors of leafy greens. The spinach went mostly into bags of Dole Baby Spinach, each tagged with the production code P227A. It was then shipped nationwide.

meatpacking.info

S restaurants and grocery stores often buy produce from the same major food processors, sometimes under the same label, but most

January~February 2018

without implicating other labels. Additionally, when wholesalers and retailers in the middle of the supply

SWOT Analysis

system find themselves with too much of one product in one place, they might divert it to other parts of their

Strength Way to reduce fraud and waste in food chain Full traceability can take seconds, not weeks – lives saved Makes supply chain more transparent than ever before (see Threats) Very difficult to hack

operation (perhaps in a different part of the country), sell it to other organizations, or even donate some product to a charitable organization. Food takes many routes to get from producers to consumers. The more twists and turns a product takes within the food supply system, the more difficult it becomes to track, and the more vital the UPC product codes become. The more diversions a product takes within the food supply system, the more difficult it

Weakness Needs majority participation of supply chain Big companies have clout to demand blockchain; small do not Governments unsure how to regulate

subsequently becomes to trace through the supply

Opportunities Everyone can be paid faster Can eliminate middlemen and lower transaction fees Option for farmers to not rely on marketing boards

brand names, use-by dates, and manufacturer production

chain when disaster strikes. Even in a best-case scenario, however, when a company has planned well and communicates the recall quickly, there are difficult hurdles because of the complexity of the food supply system. For the purposes of a recall, citing information such as codes often causes confusion. Barry Eisenberg, vice president of technical services for River Ranch, one of the companies that recalled spinach-containing products, took a broad approach to the recall since specific field information was not immediately available. “It just got very confusing,” he said. His company became part of

Threats Makes supply chain more transparent than ever before (see Strengths) Unproven for food industry A few big players such as IBM could be in a control position

the recall because its Spring Mix contained spinach from Natural Selection. He said everyone who handled spinach from Natural Selection “was guilty by association from our customers’ viewpoint”. While this was spinach, there have been other recalls around the world with the same problem. Each of the companies involved could easily track one step below and above, but getting beyond that point proved to be the challenge. There was no way to do a fast check of

often under different labels, according to The Food

every link of the processing chain or to quickly get the ‘big

Industry Center (FIC) at the University of Minnesota,

picture’. With deadly pathogens, each minute, hour, day or

which conducted research into the 2006 spinach E. coli

week delay can prove fatal to consumers.

outbreak and others.

Possible solution

The produce a consumer purchases in a grocery store might be processed by the same company as that in a restaurant. This label flexibility enables sellers to provide a consistent retail presence by sourcing product from multiple growing regions in response to market demand and weather-induced supply. As most retailers commit to their print ads six weeks in

rank Yiannas, is vice president in charge of food safety at Walmart. If you want to keep him awake all night, just have an imp whisper “salmonella” into

his ear as he starts falling asleep. Food safety issues are

advance, the ability to pack-on-demand makes it possible

always at the forefront of his mind; for years he has seen

to promote highly perishable short-dated products. The

the problem and has searched for the best solution. But

down side of this process is a given brand can come from

it’s not until you talk with him do you realize just how all-

multiple processing facilities packaging multiple brands,

consumed he is by this issue.

says FIC. As a result, it is more difficult to determine the source of suspect product and to confine a recall to that brand

January~February 2018

In 2016 IBM introduced to Yiannas and Walmart a project that a small team had been working on involving blockchain traceability. While Yiannas was skeptical going

Meat Packing Journal

source: robobank

into the meeting, he came out a convert. To prove what blockchain promised, Yiannas did an experiment at Walmart and IBM. He brought to a meeting a pack of sliced mangos that he had taken off the shelf of a Walmart. He asked those at the meeting to trace it. Walmart doesn’t play around with food safety; it goes well beyond what the law requires. Still, it took the team just shy of seven days (six days, 18 hours, 26 minutes) to track the mangos from a Walmart shelf back to the Mexican farm where the mangos originated from. Yiannas then did another experiment, also with mangos. This time it was after introducing blockchain in the Walmart system. It took 2.2 seconds to do the trace. He duplicated the same experiment in Walmart’s China offices with pork and had the same results. If it had been a real food emergency with mangos in the States, without blockchain Walmart would have pulled all mangos off the shelfs throughout the USA and kept them off until the source of the pathogen was found. If any other retailer had the slightest possibility of being also effected by contaminated mangos, their mangos would be pulled as well. While mangos are far from being Walmart’s number one seller, it still would have cost the chain millions of dollars and wasted tons of food – a case of a necessary overkill – and affected the reputation of the global chain. However, with blockchain – along with accompanying platform software – in place, Walmart could instantly see the entire distribution chain from farm to shelf of the suspect mangos and remove only those from the market. While not mentioned in the experiment, with check-out barcode scanning and numerous supermarkets tracking

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January~February 2018

customer purchases through loyalty schemes, it would even be possible to trace those who bought suspect mangos to warn them not to eat them.

key players

Because the blockchain record is permeant, in cases of food fraud like the horse meat scandal in Europe or Kosher/Halal mislabeling in the States, it would give stores a way of seeing where the fraudulent product entered their distribution chain.

IT experts are saying that there has been more growth in blockchain companies than any other sector. MPJ presents four that standout in a crowded field.

In 2017, leading UK chicken producer 2 Sisters Food Group was caught altering “kill dates” on chicken labels to artificially stretch the commercial life of the product and fool consumers into buying chicken past its use-bydate. None of the UK’s top grocers where able to identify this practice or prevent the chicken from reaching the consumer, it was discovered only through an undercover news team. With blockchain, however, every chicken product would have registered on the database from the farm. Two Sisters would be unable to tamper with the data on the blockchain without everyone knowing. According to Arvind Krishna, director of research at IBM, blockchain technology could save the shipping industry billions of dollars lost to coordination costs. Containership ship giant Maersk says that each container generates up to 30 pieces of paper, with labor and documentation processing costs amounting to $300 per container, or $5.4 million for an 18,00 TEU containership. A missing piece of paper means a container just sits at port, with food spoiling, but with blockchain it would be possible to have paperless bills-of-lading and save millions of dollars throughout the industry. Right now the Port of Rotterdam is testing blockchain for sharing logistical and contract information. In a nutshell, Blockchain has the possibility to change the world’s food safety chain in a way never before imagined. Lives, money, and reputations will be saved.

The basics

lockchain was developed to keep track of the cryptocurrency Bitcoin. Because with Bitcoin you have a form of currency that doesn’t

physically exist, you need to be able to track each coin in cyberspace. If you couldn’t, you would be leaving yourself wide open for counterfeit Bitcoins being created and other types of fraud – you have to remember that some of the people using Bitcoin aren’t on the legal side of the law. It’s called blockchain because all the transactions are sorted into ‘blocks’, and each block is chained all the

Jammed field to get only more congested Entering the world of blockchain today is like the early US pioneers meeting up at Independence, Missouri, and trying to decide which trail guide to choose. Pick the right one and you’ll find yourself farming in Oregon; pick the wrong and you’ll be eyeing over your traveling companions while snowed in on Donner Pass with no supplies. Similar to the start of PCs in the early 1980s, there are many companies claiming to offer the best service, but do they? To continue with the analogy of PCs, when PCs were first introduced with MS-DOS, you needed to know some basic programming skills to use your PC plus you had to be familiar with all the ‘F’ keys. Now, while MS-DOS in still in computers, as far as users go – thanks to Windows – it’s invisible. This is similar to blockchain technology. View blockchain as the foundation layer, what companies layer on top makes it user friendly. Just how friendly and cost-savings, however, is the question with MPJ finding few straight answers. Much like how Microsoft won the battle of the PC operating systems, MPJ suspects IBM will be the top dog with blockchain technology, with Dole, Driscoll’s, Golden State foods, Kroger, McCormick & Company, McLane Co, Nestle, Tyson Foods, Unilever, Walmart, and others coming together with Big Blue. The company has blown some big opportunities over the last 40-years and could use a win. With a war chest of $200 million, a dedicated blockchain staff numbering in the thousands and a new office in Munich, ‘serious’ is how it’s taking blockchain. It’s doubtful it will squander an early lead this time. That said, MPJ has found others who we think stand out in the crowd for truly being unique. A tip for blockchain companies out there; it’s the board that will buy your product, not the IT department. Gear your presentations towards them.

way back to the beginning to make it hard for anyone to change the records. Blockchain provides end-to-end traceability because the entire ecosystem shares a single, tamper-resistant

Big Blue’s blockchain platform World giant IBM has introduced the first fully integrated, enterprise-grade production blockchain

ledger of information that can only be updated through

January~February 2018

Meat Packing Journal

platform, as well as consulting services, that will allow more organizations to quickly activate their own business networks and access the vital capabilities needed to successfully develop, operate, govern and secure these networks, says the company. The platform builds off of the successful blockchain work IBM has delivered to more than 400 organizations, incorporating insights gained as IBM has built blockchain networks across industries including financial services, supply chain and logistics, retail, government, and health care. Extensively tested and piloted, the platform addresses a wide range of enterprise pain points, including both business and technical requirements around security, performance, collaboration and privacy that no other blockchain platform delivers today. It includes innovation developed through open source collaboration in the Hyperledger community, including the newest Hyperledger Fabric v1.0 framework and Hyperledger Composer blockchain tool, both hosted by the Linux Foundation. The integrated platform allows multiple parties to jointly develop, govern, operate and secure blockchain networks to help enterprises accelerate blockchain adoption. The platform offers all participating members a level of control, while preventing any one member from having exclusive control. A new class of democratic governance tools is designed to help improve productivity across the organizations using a voting process that collects signatures from members to govern member invitation distribution of smart contracts and creation of transactions channels. By quickly onboarding participants, assigning roles and managing access, organizations can begin transacting via the blockchain. Unites best of both worlds OriginTrail started as a full stack system consisting of the application layer (mobile/web applications for iOS, Android and websites), and the OriginTrail backend which took care of automatic data import, data storage, retrieval and other necessary systemic functionalities. People usually focus on what is visible though, so many thought of OriginTrail as ‘an app’ for customer food provenance, though it was in fact a whole system, says Branimir Rakić, chief technical officer & co-founder. Today, it is a protocol which enables applications

meatpacking.info

to be built on the application layer, but focuses on the underlying layers (data layer, network layer, blockchain layer) to provide all the necessary functionality in order to have an operational application layer. By using OriginTrail protocol, companies will be able to develop and use a variety of applications, with origin of product being one of them – but not the only one. This comes from the inherent properties of blockchain technology, which is exactly the properties that give it great features. OriginTrail builds on top of this, but focuses on the data itself and utilizes blockchain for what it does best – data integrity through fingerprinting, says Rakić. “This is how OriginTrail united the best of two worlds – the scalability of existing technologies and superior transparency, integrity and security of blockchain,” he says. “What OriginTrail can offer and none of the others can is an advanced, database grade level of data handling, validation and storage in a decentralized trustless manner. “And once this data is there and available, many different services and applications can be built on top of OriginTrail protocol (such as applications for certifications, alert systems, origin of products - the existing use case with the app we have developed before, recall, compliance, etc).” The important thing is to distinguish OriginTrail

January~February 2018

protocol from blockchain – they work together, one on top of the other. Essentially this means that companies could be using different blockchains (as blockchain is used for fingerprinting data) while using OriginTrail – it presents a middleware between blockchain, IoT and supply chain IT systems on one side, and on the other side applications built on the consumer facing end. Although OriginTrail is not the only IoT (Internetof-Things) ready company, what MPJ likes about this is that the protocol can handle the data from smart sensors and wirelessly synchronizes them. The more sensors involved from more sources, the more the opportunity to cross reference this information. An example of this would be temperature sensors in containers. Once the information is introduced to the system, it is tamper proof along the entire chain. Chain for Auz beef A very specific blockchain that has its own cryptocurrency – BeefLedger Token (BLTs) – has been launched in Australia at Queensland University of Technology (QUT). The blockchain will be used to prevent food fraud involving Australian beef to protect the brand. Marcus Foth, professor of Urban Informatics at the QUT Design Lab, says: “The BeefLedger Token, or BLT, is being developed as part of the design and implementation of the world’s first application of distributed ledger or blockchain technology to the entire beef supply chain. “It has the potential to revolutionizes the industry by limiting price fluctuations, supporting food provenance and preventing food fraud, which is a growing problem in international export markets. “The BLT will power the BeefLedger Blockchain and provide users with the value-added benefits of access to credentialed provenance data, sale history, consumer feedback insights, disease prevention, streamlining payments, and heightened food security,” says Foth. Warwick Powell, CEO of BeefLedger, says BeefLedger was designed to be a wholesale data platform that delivers credentialed food provenance data to consumers, driving value growth for the supply chain and delivering additional income to producers in recognition of product provenance excellence. “Our aim is to empower producers to serve the growing middle class markets of Asia, in

January~February 2018

particular China, and meet the market’s increasing expectations around food provenance and safety,” says Powell. “BeefLedger supports the strong reputation Australian beef producers already enjoy as safe, clean and green suppliers. “Beef is an increasingly high-risk industry in terms of brand so it’s critical to be able to prove it is top-quality Australian beef. Our research in China demonstrates consumers will pay premiums for high levels of security and the value that food provenance can add to the consumer experience. “Chinese consumers also increasingly shop with their smart phone, where scanning QR codes for product information and payments is now commonplace. The paddock-to-plate nature of BeefLedger meets this market expectation so that Australian beef remains at the forefront of Chinese consumer experiences.” Not yet for meat While the vast majority of blockchain platform companies are for a myriad of industries ranging from banking to diamonds, Australia’s AgriDigital is only for agri-supply chains. Unfortunately, so far the company is working only with grain companies. This is a real misfortune for meat/poultry because AgriDigital understands the agricultural industry. Customer Roger Fletcher, chairman of Fletcher International Exports, says this about AgriDigital. “We never want to see another IT guy in here that doesn’t understand the industry and our business. Things are changing fast and we’re excited to have AgriDigial as our technology partner for the future.” Out of all websites MPJ looked at, AgriDigital’s was the most user-friendly for non-techies and gave a near-perfect presentation of blockchain and what it can do for you. If nothing else, you will find AgriDigital’s free pilot report to be helpful. The company also responded to questions faster than any other company MPJ contacted. AgriDigital was founded by a small group of agriculture industry experts with almost 80 years combined agri-experience. “We have a hardearned appreciation for day-to-day challenges within the agriculture industry and the disruptive potential of technology. Our team is committed to building the agriculture industry of the future: one in which all participants in the ecosystem can act with confidence,” says the company.

Meat Packing Journal

consensus. Participants can view their section of the

many vendors as the silver bullet solving all the problems.

same information in a permissioned – depending on the

This glorification is unfortunately possible as still very

system used – trusted and scalable network. According

few people understand blockchain on an appropriate

to IBM, this enables ecosystem participants to exchange

level,”Branimir Rakić of OriginTrail tells MPJ.

data and transact with trust, improving transparency and efficiency within the supply chain.

“Blockchain is good for data integrity and trust, but it is actually very inefficient for any type of bigger data storage

This is how it can apply to you.

and manipulation, and it's pretty slow while we are at

No doubt in your office you have a ledger – either

it – look up the Bitcoin and Ethereum scaling issues. Last

electronic or paper. Now imagine this ledger being for

time I did a calculation, to store 1kb of data on Ethereum

just one item – broilers from Sally’s Chicken Ranch. Every

costed around $1,300.

time the broiler passes to another part of the chain, so too

“This comes from the inherent properties of blockchain

goes the ledger. But, not everyone in the chain is honest.

technology, which is exactly the properties that give it

For example, the trucking company has a theft problem

great features. OriginTrail builds on top of this, but focuses

and some of the boxes of frozen chicken are stolen. On

on the data itself and utilizes blockchain for what it does

the ledger they altered it to show fewer boxes. If there is a

best - data integrity through fingerprinting,” says Rakić.

problem with the broilers at the end delivery, it’s not their fault. With blockchain, however, your database works like

Blockchain is new with developments happening frequently, making web articles almost obsolete the minute they go on line. Even changing its name to

a network that is shared with everyone in the chain. But

something like ‘Electronic Ledger System’ or ‘Distributed

when the first initial entry is made for an item – when

Ledgers’ is being discussed. What it reminds MPJ of is the

Sally’s Chicken Ranch lists the broilers, what antibiotics

beginning days of PCs with different operating systems

they were given, etc, this entry is given a unique

fighting it out for supremacy until there is only one or two

‘fingerprint’. Just like with humans you can’t change your

– who remembers Tandy’s DeskMate system? If you’re

fingerprint, you can’t change this one either without

in the meat industry – especially in international trade or

everyone in the supply chain being aware of it. Because

if your product goes through multiple distributors – you

it’s transparent – anyone can see alterations, corrections,

should investigate blockchain. However, unless it means

etc – it creates trust amount the users of it. There is no

losing out on a contract which requires blockchain, don’t

one single party controlling the data, everyone in the

feel rushed into making a decision. From what MPJ sees, it

chain can see it. A change in broiler numbers will be

will be around for a long time.

spotted by all. An important note, with Bitcoin anyone in the world can see the blockchain data. However, as much as the purist might complain that anything else is taking away from the blockchain spirit, depending on how and whom you use to set it up, it can be kept transparent only to those with a need to know. Do you want consumers at your store to be able to scan a simple QR code with their smartphones and see what farm their meat was raised on? Would you want them, however, to also see the age of the animal, what antibiotics or vaccinations it was given, or where it was slaughtered? In its current stage, blockchain is far from perfect with its greatest problem being participation. If Sally’s Chicken Ranch and end user AlphaBeta supermarket were the only ones using blockchain, the information would be next to useless. To prevent food fraud, to allow for quick tracing of items, you need to have as many blocks – users – as possible. Someone big with clout like Walmart, Unilever, and Nestle could insist that all parts of the distribution chain, from farm to Walmart stores, use blockchain. There are few other companies who carry the same weight. “Blockchain itself is a great technology, but unfortunately due to the hype around it is presented by

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January~February 2018

e s ta b li s h e d

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br i ta i n

Brexit or 'Bremain' – all still in the air It’s beginning to feel like the longest divorce proceedings ever and the fight has yet to begin over who gets the Steely Dan CD collection. The UK’s exit from the EU is scheduled to go into effect next year on 29 March, but don’t bet on it happening as there is still plenty of time for all to kiss and makeup. MPJ reports from London

for Britain and good for Europe,” said MP Boris Johnson at a pre-election rally. Johnson, Grove and others said that Britain had the whip hand in negotiations with the EU, which would quickly agree to an exit and trade-deals on British terms. Then the USA, China, India, and other major economics would beat a path to its door to buy British.. On the other side of the fence, the ‘Stay’ groups were painting a post-Brexit world that would make the Dark Ages seem bright and cheery. A vote to ‘Stay’, was the only thing preventing the pound from dropping so low against the dollar and euro that it would become a 3rd

by velo mitrovich

World currency. UK Chancellor George Osborn said there would be an “economic crisis” if the UK left, with each

family worse off by £4,300 ($5,845). hen Britain went to the polls in

Jean-Claude Junker, president of the European

June 2016 to vote on whether or

Commission, said that the EC would make life miserable

not to remain part of the EU, it all

for the UK if it left. EU Council Chief Donald Tusk said

seemed like a much clearer and

that divorce bill would be £50 billion ($68 billion) – that’s

simpler world back then. If you

money the UK would be coughing up to pay its share in

voted ‘Leave’, the UK would be saving so much money – £350 million a week were the claims – that MP Michael Grove said Britain could build a new hospital every week. How they were going to staff all these new hospitals without workers from the EU was never addressed but it didn’t matter. Britain would be ‘Great’ again. “For Britain, voting to leave will be a galvanizing, liberating, empowering moment of patriotic renewal,” said Grove. The only thing that that the ‘Leave’ people didn’t promise that every summer day would be sunny and warm, but they sure hinted strongly at it. “So let us say knickers to the pessimists and the merchants of gloom and do a new deal that will be good

January~February 2018

Meat Packing Journal

great

existing deals. Even US President Barrack Obama came over and told the British public that if they voted to leave,

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SWOT Analysis – Brexit

for all US trade deals they’d move to the back of the line.

Agriculture dilemma

he UK’s agriculture community said without being

Strength UK regains control of its borders Money won’t be paid to EU bureaucracy UK not hampered by over 19,000 EU trade laws and regulations

part of the EU, preferential trade deals would end, seasonal workers from the EU would be hard to

find, fields would remain unpicked and slaughterhouses/ processing plants would be understaffed. Those in the red meat industry said in particular they would suffer

Weakness Loss of talented workers Pound has dropped in value Living costs have risen for UK consumers

without the EU tariff-free market. Owners of small to medium sized farms supported leaving saying they were drowning under all thousands of EU regulations; the big farm owners wanted to stay. For them, the regulations weren’t so much of a problem; it would be losing EU farming subsides in which they were making a fortune.

Opportunities UK can negotiate own trade deals Drop in value of pound means it’s an exporters market UK reestablishes itself as a separate country, not part of European state

In 2015, British farmers received 3.25 billion euros ($3.5 billion) from the EU’s agriculture fund in direct payments based chiefly on the amount of land they farmed – not individual needs. The average British farmers received about 15,000 pounds

Threats Never has happened before Banking industry could leave UK Tariffs could hurt UK exports to EU

($18,700) a year from direct payments and an EU rural development fund. For some, this money accounted for 70 percent of their income for the year. But, according to Greenpeace, the lion’s share of this EU fund went to wealthy individuals who are large landowners. An investigation by Greenpeace showed that in 2015 the top 100 recipients of EU direct

in favor of Brexit, they would continue subsidies until at least 2020. But, there are doubts that this will actually happen. “The moment you are putting payments to farmers

payments in Britain received more in total than the

up against the National Health Service care in the

bottom 55,119 recipients combined.

community and education ... you can see it is going to

The UK government told farmers that if the vote went

meatpacking.info

take its share of cuts,” says Sean Rickard, a former chief

January~February 2018

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economist for the National Farmers Union. Farmers worried that when it to came to trade deals

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such as MP Boris Johnson who backed the Leave movement. It became suddenly evident that there

and EU market access, sectors such as financial services

was no Plan A, B, C or even Z; there was no exit plan

would be a much higher priority for the government, and

at all. The senior politicians, who supported the Leave

any new EU trade tariffs could have a significant impact.

campaigned, said “mission accomplished,” tipped their

Another fear was that in the scramble to come up with

bowlers, and ran out the backdoor of Parliament. leaving

new trade deals with countries such as the USA and

a shocked looking Prime Minister holding the bag who

Brazil – both massive agricultural powerhouses – UK

then resigned. No one had actually expected Britain to

farmers/meat producers would be sold out and cheap

vote Leave; not the British government, not the European

imports would come flooding in.

Commission, no one.

EU agriculture commissioner Phil Hogan said that

Even Dominic Cummings, one of the masterminds

British farmers would suffer following Brexit. “If people

behind the Leave campaign, said the referendum

want to go separate ways like the UK there are going to

was a “dumb idea” and warned that Brexit would be a

be losers, and the big losers in the UK are going to be

“guaranteed debacle.”

farmers,” Hogan told a media briefing.

The aftermath

Voting day

ow over a year later the only thing that has come

he Conservative Prime Minister David Cameron spoke in favor of staying; his ‘loyal’ deputies spoke of leaving. Whatever you wanted to

believe, you could find someone touting that opinion, no matter how ridiculous it was. The BBC was anything but its impartial

to pass since the UK’s referendum vote, is that nobody’s predictions have materialized.

Not a single new hospital has been built; but

neither has the pound joined the Mongolian togrog. For about six months after the vote, the pound tanked against the euro and dollar, but since then

self – being in favor of staying – although it

the pound has regained some of its strength. As

too seemed to have a hard time following the

far as driving the UK into a depression, the UK’s

sound bites. In one BBC news special that was

economy has actually continued to grow. It’s now

promoted as putting all Brexit questions to rest,

just below that of Germany and well above France’s.

it mostly seemed to show its star political reporter being driven up and down the Thames River in a speed boat, to a Fat Boy Slim song, while giving a stern look. What this had to do with Brexit, she never explained.

Employment, too, has fallen to a 42-year low of 4.3 percent – France’s is over 10% and for young people, 25%. Is the vote binding, however? The EC has said that Britain would be welcomed back with open arms up

In the end, it was a tight vote with the British public

until March 2019 when the divorce gets finalized – more

deciding to leave. This shocked all, including politicians

or less. In 2017 Prime Minister Theresa May held a snap

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election, wanting the people to fully endorse her vision of Brexit. The Conservatives were so sure of a crushing victory, they were discussing the election as being

Hard or soft

the end of the Labor Party. The people spoke and the Conservatives just barely held onto power by the thinnest of margins, having to cut a deal with a very conservative Northern Irish party. While May basically wanted the Brexit negotiations to be free of Parliament, this will not be the case. While the referendum was the voice of the people, is has no legal authority to bring about Brexit; that is up to the members of Parliament. If it comes to a vote, there is an every growing chance that they will vote to remain in the EU. In the meantime, the government is trying to come up with trade deals, but while it remains part of the EU, it can’t sign. As US president Donald Trump discovered when he met with European leaders, if you’re a member of the EU, you can’t cut a separate trade deal. The latest deal the UK government is looking into is the Trans-Pacific Partnership. This unusual move – all 11 members have borders either on the Pacific Ocean or South China Sea – would allow the UK to cut one trade deal with all members instead of negotiating with each individually. UK trade minister Greg Hands told the Financial Times that there was no geographical barrier

‘Hard’ Brexit This would be quitting not just the EU, but also the single market and customs union. This would give the UK full control over its borders which is one of the main points of the ‘Leavers.’ Markus Kerber of the German BDI group said: “It’s better to have a hard Brexit that works than to have a fudge in the middle that has to be renegotiated or doesn’t politically work and you have uncertainty lingering on.” Sectors such as agriculture could lose EU protections against cheap imports from abroad. Prime Minister Theresa May is in favor of this who says that the soft option would “subvert democracy.” Former Greek finance minister Yanis Varoufakis, who has considerable experience dealing with the EU, said the UK should just walk away and pay nothing, taking hard Brexit to the extreme.

to the UK joining. “Nothing is excluded in all of this, there doesn’t have to be any geographical restriction.” However, critics have pointed out that joining the TPP would not compensate for leaving the EU’s single market. Tim Farron, former Liberal Democrat leader, said: “This smacks of desperation…it’s all pie in the sky thinking.” Former Foreign Office senior civil servant Simon Fraser tweeted: “Welcome to cloud cuckoo land.” William Faulkner wrote: “You cannot swim for new horizons until you have courage to lose sight of the shore.” Whatever the outcome will be, there was something courageous about the vote to leave. MPJ believes that the Brexit election was always in the hands of the European Commission. But instead of taking the time to understand Britain’s concerns with the EU, those in power such as Jean-Claude Junker and Donald Tusk felt the best way to deal with the situation was to stay in Brussels and threaten the UK. They couldn’t even be bothered to take a single, short train journey to the UK and address the public as to the benefits of staying a member of the EU. Their absolute arrogance and pomposity put those British sitting on the fence, over to

‘Soft’ Brexit This would be something similar to the relationship Norway and Iceland has with the EU. Favored by the UK’s business community and the ‘Remainers,’ this would consist of minimal customs formalities at the land, sea, and air borders; a flexible system for the movement of labor; and protection of the benefits of free trade agreements currently in place throughout the EU. The UK would lose its seat on the European Council, but keep membership in the European single market. Besides paying dues to the EU for this privilege, it would have to accept the ‘four freedoms’ of movement of goods, services, capital, and people. Due to the tricky situation with Northern Ireland having a border with Ireland with neither wants to close, May might be forced into accepting the soft Brexit.

the side of the ‘Leavers.’

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Lots of guesses but few answers Each day breaks new ground with the coming Brexit. No one has left the EU before so there is no template in place. No wonder crystal balls are now at a premium

paying UK farmers subsides through 2020, with the National Health Service on the ropes, along with the police and other public sector services, no one is expecting subsidies to go one day beyond. A disadvantage the agriculture industry has it that it lacks a champion in Parliament fighting its cause. Politicians will lose their seat if they’re not seen as

hile uncertainty reigns supreme,

supporting the NHS; it could be just as much as a political

there is one thing all agree on.

suicide if an MP supports farm subsidies.

The UK agriculture industry will

With a hard Brexit cutting off the supply of cheap labor,

undergo radical changes if a hard

no subsidies or other support, it is hard to see how small

Brexit takes place. Favored by

farms will be able to stay in business. With a hard Brexit

Prime Minister Theresa May, in a hard Brexit the UK will

driving up food prices, it is hard to see the UK public

break formally with the EU, along with the single market

rallying behind its farmers.

and customs union. There will be no transitionary period

Poultry sitting pretty

and it’s expected that trade between the UK and EU will be severely disrupted. “In a worse case scenario, in which no deal between the EU and the UK is agreed, the impact on the [entire EU] meat sector will be monumental, due to the particular exposure of this sector to tariff costs, veterinary checks, and increased customs and transport costs,” says Philippe Borremans, president of the European Livestock and Meat Trades Union. “By potentially cutting off one of the largest and highest value meat markets in Europe, Brexit threatens to be catastrophic for the industry across Europe and the UK.” In the UK, not only will farmers no longer get the

n advantage that the UK poultry has over red meat is that it can turn on a dime to fit changing market conditions, allowing it to quickly scale-up

production to support increased self- sufficiency if a hard Brexit takes place. In addition, UK poultry doesn’t receive any subsidies under the EU’s Common Agriculture Policy so no loss. However, labor will be an issue. Non-UK labor in the sector is around 60 percent, according to the British Poultry Council. The government has yet to address the

support of the EU and its generous Common Agriculture

labor shortage in any way as debates continue between

Policy subsides, the UK will no longer be paying into the

hard Brexit and soft, with the soft-option allowing free

EU’s subsides pot affecting farmers on the Continent –

movement of people between the EU and UK.

the UK pays in more than it gets back. Although the UK government said it would continue

meatpacking.info

Since, however, this was one of the reasons why people voted ‘Leave,’ MPJ finds it hard to believe that the

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SWOT analysis - Poultry 6%

Strength Huge demand for poultry in UK Industry can quickly ramp-up production Not dependent on subsidies Weakness Exports cannot offset import costs Food safety standards can be bypassed Labor immigrant dependent

France

ireland 37%

10%

17% Other EU 22%

Opportunities Cannot meet demand – needs imports Not seen as a premium product – consumers go with price Threats Trade deal with the US could flood market Buying public easily influenced by media scares

SWOT analysis - Red meat Strength UK’s beef has excellent reputation Britain is the largest producer of lamb in Europe

Netherlands uk beef exports Poland

Germany

Other EU 5% 6%

Netherlands 8%

Non EU

68%

Weakness 90 percent of UK exports go to EU Exports outside EU are generally offal or other lesser cuts Food prices are rising Cannot negotiate deals until after Brexit Opportunities Supermarkets supporting local meat industry, which will help it grow Low pound could help exports Easier to enter new markets Threats High export tariffs to EU markets – could hurt meat exports High import tariffs to UK – could hurt meat imports US meat industry said it would undercut UK beef Reduction in trade could create surplus across Europe

January~February 2018

ireland

uk beef imports

Production of meat by species (2016) EU

Beef

7799

912

Pork

23440

919

Lamb/Mutton

713

290

Goat

Poultry

14400

1791

Unit: thousand tonnes of carcass weight Source: Eurostat

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government will voluntarily choose to go this way. Right now the UK imports a whopping £1.5 billion worth of poultry a year and if current consumption trends

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UK's share of intra-EU meat exports (beef, pork, and lamb/mutton)

continue, then this is likely to swell even more so. With

Austria

the UK exporting mostly dark meat and ‘fifth-quarter’

Belgium

Bulgaria

Cyprus

Czech Republic

Germany

Denmark

Estonia

Spain

Finland

France

farmers and producers, and protects our food values

Greece

and high standards of production, which have been hard

Croatia

to enhance rather than diminish British food values that

Hungary

secure not just affordability and availability for the people

Ireland

Italy

Lithuania

post-Brexit deal must be about Britain’s future food

Luxembourg

security and safety. It is a matter of our reputation on the

Latvia

Malta

Netherlands

Poland

Portugal

Romania

Sweden

Slovenia

Slovakia

products, this is unlikely to offset increases in import costs. The British Poultry Council welcomes International Trade Secretary Liam Fox’s comments on the need for a wider consultation before signing any new trade deals, as he highlights the British consumers’ unwillingness to accept lower food standards as part of a trade deal with the US. Fox says the talks around US chlorine-washed chicken entering UK home market show lack of coherent Government safeguards for UK food and farming and risks eroding domestic supply chains as well as the ‘farm to fork’ model of transparency prized by consumers. British Poultry Council CEO Richard Griffiths says: “We welcome Government’s support towards our vision for a food system that speaks to the public good, backs British

won through years of experience. Brexit is an opportunity

but stand up for the quality of our food from ‘farm to fork’. “The British Poultry meat industry stands committed to feeding the nation with safe, nutritious and affordable food without any compromise on standards. A secure

global stage.”

Opportunties in red

hile the UK’s red meat industry has more to lose with a hard Brexit than the poultry industry, there are opportunities for the sector

as well, according to the UK’s Agriculture and Horticulture Development Board (AHDB). Expansion of UK beef exports to non-EU markets has been constrained by limited market access due to EU members not allowed to cut separate deals. In addition, access to many major beef importing countries has never been restored following the BSE (Mad Cow Disease)

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restrictions imposed in the late 1990s.

SWOT Analysis - supermarkets

However, with a hard Brexit, the UK will be able to cut its own deals with China seen as the most obvious

Strength Retailers already have good local sources Climate change allowing warm weather crops in UK

choice. Although the UK will be at a disadvantage against countries such as Australia and New Zealand which already have a free trade agreement in place for their red meat, English and Scottish beef are seen as a premium cuts and will drive a higher price.

Weakness Shoppers will pay more Less quality without EU regulations Longer and more costly shipping

Other Asian and African markets also have the potential to take more UK beef and bovine offal, depending on how trading relationships develop. According to John Richards of the Welsh red meat levy body Hybu Cig Cymru – Meat Promotion Wales (HCC –

Opportunities Trade deals might make it easier for foreign chains to enter market Good time to buy struggling supermarkets

Welsh sheep farmers are getting nervous as to how Brexit

Threats Loss of shopper’s income will affect buying power Less variety in supermarkets

over the past few months, there have been interesting

will affect them. Thanks to the efforts of HCC, Welsh lamb has made strong inroads across Europe during the last three years. Will this effort now be lost? “In many of the farmer meetings I have attended discussions over how the market and industry in general might look after we leave the EU in 2019,” says Richards. “Independent reports have suggested that the sheep sector – which sells a third of its lamb to EU countries – is one of the most vulnerable to a hard or no-deal Brexit where tariffs may be imposed on exports.” “It seems that some farmers are now looking at their own businesses to see if they can spread risk through either the beef herd or new ventures,” said John. “An example of this may be that the number of fattening pigs on Welsh farms increased by eight percent. Producers may be looking to supplement farm incomes by diversifying into rearing and finishing different types of livestock.”

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Supermarket truths Britain’s supermarket sector has always been ruthlessly competitive. Major retailers such as Tesco, Sainsbury’s, Morrisons, and Walmart’s Asda fight it out daily for shoppers using online shopping with home delivery (which all run at a loss), loyalty schemes, and huge advertising and marketing budgets. Off to the side are the more upmarket shops, Waitrose and Marks & Spencer, which try to use quality as their unique selling point. Indeed, having either in your neighborhood adds as much as 10 percent to real estate values, according to Lloyds Banking Group. A low-end Aldi adds just one percent. While officially the large supermarket chains said the choice to leave or remain in the EU was a decision for the British people – not supermarkets – it’s understood that all would have preferred remaining in the EU, knowing that prices would start to rise the second the vote was counted. But, probably none were quite expecting the huge gains that German retailer discounters Aldi and Lidl are currently experiencing. According to research group Kantar Worldpanel, both chains since Brexit have seen their growth in market shares accelerate. This last summer Aldi and Lidl accounted for more than 12 percent of the UK’s spending; up from four percent a decade ago. Kantar says the average UK household spent in 2017 around £133 more than last year, which is helping to fuel the rise in the discounters. “UK households are quite sensitive to pressure on disposable income,” Edouard Aubin, an analyst at Morgan Stanley, told the New York Times. “That is why they’re switching to cheaper alternatives.” In a talk on BBC Panorama, Justin King, who ran Sainsbury’s supermarket for a decade, said the last thing any current supermarket boss would reveal was their intention to put up prices, but he feels it is “very clear” UK shoppers will

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face higher prices, less choice, and poorer quality. According to King, Brexit – almost in whatever version it is – will introduce barriers. "That makes it less efficient which means all three of those benefits - prices, quality and choice – go backwards." There is now a drive by British supermarkets to tout what percentage of their food is coming from the UK as opposed to the EU or beyond. With British farmers for years operating at a nearloss, this can only be good for them. In the meantime, the mid-term effect of goods sourcing is likely to be the largest factor of consideration for British retailers, with the prices of fresh produce definitely going up as much of this is sourced from the EU. According to Kantar, in the case of Tesco almost 50 percent of its butter and cheese consumed in the UK comes from milk sourced from EU markets. Inflationary pressures will further boost the call for locally-sourced/ manufactured products as the retailers’ ability to source from the EU suppliers offering better trade terms is adversely impacted. Higher commodity prices and tariffs will also impact production of traditional fast moving consumer goods, even though a significant proportion of good are produced locally. Supply chain costs are likely to go up due to higher trade tariffs.

Tesco UK British multinational grocery and general merchandise retailer Tesco is the third largest retailer in the world measured by profits and ninth-largest retailer in the world measured by revenues. Not surprising, it’s the grocery market leader in the UK where it has a market share of around 28 percent, more than 3,400 stores and 310,000 employees. Originally a UK grocer, Tesco has diversified since the early 1990s and into areas such as retailing books, clothing, electronics, furniture, toys, petrol and software; financial services; telecoms and internet services.

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Is its Board worried about Brexit? It doesn’t seem to be. In Tesco’s 177-page 2017 shareholders’ annual report, Brexit is given just one paragraph: “The result of the referendum… could cause disruptions to and create uncertainty around our business, including affecting our relationships with our existing and future customers, suppliers and colleagues…. As further details of the Brexit terms emerge, the management will continue to assess the potential risks and impacts of these on Tesco stakeholders.” They don’t seem to be losing any sleep.

Sainsbury’s Number two in the UK is Sainsbury’s with almost 17 percent share of the supermarket sector, and 1,415 stores. Like Tesco, Sainsbury’s has looked beyond groceries with petrol stations, banking services, and clothing. Sainsbury’s chief executive Mike Coupe says the group was aiming to limit price rises in spite of food inflation fueled by a weaker pound in the aftermath of the Brexit vote. “We’re probably through the worse, if the truth be told, and actually even today’s prices are about the same as they were two years ago, so we as a business have done a very good job of protecting our customers from the more extreme challenges of inflation and currency movements.” In its 196-page 2017 Annual Report, Brexit gets zero mention.

Asda Most pundits are sure of this; Walmart-owned Asda is going to have to do something if it’s 638 stores are going to survive in the highly competitive UK grocery market – with or without the threat of Brexit. Asda’s selling point was always that it was the cheapest; well no more thanks to Aldi and Lidl entering the market in a big way. Tom Berry, retail analyst at GlobalData says: “Asda has chosen to focus on price rather than range and in-store experience, which has clearly been the wrong strategy.” What seems like a lifetime ago, in April 2017 investment bank UBS declared Asda to place to

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shop if you wanted to fight Brexit price increases.

Morrisons After taking heat for being one of the first supermarkets to increase prices due to Brexit, Morrisons is fighting back. The UK’s fourth largest chain “has committed” to selling 100 percent British meat after deciding it would drop fresh lamb from New Zealand and Australia from its shelves. Over two-thirds of the food it sells is already British, compared to a national average of 52 percent, which includes British beef, chicken, ham, pork, sausages, duck and turkey. This seems to be paying off, its showing eight consecutive periods of growth. "We again worked hard during the quarter to limit the impact of lower sterling on imported food prices,” says CEO David Potts. "We are pleased with a further step up in our competitiveness and another period of positive sales growth. “The trading environment remains challenging, with competition still fierce and consumer purses under pressure, but Morrisons is now in better shape to weather tough conditions."

Aldi & Lidl It must drive the two German retailers crazy but everyone seems to always link the two names together. This is understandable, however. The two companies were founded by two brothers who had a major falling out. Both are discounters, both are no frills, both claim to offer the lowest prices, and both use minimal staff. Both, too, are anticipating that Brexit will bring major profits for them and they are investing billions into expansion in the UK. If there was any one major difference between the two and that is the majority of Aldi items are ownedbrands. Surprisingly, in food taste tests with professional tasters doing blind tastings – which MPJ observed – Aldi’s brands came out high. Researchers have said that both stores are set to benefit the most from Brexit in the short and medium term than other supermarkets in the UK. The brothers are probably the only two people hoping for a messy Brexit.

Meat Packing Journal

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Em e r g i n g

prote i n

i nsects

Putting a bug in your ear It’s not going to happen tomorrow nor the day after tomorrow, but with a growing world population, ultimately insects will be in our diet, either hidden as a protein powder, eaten dried in their natural state, or a feed-ingredient for livestock. The question is: should you jump in now while opportunities abound, or take a wait and see approach? In this first of MPJ’s new feature ‘Future Proteins’, we’ll look at why edible insects will be coming to a store near you.

iesbet Minne from Belgium is walking through Khao San Road, known as the backpacking street of Bangkok, with chef David Creelle. They’re watching fellow tourists, young people, trying out the local

cuisine. Besides the familiar Thai dishes the tourists are buying from food vendors – pad Thai noodles, satay sticks, and green curies – they’re also bravely trying crickets, grasshoppers, worms, larvae, and more. In northern Thailand, she and Creelle start to realize how important insects are in the local diet and culture. Kids are catching crickets and, after their mother quickly bake them, take them to school in their lunch boxes. Back in Bangkok, it is fascinating for the duo to see the contrast: on one hand, they see that eating insects is truly part of

by velo mitrovich

January~February 2018

the culture and education in Thailand, on the other hand they see the eager western tourist strolling down Khao

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San Road, experiencing this for the first time. “This image got us thinking and it was the beginning of this exciting adventure starting up our business,” she tells MPJ. The bug eating business. Before you at best, dismiss her, or at worse question her sanity, think about this from Minne. “Thirty years ago, nobody ate sushi, the idea of eating raw, uncooked fish sounded disgusting,” she says. “Now, everyone eats sushi, you can buy it anywhere. Insects will be the same.” But not quite the same. While sushi tastes great, nobody sees it as a solution to world hunger. And that’s where Minne and Creelle’s vision comes in, along with many others. They see insects as a world solution food. Although humans and our biological mammal

viable alternative for food and feed security – both in developed and developing countries. According to FAO,

ancestors have been eating insects since the beginning

by 2050 the world’s population will be 9 billion people. To

of their existence, today in the West we see insects as

accommodate this number, current food production will

dirty, disgusting, and disturbing. However, most the world

need to almost double. Farm land with sufficient water

sees them as a source of food.

is becoming scarce and expanding the area devoted to

If you are looking to get on the ground floor of the

farming – such as in the Amazon River Basin – is rarely a

future, look no further than insects. However, regulations,

viable or sustainable option. Oceans are overfished and

technology, and acceptance are far from being

climate change and related water shortages could have

established. You will find people in the industry tend to be

profound implications for food production.

secretive – both raw and finish product producers – few

“To meet the food and nutrition challenges of today

champions, a lot of exaggeration, and little support from

– there are nearly 1 billion chronically hungry people

state and national governments.

worldwide – and tomorrow, what we eat and how we

Still, you wouldn’t be reading this if you didn’t like a challenge. In 2013, the UN Food and Agriculture Organization (FAO) issued a report proposing edible insects as a

meatpacking.info

produce it needs to be re-evaluated…. We need to find new ways of growing food,” says the report. This was probably not FAO’s most favorably received report – at least in Europe and North America.

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i nsects

crickets, stinkbugs, and live scorpions – a favorite in the

SWOT Analysis

winter. Throughout the world, nearly 2,000 different types of insects and arachnids have been recorded as being eaten with the potential for many more.

Strength Traditional diet of over 2 million people More than 1,900 used as food Quick growth rate High feed conversion ratio Can be fed any organic material

There might be a reason, however, why insect eating never caught on in ancient Europe and disgust is not it. Out of the 14 major animals domesticated by early man, 13 were in the Middle East’s Fertile Crescent, which most made their way into Europe. Twelve months out of the year – no matter how far north you are – a large ox can provide meat, milk, leather, warmth, wool, plough traction

Weakness Marketing – could use different name (Sky prawns for locusts) Data is scarce on nutritional value Regulations are geared towards keeping insects out of food chain

and a means of transport. Crickets can only provide a meal and a bit of music, and that’s for only a short portion of the year. But today, you can also add ‘cash’ to what a cricket can provide you with. According to a report published in 2016 by Persistence Market Research (PMR), in terms of value, the global

Opportunities Rising population needs to be fed Cheap source of protein Novelty factor in West

edible insects market is anticipated to expand at a

Threats Public opinion Plant-based food industry is in rapid growth Potential allergy issues have not been studied Wild harvesting can damage environment Some species are endangered

is projected to register a CAGR of 8.1 percent over the

compound annual growth rate (CAGR) of 6.1 percent during the forecast period and is expected to account for $722.9 million by 2024. Orthoptera (cricket, grasshopper, and locusts) segment forecast period, driven by rising demand for cricket granola bars, cricket crackers, cricket cookies, and cricket chocolates – with the majority of these foods made from ground cricket meal. Of the various edible insect type products, the beetle's segment is estimated to account for approximately 30.8 percent share of the global market share in 2016 [eaten in mealworm larvae form], and caterpillars segment is estimated to account for 17.9 percent share. Nutritionally, insects can be good source of protein, minerals, vitamins, fatty acids, and fiber, especially

“When Columbus came to the New World, he

in relation to conventional livestock. For example,

described indigenous peoples who ate bugs as being

the omega 3 fatty acid contained in mealworms is

"como bestias" (like beasts) because the crew had

comparable to that in fish. And the iron content in mopane

only seen it before in animals. "I really think we haven’t

caterpillars varies from 31 – 77 mg per 100 grams of dry

overcome that," says Julie Lesnik, an anthropologist

weight versus only six mg per 100g of dry weight in beef.

at Wayne State University in Michigan who studies entomophagy – eating insects. Why those in the West don’t eat insects is in many ways more puzzling than why the idea turns so many of

For the environment, they can present a series of benefits such as reduced land and water requirements, low GHGs emissions, little risk of zoonotic infections, and fewer problems with animal welfare issues, says FAO.

us off.

Whole or ground

In Asia, Africa, the Middle East, and Latin America – in other words, most the world’s population – people don’t bat an eye at eating a grub. Eating insects is mentioned in the Jewish Torah, the Christian Bible, and the Muslim Koran. In all three, insects are given the green light. Indeed, John the Baptist is famed for living on locusts and wild honey. MPJ has seen in Chinese live animal markets shoppers buying silkworm larva, water beetles, dried millipedes,

January~February 2018

n the insect industry there are two philosophies. One is to keep the bugs whole, omnem naturalem, and prepare them through either pan frying, baking, or

drying. This is how most of the world’s bug eaters enjoy their meal. The other school of thought is to disguise the insect as much as possible. After growing the cricket, meal worm

Meat Packing Journal

i nsects

Em e r g i n g

Cicadas, leafhoppers, true bugs (Hemiptera)

prote i n

Termites (isoptera)

Beetles (Coleoptera) Others

Grasshoppers, locusts, crickets (Orthoptera)

Caterpillars (Lepidoptera)

Bees, wasps, ants (Hymenoptera)

% of total insect consumption most commonly consumed insects

larvae, or a few others, the insects are killed by freezing,

and Ryan Goldwin think in volume and have numerous

then dried/baked, and ground, turning them into neutral-

products to cover various markets.

looking protein powder that is used in bread, pasta, protein shakes, or energy bars. For insect meal, there are factors you need to consider

Crickets are grown in a 60,000-square foot barn which allows Entomo to grow at any one time around 100 million crickets. While other cricket farms grow in single cycles

from the beginning: are you going to grow and process

– egg to mature cricket and then start the process all

your own meal or buy meal from others? Worldwide there

over again – at Entomo the crickets range in all stages of

are over 20 companies making protein bars with cricket

maturation, giving them a continuous harvest. The type

meal; none are actual producers of meal, with at least

of farm they use for crickets, what Darren Goldin calls a

half or more buying it from Thai or Chinese sources. Five

“cricket condo,” also allows the crickets to grow in a more

companies make cricket powder protein shakes, and

natural state.

around 20 make snacks, pasta, or breads with cricket

“Crickets are naturally a swarming species and like

powder; again with these companies not growing and

being in a dark, warm place,” says Goldin. “The condos

milling their own crickets.

allow the crickets to live in a natural way as close as

If you’re planning on producing your own meal to sell

possible to how they would live in the natural world. They

on, can you produce the volume you’ll need to keep

are free to hop from feed station to feed station, and can

prices low? And last, but far from least, with there being

burrow deep into the condos if they so choose until it is

movements to get people to reduce the amount of

harvesting time.”

protein they eat or to switch to vegetable sources, how

Products that Entomo produces includes: cricket

are you going to convince your perspective customers to

powder; organic cricket powder; organic gluten free

give insects a try?

cricket powder, mealworm powder; whole roasted crickets and mealworms; BBQ, chili-lime, and other

Big cricket

n North America Entomo Farms, with its headquarters in Norwood, Ontario, is one of the leaders in cricket meal and, as North America’s first and largest cricket

flavored whole roasted crickets and mealworms; cricketbased pet foods, and farmed fish, chicken, beef, and hog livestock feeds. Western Australia's first edible cricket farm was given approval to sell its product for human consumption last

producer, is ticking all the right boxes. What MPJ likes

year. Up until now just one other edible-cricket farm,

about Entomo is that its founders, brothers Darren, Jarrod,

based in Sydney, has been in operation.

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Insect flavors Edible insect

Taste & flavor

Ants, termites

Sweet, almost nutty

Larvae of darkling beetles

Wholemeal bread

Larvae of wood-destroying beetles

Fatty brisket with skin

Dragonfly larvae and other aquatics

Fish

Cockroaches

Mushrooms

Striped shield bugs

Apples

Wasps

Pine seeds

Caterpillars of smoky wainscots

Raw corn

Mealybugs

Fried potatoes

Eggs of water boatman

Caviar

Caterpillars of erebid moths

Herring

Source: J. Ramos-Elorduy; Creepy Crawly Cuisine: the gourmet guide to edible insects

But now a south-west start-up company, Grubs Up, is also in the game, producing crickets for protein powder and eyeing off bar snacks and condiments down the

whole bugs, however, are true believers in all things sixlegged or more. This is understandable though. To get someone to try

track. The business venture has been a long time in the

a cracker or bar made with seven percent cricket meal

making for founder Paula Pownall, who quit her job in

is not a lot of work. To get someone, however, to take

2015 to focus solely on the research and development of

the leap of taste and try a grub or cricket which looks

the cricket business.

like it was just plucked off a cabbage leaf hours earlier is

Pownall told ABC that she was excited to finally be able to sell the crickets to consumers. "It means that

considerably tougher. Liesbet Minne has that look of a believer in her eyes.

we can actually sell that product and really upscale our

And, like a Bodhisattva, she’s not moving on until she

business and production on a commercial level," she said.

gets everyone in the West to see the wisdom of eating

Just outside of Austin, Texas, Aspire is using

bugs. After n returning to Belgium, she and chef David

robotics to feed millions of crickets, 24 hours a day, in a

Creelle started creating insect recipes based on their

24,000-square foot R&D center. If the technology proves

Thailand experiences – as one does. In March 2014 they

successful for Aspire, it will duplicate the process in a

tested their recipes in a pop-up restaurant in the Flemish

farm 10 times as large – 240,000-sq ft.

Ardennes. Less than a half-year later, the duo opened

Mohammed Ashour, CEO of Aspire, points out that

the first insect restaurant in Belgium – Bugs and Lunch

non-cricket protein powder can be bought wholesale for

– in the city of Ghent. Creelle followed this up with a

$10 a pound; cricket powder costs double the amount.

recipe book, Bugs: culinair insectenkookboek, which was

While some firms such as Tiny Farms tout small scale

published only in Dutch. The cover didn’t mince around, it

production, Ashour believes that only by going large

showed about six whole crickets speared onto a fork. Bon

can the price be brought down to make cricket meal

appetite indeed. Was the restaurant successful? In one word – yes.

competitive.

“A lot of well-known Flemings were curious, you had

Whole bugs

hen you talk to either producers or users

insects in combination with raw and vegan food.” Eighteen months later and Minne and Creelle closed

of insect powder, at times it feels like you

a major deal with a large, well known Belgian chain of

are talking to an accountant, with facts and

supermarkets. Due to limitations in time with trying to run

figures calmly laid out in front of you. Those who promote

to reserve in advance for weeks,” says Minne. “We served

January~February 2018

the restaurant and supply the supermarket, they decided

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to close the restaurant and concentrate solely on the

sustainable supply of protein, this study finds that such

supermarket deal.

conclusions will depend on what the crickets are fed and

“Our bugballs are very popular [MPJ has tried],” says Minne. “The balls are based on vegetables and includes insects. You don’t see the little animals, but they are involved in the product.” Minne and Creelle’s World Solution has the right

which systems of livestock production they are compared to, writes Lundry/Parrella. When compared to broilers and fed similar diets, crickets showed little improvement over chickens. Whether crickets could be raised economically on

products and Minne has the personality to be the perfect

substrates of similar quality and level of processing

bug ambassador. They just need the right investors and

requires further analysis, they write.

advisors to take this to the next level.

“Insect cultivation is more likely to contribute to human nutrition at a scale of economic and ecological

Not all bugs are created equal

significance if it does not rely on a diet that competes with conventional livestock, but more innovation is needed for

n talking with anyone involved in insect production

this to become a reality. Moving forward, the imperative

or use, there is no missing the excitement they

will be to design cost-effective processes that enable

feel. However, much like only a fool tests the depth

large populations of insects to capture protein from

of a river with both feet, if you are considering insect

underutilized organic waste and side streams.”

production as a possible business venture, any and all

The authors note that, in addition to crickets, many

data requires close scrutiny. One problem with insect

other insects are also being considered as possible food

production is that with few taking it serious for so many

and feed sources, and that some — such as the black

years, a tremendous amount of research needs to be

soldier fly (Hermetia illucens) — may be better suited for

done. On company websites, cherry-picking takes place,

converting low-quality, organic materials into protein.

in particular showing the nutritional make-up of insects

No level playing field

and their feed conversion ratio. While no one would lump all mammals into one category, comparing the nutritional value of a vole mole against an elephant, people do with insects. The problem that has resulted from this is that members of the bug fraternity – who know better than to do this – tend to cite only the top figures. The nutritional value of edible insects is very diverse

hat insect producers are finding in all Western countries that not only do insects fall under regular food/livestock laws, like a moth to a

light, they attract strict and odd interpretations that apply to no other foods. Blog writer (The Future of Edible Insects) and owner of

mainly because of the large number and variability of

Incredible Foods, Mark Nagy, follows US laws/regulations

species. Nutritional values can vary considerably, even

like no other and is a valuable source of information for

within a group of insects depending on the stage of

those in the States. As he points out, at times nothing

metamorphosis, origin of the insect, and its diet. Not only

makes sense.

do values different between species, they can vary within

For example, according to the US Department of

as well due to different feed, according to Drs Lenka

Agriculture (USDA), insects raised for animal or pet food

Kourimska and Anna Adamkova in their paper “Nutritional

cannot be diverted to human food. They cannot be ‘wild

and sensory quality of edible insects.”

crafted’ (collected in the wild) and sold as food due to the

In addition, insect fans are quick to show feed conversion/water conversion ratios between cattle,

potential of carrying diseases or pesticides. “Why must insects be raised specifically for human

sheep, pigs, poultry, and crickets. It’s no surprise who

consumption? Corn is diverted all over the place,” says

always wins.

Nagy. “What is the basis for disallowing wild crafted

However, in another research paper entitled ‘Crickets Are Not a Free Lunch’, by UC Davis’ agronomy advisor

insects? I feel this is no different than trolling for shrimp. “People have been eating insects for the past 10,000

Dr Mark Lundry and entomologist Dr Michael Parrella, it

years; 2 billion people around the world currently

states that food conversion figures might be exaggerated.

consume insects as part of their diet,” he says. “They are

“Everyone assumes that crickets – and other insects – are the food of the future given their high feed conversion

already in our food coming from unavoidable defects…a course they are safe.”

relative to livestock,” Parrella told Entomology Today.

According to FAO, any effort to release the huge

“However, there is little data to support this, and this

potential that insects offer for enhancing food security

article shows the story is more complex.”

requires that the following four key bottlenecks and

Although it has been suggested that crickets reared for human or livestock consumption may result in a more

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challenges are addressed simultaneously. 1, Further documentation is needed on the nutritional

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Bug bible There are few books out there for those interested in raising and consuming insects; Insects as Food and Feed is probably the best in a small playing field. Using a host of researchers from around the world, the manual covers everything from the potential of insects as food and feed, through a world view of production techniques, to breeding, and problems in production. The production of insects for feed is thoroughly covered, as well as processing, regulations, and future prospects. Published last year, what many readers will find valuable is the appendix which lists pretty much everyone involved in the industry from the makers of insect protein bars to a world listing of restaurants serving bugs. With amazing photos throughout, you will find Insects as Food and Feed your go-to reference For a quick read, MPJ recommends research paper â&#x20AC;&#x2DC;Opportunities and hurdles of edible insects for food and feed,â&#x20AC;&#x2122; by Darja Dobermann, J.A. Swift and L.M. Field out of the University of Nottingham, UK. First published in November 2017, it can be read for free in the Wiley Online Library, as part of the Nutrition Bulletin, Vol 42, Issue 4. The paper highlights some of the opportunities and hurdles associated with entomophagy with respect to malnutrition and food security, and the barriers to the widespread implementation of entomophagy and the steps necessary to counter them. The authors state it is intended as a narrative review and as such is not wholly exhaustive of the literature. Rather, it provides a general overview of the state of research on edible insects and current challenges due to the lack of research. Insects as Food and Feed: from production to consumption Edited by Arnold van Huis and Jeffery K Tomberlin Wageningen Academic Publishers

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Cricket tacos by entomo farms

values of insects in order to more efficiently promote

play a big role in this. When I teach my pupils about

insects as healthy food.

entomophagy, it keeps on surprising me how open their

2. The environmental impacts of harvesting and farming insects must be investigated to enable comparison with traditional farming and livestock rearing practices that may be more environmentally damaging. 3. Clarification and augmentation of the socio-

minds are about it – especially when you compare their reactions to the ones of adults!” One of the problems that promoting entomophagy will always have in the West is its potential sensational coverage by the media. While a story about ham would

economic benefits that insect gathering and farming can

not be illustrated with photos taken from the initial stage

offer is needed, in particular to enhance the food security

at a slaughterhouse, the same gloves come off when it

of the poorest of society.

comes to bugs.

4. A clear and comprehensive legal framework at

“While some of our media coverage showed our

(inter)national levels is needed to pave the way for more

products as tasty dishes, others took a more sensational

investment, leading to the full development (from the

route. Showing a bowl full of living maggots isn’t the most

household to the industrial scale) of production and

inviting,” says Minne. “We have to understand that insects,

international trade in insect products as food and animal

too, need to be processed, just as meat is processed

feed sources

before it arrives on our plates. We don’t eat the cow right

“Despite the growing list of reasons to practice entomophagy, the western world remains doubting,” says

after it comes back from its meadow.” For those in the food supply chain, the emphasis has

Minne. “This is largely due to culture and our association

always been on keeping insects out, not putting them

of insects with pests. The fear of insects and the idea that

in. For insects to become a food item in the West, baring

insects are dirty, is not stimulating people to eat insects.

a global catastrophe, a major change in mindset will be

“It is important to keep talking about the subject,

required from producers to consumers. That said, with

so that the next generation gets adjusted to the idea.

low production costs, insects have a lot going for them.

Education on cultural, nutritional and ecological issues

When the Puritans came to New England in the 1600s,

associated with entomophagy can partly overcome this

the idea of eating lobsters seemed disgusting. In 2016,

aversion towards insects.

the Maine lobster was worth $533 million. With insects it

“I, being a teacher myself, believe schools could

January~February 2018

might be similar, only happening much faster.

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AgriProtein's insect meal being brought to the warehouse by agriprotein

Doors finally opening for insectbased animal feed 48

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The use of insects as a prime component of animal feed has been stymied by regulations in the EU and North America, and a lack of resource. While this is finally beginning to change, will there be the demand? MPJ reports

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The reasons are numerous. In a research paper by Marine Popoff and Michael MacLeod of the Scottish Rural Policy Center concerning the feasibility of using insects in salmon feed, the researchers found that currently the production of insect meal isn’t enough to take much of a dent out of the industrial fish catch and soybean harvest. Combine this low production rate with high prices and Popoff/MacLeod found there is little incentive for the

big fish feed companies, such as Norway’s Skretting, to

even Fluffy the Cat will eat grasshoppers and other

insect meal to massive scale have been regulators in

insects from the backyard if given half a chance.

Europe and North America who until very recently were

t seems obvious. Around 40 percent of a freshwater trout’s diet is made up of insects. Among wild

switch to insects. And indeed, this isn’t the first time that a product has

poultry, such as pheasants or partridge, the

been touted as being a substitute for fishmeal with the

proportion of insects in their natural diet can be as

reasons for the rejection the same – a lack of large-scale

high as 50 percent during their growth stage, and

production and costs.

around 10 to 20 percent in adults. Wild boars eat insects,

Holding back companies though from producing

And then there is the fish question.

making it anything but easy. Much of the worry is based

Around 25 percent of the global fishing catch goes to

on a lack of research as to how animals will respond to an

make fishmeal and fish oil for animal feed, with over half

insect feed diet, what the farmed insects will be fed and

going to farmed fish – a case of fish being used to feed

can this lead to a transmission of disease?

fish. The remainder goes to pig feed (20%), poultry feed (12%), and the rest for other uses. Just how large is this catch? The main type of fish

With the massive problem most cities have with disposing of food waste, it would make sense to use this organic waste as feed for insect farms. This in turn would

used is an anchovy caught off Peru. According to FAO

lead to the production of insect meal, oil, fat, and organic

2015 figures, the catch was 4.3 million metric tons –

material suitable for farms and gardens.

although most in the industry believe the catch was at

However, agriculture and food safety ministries are

least 400,000 MT higher due to overfishing and rampant

leery about taking this route, due to a lack of control as

underreporting of catch. Some environmental groups

to the exact make-up of the waste. Europe, in particular,

believe it could be up to 2 million MT underreported.

has more to worry about this after experiencing an

In the 1990s fishmeal went for around $500 a ton.

outbreak of bovine spongiform encephalopathy (BSE),

Recently it sold for as much as $2,500 a ton leaving the

better known as mad cow disease, during the 1980s and

Peruvian anchovy “the most heavily exploited fish in world

1990s. BSE is caused by misfolded brain proteins and was

history,” according to FAO. With prices like that, quotas

spread among cows that were fed meat and bone meal

and concerns get left on the dock.

from infected cattle or sheep.

Over half of all seafood consumed comes from a

While humans cannot catch BSE, it can be transmitted

fish farm, making aquaculture the fastest growing food

to them through the eating of food contaminated with the

production sector in the world. This will drive the demand

brain, spinal cord, or digestive tract of infected carcasses.

for even more fishmeal, leaving some wondering where

Once transmitted to humans, it becomes a fatal human

it’s going to come from.

form of the infection, Creutzfeldt-Jakob disease. In the UK

An answer, however, is already there. A 2014 review

177 people died, along with 52 elsewhere in Europe. In

by FAO scientists of feeding trials conducted on farmed

response, the EU banned the feeding of almost any type

catfish, tilapia, rainbow trout, and several other fish

of animal protein to farmed animals.

species, as well as farmed shrimp, chickens, and pigs,

No one thought of insects at the time, but today, the

concluded that insect meal could replace between 25

regulation is holding back development, complains

to 100 percent of soymeal or fishmeal in the animals’

Antoine Hubert, a French scientist who co-founded

diets with no adverse effects (80 percent of the world’s

Ynsect, a company that aims to rear insects for feed and

soybean crop goes to animal feed/266.4 million MT).

other applications. Because insects and mammals are

Most insect meals are deficient in calcium and the amino

so distantly related, the risk of prions or other pathogens

acids methionine and lysine, but these can be added

making the jump is much smaller than it is between

cheaply, according to FAO.

mammals, he says.

So why isn’t insect meal being used to replace fishmeal?

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In 2013, the European Union relaxed the rules a small amount to allow the use of animal proteins in aquaculture.

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Black soldier fly production in South Africa by Agriprotein

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But there was one problem: animals used as fish feed had to be killed in a certified slaughterhouse with a welfare officer present, a rule clearly not written with maggots in

SWOT Analysis

mind. In 2016, however, the EU Standing Committee on Plants, Animals, Food, and Feed, agreed that insects did not have to be slaughtered in an officially registered slaughterhouse, and in July 2017 a small number of species were approved to be used for fish feed in Europe. It is expected that approval for non-ruminants to be fed insects will happened within two years. Jason Drew, one of the founders of AgriProtein

Strength Comparable with fishmeal and soy-based diets Seen as natural feed for poultry, fish, and swine Can be fed almost any organic material Low overheads – land, water, and feed Easier to sell to public for need

Technologies in South Africa, says that the black soldier fly larvae company is now ramping up production and is seen as being the furthest along in rearing insects at an industrial scale. With a huge grant from Bill and Melinda Gates Foundation and cash from private investors, the South African plant’s larvae consume 250 MT of organic waste

Weakness Regulations – few countries have a clear policy Not scaled up for massive production Lack of research, both in growing and in use Lack of consistency in product

a day to produce 50 MT tons of maggots a day. Dried and ground to a powder, it is sold on to South African farmers at a price lower than fish meal. According to Drew, AgriProtein is looking to build 20 fly farms in the USA and Canada, as part of a global target of 100 fly farms by 2024 and 200 by 2027. Last year it

Opportunities Can replace fishmeal in feeds Use by cities to dispose of organic wastes Potential for huge demand by aquaculture industry

announced a partnership with Austrian engineers Christof Industries which will allow it to build 25 black soldier fly larvae farms on a turnkey basis. Each factory will cost between $15 million to $23 million depending on the amount of automation installed. Just last month AgriProtein was named a top 10 Virgin Media Business Disruptor to Watch in the Fast Track 2017. In November the company announced it has secured $17.5 million of further capital form key strategic partners

Threats Big feed companies are already looking at other fishmeal alternatives Public opinion against insects Potential allergy issues have not been studied Wild harvesting can damage environment Some species are endangered

to fund expansion into Europe, North & South America, and Asia. Drew says: “The new funding demonstrates a growing appetite for fly farming in the global investment

developed proprietary equipment and processes for

community, helping us pursue our mission to find a better

producing high quality insect-based ingredients. But also

way to feed the world.”

Swiss-based Bühler has been on the topic since 2009,

After four years of work, Canada approved in 2016

installing a pilot facility in China to process fly larvae and

Enterra Feed Corporation’s whole dried black soldier fly

mealworms. However, the large-scale processing of

larvae as a feed ingredient for poultry broilers. Enterra’s

insects is still largely uncharted territory.

plant, located in Langley, BC, uses pre-consumer food waste that would otherwise go to a landfill. In the USA, the Food & Drug Administration approved also in 2016 Enterra’s feed as suitable for salmonid fish.

In order to boost this young industry and scale the technology up to the requirements of large, industrial producers and processors, Bühler and Protix founded the joint venture Bühler Insect Technology Solutions.

The was the first time in the States a federal regulatory

The company is not looking at raising insects for

body approved the use of an insect-based ingredient in

human consumption at this time, believing there is too

commercial animal feed. Before this, each US state was

much resistence in the West for this market to succeed.

allowed to make its own decision regarding insect feed.

But they do see a huge potential in animal feeds, primarily

One company that has really caught MPJ’s attention is Buhler Insect Technology. Protix was founded 2009 in the Netherlands and has

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for aquaculture. Both partners decided to establish Bühler Insect Technology Solutions in China. One reason for this is that

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the use of insects for feeding animals has a longstanding

insect Startups

tradition in China, with the acceptance of insects as feed for fish or poultry being very high. Because insects are consumed by humans in parts of Asia, the barriers in

Insect-for-feed startups have emerged around the world to capitalize on this opportunity, particularly for aquaculture, including:

terms of consumer acceptance for insect-based food products are also much lower than in other parts of the world. Another aspect is that in many countries, animal proteins are banned from being used in livestock feeds

Ynsect (France; $37M raised) AgriProtein (South Africa; $30M raised) Enterra (Canada; $5M raised) InextProtein (France; €1.3 million raised) Protix (Netherlands; undisclosed) EnviroFlight (USA; acquired by Intrexon Corporation) Mad Agriculture (USA) GoTerra (Australia; undisclosed)

since the BSE crisis and the legal framework for the use of insect-based feed either just been created or yet to be. China offers more favorable regulations for insect processing. In addition, the Chinese market is large enough to quickly reach a breakthrough the industrial production of insects. While these developments are all promising, the two numbers to keep remembering are: 4.3 million MT (fishmeal) and 266.4 million MT (soybean). Unless production is ramped up considerably and/or

Compiled by Sarah Nolet, founder and CEO of AgThentic

government regulations become highly supportive to the point of restricting the use of fishmeal, MPJ sees the use of insects as an animal feed being limited for at least the next 10-20 years.

January~February 2018

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Small Caucasus country could be export giant Why MPJ has Georgia on its mind – the Republic of Georgia that is – and you should too if you’re an investor. Editor Velo Mitrovich reports on this little-known country with big potential

Meat industry needs you

arge scale meat/poultry producers in Georgia can be counted on one hand. There are many small farms in Georgia, which are managed by

by velo mitrovich

individual households, but because of the lack of modern and efficient approaches in breeding, species selection, resource management and other factors, many of them

he Republic of Georgia is a country that is hard to define. Is it the most eastern part

just remain small household with small scale production, according to the Georgian National Investment Agency. That said, the demand for meat consumption is

of Europe or the most western part of

showing an increasing trend. Around 25 percent of beef,

Asia? About the size of Ireland, it’s just a

50 percent of pork and 60 percent of poultry consumed

coincidence – and a source of confusion on

in Georgia is imported, with these imports worth around

the internet – that its name and that of the US southern

$81 million. In 2016 the average consumers prices for beef

state are the same.

was $4.67/kg; pork $4.45/kg; and poultry $2.39/kg. Much

Although small, it’s located close to big neighbours,

of the beef that is imported is low quality Indian buffalo.

with large populations such as Russia and Turkey. With

Although the taste and quality of Georgian-produced

low wages, temperate weather, and a pro-business

beef is much better, local producers find it difficult to

environment, Georgia could be ideal for investment in the

compete against cheap imports. This has led Georgian

meat/poultry industry.

producers to export live animals rather than slaughter for

If there are any dark clouds on its horizon, its relationship with Russia continues to be a concern. Just

the domestic market. As in many parts of the world, an increase in a

as the small Caucasus country flirted with joining NATO in

country’s middleclass leads to an increase in meat

2008, Russia invaded and to this day continues to occupy

consumption and Georgia is no exception to this.

20 percent of its territory. [For more on why Russia made

However, defining ‘middleclass’ in Georgia is not

this move, see MPJ Sep 2017 ‘Insight into Russia’, or listen

straightforward.

to Meat Talk Podcast 10.]

January~February 2018

Some experts define middleclass by income; others

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confidence and risk index

SWOT Analysis

Business Climate

Strength Democratic political system/free press Business friendly environment International support, notably from the EU Strong GDP

Trade deals Political system Coruption International support Agricultural resources

Weakness High levels of poverty Universities not meeting agricultural science/engineering needs Need to bring in outside expertise Poorly developed rural infrastructure

Poverty Education system GDP growth Infrastructure

Opportunities Access to numerous trade free foreign markets including China Government support for investors Abundance of underemployed and cheap agricultural workforce Rated easy to do business with

Infrastructure development International logistics Government transparency Budget deficit

Threats Unresolved border war with Russia Foreigners cannot own agricultural land Contamination of surface water by agriculture runoff Relatively high level of leaving school in urban areas â&#x20AC;&#x201C; especially by girls

Starting a business Enforcing contracts Paying taxes Legal rights Construction permits Buying property

Source: Reby Research, Coface, World Bank

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History Georgia is a country in the Caucasus region of Eurasia. Located at the crossroads of Western Asia and Eastern Europe; west is the Black Sea; north is Russia; to the south is Turkey and Armenia, and southeast is Azerbaijan. The region of present day Georgia goes back to two ancient kingdoms. Due to its strategic location, over history it has been ruled by the Romans, Persians, Arabs, Turks, and Mongols. Georgia was absorbed into the Russian Empire in the 19th century. Independent for three years (1918-1921) following the Russian revolution, it was forcibly incorporated into the USSR in 1921 and regained its independence when the Soviet Union dissolved in 1991. For most of the following decade, post-communist Georgia suffered from civil conflicts, secessionist wars in Abkhazia and South Ossetia, and economic crisis. Following the bloodless Rose Revolution in 2003, Georgia strongly pursued a pro-Western foreign policy; aimed at NATO and European integration, and introduced a series of democratic and economic reforms. This brought about mixed results, but strengthened state institutions. The country's Western orientation soon led to the worsening of relations with Russia, culminating in the brief Russo-Georgian War in August 2008 and Georgia's current territorial dispute with Russia. Russian troops pledged to pull back from most occupied Georgian territory, but in late August 2008 Russia unilaterally recognized the independence of Abkhazia and South Ossetia, and Russian military forces remain in those regions.

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georg i a 50.0

47.5

year

georgia labour force

rural population as a percentage of total

by lifestyle. For still others, it is a state of mind relating to education, family background, and social behavior. Examined through the prism of hard cash, being

2017

2016

2015

2014

2013

2012

2011

2010

2006

2016

2015

2014

2013

2012

2011

40.0

2010

1750

2009

42.5

2008

1875

2009

45.0

2008

2000

2007

‘000s of men

2125

2007

percentage of population

2250

feed production, through to processing and packaging. Georgian Prime Minister Giorgi Kvirikashvili has launched a four-point strategy to draw investment to

middleclass in Georgia does not necessarily imply

the country by modifying income tax laws favorably

prosperity. “If we take the whole population, rank them

for most businesses, streamlining governance to drive

according to … income and take the middle 50 percent

efficiency, accelerating critical infrastructure projects, and

as a reference for the middleclass, we see that in 2014,

focusing investment in education on the most needed

the monthly income per person ranged between $90

areas and professions, says Michael Cowgill, president

to $204,” says Nino Doghonadze, an economist at Tbilisi

of the American Chamber of Commerce in Georgia and

State University’s International School of Economics.

president and co-founder of the Georgian American

Under World Bank standards, Georgia’s middleclass

University. Since 2010 the government has even been

would drop to “only 10 percent” of Georgia’s 4.4 million

pushing English as the country’s second language to aid

inhabitants, according to Doghonadze. Most of these

in business.

10-percenters live in urban areas like the capital, Tbilisi, and mid-size regional cities of Kutaisi, Telavi, and Batumi. According to the Georgian government’s ‘GeoStat’,

“Georgia has the most business friendly, reliable, and predictable business environment in the region,” says Cowgill. “Georgia’s favorable tax regime is the 9th least

per capita monthly income in rural areas is $95 (per rural

burdensome in the world, according to World Economic

household $347), while in urban areas per capita monthly

Forum. This is significant enticement to both local and

income is $126 (per urban household $436). Pensioners

international investors.”

receive from the state $70 per month. This is not a country whose 3.9 million inhabitants have money to burn.

According to the US Department of Commerce, Georgia’s successful economic reforms are reflected in its rankings by reputable international organizations. Since

Modernize

2003, the World Bank has recognized Georgia as one of the world’s fastest reforming economies and as a leader in fighting corruption. Georgia ranks 16th in the 2016

he Georgian government says there is a need and

World Bank’s Ease of Doing Business index, 13th in the

capacity to build modern farms to supply local

2017 Economic Freedom Index, and 59thout of 128 global

markets in the first stage and to distribute through

economies in the Global Competitiveness Report. Georgia

the region as the next step. Foreign expertise is needed

has the lowest corruption rate in the region according to

throughout the entire process from animal husbandry and

Transparency International and International Credit Rating

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Livestock birth rates 2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Calf

506.4

466.8

487.5

497.3

431.3

431.9

482.1

497.7

492.0

473.2

432.8

Piglets

773.2

385.0

116.4

211.0

211.1

223.7

360.0

408.9

366.8

419.7

332.9

Goat and lamb

523.5

541.8

521.1

505.8

483.1

440.5

476.7

551.7

634.8

622.8

628.1

Unit: thousand souls | Source: National Statistics Office of Georgia

Livestock slaughter rates 2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Cattle

47.0

69.7

75,6

76.1

101.9

73.0

92.1

69,3

67,2

69.1

83.7

Pigs

62.2

260.1

33.9

32.1

90.1

39.1

46.4

117.1

58.1

81.5

84.0

Goat and sheep

37.4

30.2

53.1

26.8

48.6

37.3

42.9

51.6

69.6

80.9

94.3

Bird

705.5

1985.4

2679.9

2592.7

2961.0

2007.1

3217.2

3005.3

2748.2

2943.3

2934.1

Unit: thousand souls | Source: National Statistics Office of Georgia

800 Birth

Slaughter

700

Small farms means little production

‘000s of souls

600 500 400 300 200 100 0 Cattle

Pig

Goat and sheep

protein birth rates vs slaughter rates (2016)

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Most livestock farms in Georgia are small and managed by individual households. Because of the lack of modern and efficient approaches in breeding, species solution, resource management, and other factors, many of them will just remain small household with small scale production. Due to a flood of Brazilian frozen pork and Indian beef imports, which can undersell locally produced red meats, there is a lack of initiative on the part of small Georgia farmers to either expand their own production or to form co-ops. In looking at similiar countries (weather, population, etc) in the region such as Armenia or Serbia, these are producing three times more than Georgian farmers who once had high production figures. Indeed, during the Soviet era, Georgia was famed as an agriculture powerhouse. While the political, social, and economic reasons for this slip in production are gone, Georgia seems to be struggling to shake off this negative spiral. One of the brightest exceptions to this – and showing what is capable in Georgia – is poultry company Chirina.

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Average price of protien 2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Beef

6.92

6.82

7.48

7.43

7.94

10.97

12.1

11.59

12.68

12.55

12.43

Pork

7.24

6.6

9.82

11.05

9.07

11.15

12.24

10.62

11.7

12.18

11.83

Chicken

6.59

7.07

6.45

6.71

7.16

6.92

6.53

6.41

6.56

6.37

Sausage

4.97

5.59

6.23

6.59

6.88

7.27

7.66

7.58

7.4

7.58

7.69

Frozen fish

4.22

4.59

4.56

4.79

5.19

5.73

5.67

5.77

5.35

5.55

5.7

Unit: GEL/Kg | Source: National Statistics Office of Georgia

150

Agencies (Fitch, Moody’s Investors Service and Standards and Poor’s) rated Georgia as a stable country. Judicial reform is a top Georgian government priority.

135

he EU and Georgia signed an Association Agreement in June 2014, which became active in July 2016. This agreement introduces a preferential

trade regime – the Deep and Comprehensive Free Trade

‘000 of tonnes

Trade deals

120

Area (DCFTA) – which increases market access between the EU and Georgia based on having better-matched

105

regulations. Under the DCFTA, the EU and Georgia will remove all their import duties on agricultural products.

measures will boost Georgia’s exports of agricultural products, says the EU. In addition, Georgia has bilateral free trade agreements

2016

2015

2014

2013

2012

2011

2010

2009

Georgian food products safer and, together, these

2008

The reform process will be an opportunity to make

2007

Georgia’s rules on animal and plant health and hygiene.

2006

The Agreement also provides a plan for reforming

year georgia annual meat consumption

with Turkey, Ukraine, some of the CIS countries (former Soviet Union), and has recently signed an agreement with China. Already the most pro-USA country in the area, there is a move for Georgia and the USA to sign a trade

Meat consumption hits bump

deal. Already there is a generalized system of preference deal with the USA, Canada, Japan, Norway, and Switzerland. Citizens of 94 countries can enter Georgia for a year without a visa, making business trips easy. “Georgia is emerging as a regional hub for trade on the New Silk Road. Georgia is now less than 10-days overland from China, and within four days of any point in Europe,” says Cowgill. A new deep-water port on the Black Sea will further enhance this connectivity, capable of handling up to 100 million tons of cargo and the world’s largest container ships. The Anaklia Port Project, estimated at $2.5 billion, is an ambitious joint venture between US and Georgian firms and will be operated by an American

After a very steady rise in meat consumption in Georgia, for the last three years there has been little growth. This is due to numerous issues including stagnant/low wages and local red meat production going to the export market. Exports of live bovine animals are comparatively new for Georgia. Due to harsh competition from Indian frozen meat importers, domestic meat producers are finding it hard to maintain their position in the domestic markets and most meat producers have switched to exports of live animals, mainly to Azerbaijan

company.

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Case study 1: Swiss knowhow brought to Georgia Company: Blauenstein Georgia Brand name: Blauenstein Georgia Year entering Georgia: 2008 One of the success stories in the Georgian meat production system has been brought about by Blauenstein Georgia, according to the Georgian business newspaper, The Financial. Blauenstein Georgia outsources the fattening of animals (Swiss and German breeds) to a small number of local farmers, who must meet minimum land requirements and have access to water and asset ownership, to ensure that they can feed and take care of the animals to the required standard. Farmers involved in this scheme are trained by Blauenstein Georgia and are provided with inputs, veterinary services, and all other needed support. When the calves reach a certain weight, Blauenstein Georgia buys them for slaughtering and selling. Those involved say the main challenges of this type of model are ensuring good coordination between all participants in the scheme and the avoiding of side selling. According to business writers Ia Katsia and Pati Mamardashvili, vertical coordination, such as the example of Blauenstein Georgia, has a lot of potential for Georgian agriculture, where many smallholders have substantial knowledge gaps, limited or no access to finance, outdated technology, and are using unsustainable agricultural practices. Blauenstein Georgia was established in 2008 by Max Blauenstein of Switzerland and Georgian Irakli Kervalishvili. Their aim was to create a modern, Swiss quality farm in Georgian Mountainous Region Racha. Today, Blauenstein Georgia produces fresh meat and meat products, with the company owning farms, a meat processing plant and a brand shop. The company has a tight partnership with local population; they not only train and employ local workers, but also support farmers by teaching contemporary farming techniques, giving cattle for farming, etc. Their model has proved to be successful. Blauenstein Georgia has plans to continue partnership with local population and increase the

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number of nine partner-farms in Racha to 20 in a near future. Additionally, the company is planning to expand its activities to other mountainous regions. "Cattle-breeding has huge potential in Georgia. For this reason it is very important to support this field of agriculture,” says Georgia’s Agriculture Minister Otar Danelia. "A large part of meat products are imported to Georgia. Investments made in local meat production will contribute to replace importing products with locally produced ones.” At a presentation in 2016, Georgian Prime Minister Giorgi Kvirikashvili said: "This is the case when members of the government should be silent and help the company, Blauenstein Georgia to do more good deeds. "I want to assure you that our team's motivation for this project to develop and become of greater scales is tenfold today. This is a pilot project, because we think that its potentail is a hundred times more than it is today. The model that you have introduced is the most compatible with Georgian agriculture and each person's motivation invovled in the project."

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Understanding georgia It's not called Georgia Georgians call their country Sakartvelo. The name consists of two parts: Kartveli, which refers to an inhabitant of the core central Georgian region of karli-Iberia, and the rest which means the "land where Kartveli live." It's not known where the English name of the country came from, but it's believed to be taken from St George, the patron saint of Georgia.

Cradel of winemaking George has been producing wine for at least 8,000 years and is considered to be the birth place of the beverage.

Only Georgians speak Georgian The Georgian language is among 14 unique languages in the world and has its own alphabet with 33 letters and no capital letters.

English spoken here â&#x20AC;&#x201C; sort of In 2010 the Georgian government made a big push for the country to learn English and has been recruiting a large number of native English speakers, mostly from the USA. The result is, those in their young 20s and younger in cities can speak some English, those over 40 know Russian, and everyone inbetween are a gray area. Overall, Russian is more widely spoken.

Ecologically diverse Georgia has 12 different climate zones, ranging from subtropical to alpine to semi-desert and has 49 types of soil.

When to go The ideal seasons in most of the country are from mid-May to early July, and early September to mid-October

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Cash Georgia's currency is the lari (GEL). It has been fairly stable since being introduced in 1995. One lari is divided into 100 tetri. As of 1 January 2018, $1 = 2.59 GEL. ATMs generally accept MasterCard, Visa, Cirrus, and Maestro cards, and are plentiful in cities and towns. You can make pruchases with credit cards at some hotels, restaurants, and shops, although less frequently outside of Tbilisi.

Vias Over 90 nationalities need no visas for stays up to one year. Those who need visas can apply online and receive them by email.

Tbilisi International Airport The airport is 15km east of the city center. Direct flights head to/from over 40 international destinations.

Kutaisi International Airport Located 22km west of central Kutaisi, the modern airport receives flights from several countries, mainly budget airlines, including Wizz Air, SCAT Airlines, and Vanilla Sky. The airport is around 200km west of Tbilisi.

Taking the water There is a chance tapwater harbors a parasite commonly known as Giardia. In addition, the condition of pipes can be quite poor. With a large assortment of local bottle water, it's safer to go bottled.

Crime? Tbilisi and the rest of Georgia is considered to be quite safe. Just use the same common sense you would use anywhere. Although the country is trying to change attitudes, Georgia has a homophobic problem.

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Case study 2: Largest poultry producer Company: Chirina Ltd Brand name: BiuBiu Year entering Georgia: 2010 Chirina Ltd is Georgia’s largest poultry producers and is the most successful processor in the country. Started by Revaz Vashakidze, a returning member of Georgia’s diaspora, Chirina is a modern, fully integrated poultry plant which can compete against cheap imports. Designed and built as a turnkey project by Israel’s Agrotop in 2011-2013, Chirina is a unique vertically integrated complex. Its products – fresh and frozen chicken meat sold under the BiuBiu brand – already accounted for about 1/6 of Georgia’s total consumption of poultry within its first year of production. According to a report from the US Agency for International Development, Chirina’s example shows that the key to Georgia’s success in technological upgrading, job creation and small/ medium size enterprise development can be held by large, well-invested food processing and manufacturing businesses. The notion that Georgia should prioritize SME development (at the expense of large enterprises) is akin to putting to cart before the horse. Chirina has become one of the leading food industry players in Georgia, creating hundreds of jobs, integrating Georgian agricultural producers into its supply base, applying downward pressure on prices, and expanding the range and quality of products available to Georgian consumers. Thanks to Chirina, Georgians can now buy fresh poultry in the market as well as frozen, local grown. Chirina’s entire production cycle is undertaken in Georgia, with high quality control procedures at each stage of production. The company owns the following enterprises: hatchery; breeder, pullet, and broiler farms; farmland for the growing of wheat and corn for feed; feed mill; meat processing plant; waste water treatment plant; shops and kiosks; rendering plant; and veterinary laboratory. Few of those they locally hired had prior experience or education of direct relevance for their jobs. Even when such experience was available, Chirina still invested considerable time

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and effort to acquire skills and knowledge that were specific to Chirina’s technological processes. During the first year of operation, Agrotop had a more-or-less continuous presence of two people on the ground to provide coaching and on-thejob training. Other people, such as the head of the veterinary laboratory, was sent to Israel to further her training in microbiology, virology, and serology. This also required hiring a private tutor to improve her English skills before going. For more on this remarkable company, read the interview in this feature with Keti Vashakidze, deputy director of Chirina.

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Challenges

vaguely worded loophole for “special cases,” and foreign investors are negotiating with the government to try to avoid a total ban. Lomsadze says that there seems to be

eorgian agricultural production was sharply

little justification for the land scare. Detailed records on

reduced after the collapse of the Soviet Union

foreign ownership of land are not available, but a 2014

as it was the case in all post-Soviet countries.

study by Transparency International Georgia estimated

However, it was hit even harder during the turbulent

that only 18,500 hectares of Georgian farmland was

1990s due to several armed conflicts. In 1990, agriculture

foreign-owned, a mere 0.7 percent of the country’s total

and forestry made up around 30 percent of the GDP;

agricultural territory.

nowadays it’s about a third of that level.

“I expect some foreign agricultural investors will have

Outdated skills of farmers and a lack of know-how

serious questions about the constitutional amendment,”

clearly stand out as weaknesses in Georgia’s agriculture

says Michael Cowgill. He said that his association, while

industry, according to Aleqsandre Bluashvill and Nina

conscious of the sensitivity of the land issue, believes that

Sukhanskaya, authors of an EU funded trade report.

such a strict ban may harm the country's economy.

Georgia’s universities have for years turned out economic

Connecting with good local representation is

majors but not engineers or other more practical degree

recommended before entering the Georgian market,

graduates which could help build a nation. In what might

says the US Department of Commerce. Exporters

start to turn this around, San Diego State University has

should consider visiting Georgia before signing a sales

partnered with three prominent universities in Georgia

or representation contract. There are several US‐trained

to offer SDSU curricula in several science, technology,

and licensed attorneys and Western consulting firms

engineering, and mathematics disciplines. With the

operating in Georgia. In addition, the Economic/

program only starting recently, however, you will still need

Commercial Section of the US Embassy in Tbilisi can be

for some time to bring in your own engineers to construct

instrumental for the American companies in their quest

a modern plant.

for partner search or market information.

Ownership of land for agricultural use remains a

Local entrepreneurs often request concessionary

sticking point if you do not have Georgian partners. The

payment terms or credit. Exporters should be wary

country, worried about farm land being bought up by

of extending credit before establishing a long and

foreigners, outlawed land sales to non-citizens and

satisfactory trading history with a customer, as well

formally enshrined the ban in the constitution this last

as limiting exposure. Cash in advance or the use

September.

of irrevocable letters of credit through a reputable

Economists are warning that the ban will put a damper

local correspondent bank is advised. Enforcement of

on much sought-after foreign direct investment, now

contractual rights by the local court system remains

over 10 percent of Georgia’s $14-billion economy, and

uneven.

will hamper development of the agriculture sector, which

Information on potential business partners and

employs over a half of the nation’s labor force, according

clients can be difficult to obtain in Georgia, with laws

to Giorgi Lomsadze of Eurasianet.

and regulations subject to change. Local attorneys and

However, a new clause in the constitution contains a

January~February 2018

consulting firms can be of assistance.

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700

â&#x20AC;&#x2DC;000,000,000s of usd

1.7

600

500

400

1.4

1.1

year

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

0.5

2006

0.8

300

2006

â&#x20AC;&#x2DC;000,000s of usd

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2.0

800

200

g row th

year

georgia food and drink exports

foreign direct investments in georgia

Top ten export markets Russia

355

Azerbaijan

222

Turkey

195

China

194

Armenia

188

Bulgaria

159

USA

115

Ukraine

106

Iran

Italy

iran

italy

Ukraine USA Other

Bulgaria

Armenia

China Russia

Turkey Azerbaijan

Unit: '000,000 USD | Source: National Statistics Office of Georgia year georgia largest export countries

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Big poultry in Georgia Georgian poultry producer Chirina Ltd will surprise you in more ways than seems possible. If this vertically integrated operation was built in Brazil, USA, Thailand, or Poland, it would still outshine all its neighbors. But to create this in the Republic of Georgia – a country many people struggle to find on a map – is truly amazing. MPJ suspects that if you look up ‘foresight’ in a dictionary, next to the definition will be a picture of Revas Vashakidze, founder and president of Chirina, and his niece, Keti Vashakidze, deputy director. MPJ talks to Keti Vashakidze to find out their secret in achieving very-near poultry perfection.

2013 is the official start-up date for Chirina. Was the entire operation up on-line at this time – corn production, feed mill, hatchery, farm, processing plant, distribution – or was it a several years process? Keti: In 2013, all the processes were up and ready for operation. End of August 2013 was the first time we introduced our meat to the market. But for producing the meat we needed to start up various business lines in different time periods. First was the startup of raw material production, its drying and storage facility, which we did in 2012. Farms became operational in December 2012; hatchery in May 2013 and the processing plant in August of 2013.

From what I can see, in Georgia there is nothing like Chirina. Where did you get your inspiration from? Keti: Georgia is one of those countries where after the breakup of the Soviet Union, most of the production

by velo mitrovich

and processing was destroyed and put to ground. Since then the country has been feeding itself mainly with the imports. For succeeding in this business, we needed

In Georgia, is poultry seen more of a healthier meat protein choice or as less expensive option?

to build everything from the ground up; we needed to build vertically integrated production lines – operations that would enable us to compete with the imports. We

Keti Vashakidze, Chirina: I would say both. Chicken in

have studied a lot about the business models existing in

Georgia is considered as a very healthy product. But at

European countries, in post-Soviet countries and tried to

the same time it is important to note that it is one of the

implement the best practices in Georgia.

cheapest source of protein making it highly demanded product both in Georgia as well as in the rest of the world.

Was investment internal or were you able to tap into funds from the Produced in Georgia program?

From day-one was it decided that the entire operation would be vertically integrated to the extreme that it is? Keti: Since there were no proper facilities (feed mill,

Keti: Our investment was mainly internal, but we have also

hatchery, and so) for this industry in Georgia we needed

participated in government programs like “Produced in

full vertical integration for this business. That was the

Georgia.”

decision made from the very beginning.

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Right now, around 70-80 percent of all poultry consumed in Georgia is imported, has it been hard breaking into the poultry market? Keti: Actually, the percentage is 60 percent. When we entered the market 90 percent of consumed poultry meat

expansion of our integration and tapping into meat further processing is the emphasis of our company.

With Agrotop [turn-key engineering company], Meyn, using air chilling technology, etc, just luck on your part picking the best?

was being imported; nowadays thanks to our production, this percentage is 60 percent. I believe we had right

Keti: When starting this project our intention was to

strategy for breaking into the market: latest technology

bring the best technology, know-how existing out

and knowhow; utilization of economics of scale; our own

there on the market to Georgia and that’s what we did.

retail chain; good distribution; good quality product at the

Partnering and working with the right companies has

right price.

been the main reason for the success of our company. [Companies Chirina use in processing include: Bizerba

At times with some countries/companies able to do massive production and combine it with cheap shipping costs, it’s impossible for local farms/ processors to compete. For example, in California I visited a large lamb processing plant. You would think that at the closest supermarket – just a few miles away – it would be selling their lamb. No, Safeway sold lamb from New Zealand because it was cheaper. Does Chirina have the same problem with poultry imports?

(weighing system), Multivac and Ishida (packing), Meyn (slaughtering/ processing plant) Nij-huis (water cleaning system); Agrotop (building); Geerlofs (refrigeration).]

In hindsight, would you have done anything differently when it comes to processing? Keti: I believe we had right business model from the beginning. Also, cooperation with the best companies enabled us to minimize the possible errors. Nevertheless, there is always an opportunity to do things better, and

Keti: Economics of scale enables large integrators to

more you learn and understand about the sector better

position their products at a competitive price in different

you can evaluate processing process, its plusses and

parts of the world. And price is crucial for this product.

minuses and generally the business.

Due to having latest technology, industrialized production of poultry meat we are able to successfully compete with the imports. Another advantage that we have is that our

The operation covers a rather large area, 15 square km. Are biosecurity issues a major problem?

emphasis is mainly on fresh meat, the quality of which exceeds frozen imports.

Keti: We have implemented ISO22000, HACCP at all of our production facilities. Biosecurity and quality of our

Georgia is in a fairly idea location with neighboring Turkey, Armenia, Azerbaijan, and Russia, along with having a Black Sea port. Are you looking at the export market or first trying to capture the Georgian? Keti: Export is the next step of our company development.

products is number one priority for us and thus we are constantly working in this direction.

The right equipment can minimize the potential of human error; was this one of your thoughts in going with Meyn?

Our main emphasis as of now is still to expand out production locally in Georgia, but we are starting to look

Keti: Meyn is one of the best companies in the world

more into export potential.

dealing with the processing of the poultry products. Quality of Meyn processing equipment, automation of its

Is halal or kosher an option you are looking at?

machinery were the main reasons for choosing Meyn.

Keti: We are looking into it, particularly into Halal

Is maintenance an issue in going high-tech?

certification and believe soon we will get consequent certification as well.

Keti: For developing the expertise in terms of maintenance we have contracts with the equipment

The work finished in 2013 was called Phase 1; has there been a Phase 2 yet?

suppliers. Technicians of equipment suppliers are visiting us annually, inspecting all of our equipment and training further our personal. Close cooperation with

Keti: Since 2013 we expanded our production, added

our partnering organizations has been crucial for proper

new facilities and doubled our production in 2015. Further

maintenance.

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January~February 2018

Is it difficult getting qualified processing plant workers?

Consumers can buy chicken at small Chirina street kiosks; is this a typical way of buying poultry in Georgia?

Keti: Having the right people and talent is the challenge of every organization. Initially most of the team didn’t

Keti: As it has been already mentioned, our emphasis

have any knowledge in poultry growing, processing, feed

is to sell fresh meat. Unfortunately, the professional

production and so on. For the purpose of training our

retail sector is still not widely developed in Georgia.

people and implementing the latest trends, we signed

Consequently, for selling fresh meat and ensuring the

one year know-how agreement with our Israeli partner

quality of the products we came up with the solution of

Agrotop. Group of professionals gathered by Agotop lived

kiosks. Due to establishment of kiosks and our own retail

in Georgia for a year and paired with local specialists.

shops currently fresh meat represents 60 percent of our

This is what enabled us to form the team of qualified

sales.

professionals.

How many shifts do you have a day?

You offer chicken mince and chicken sausages – not typical Georgian products. Has it been difficult breaking these two products in the market?

Keti: We have mainly one shift, but for some positions we have a 24-hour shift. We have special teams devoted to

Keti: In terms of further meat processing, so far we haven’t

cleaning in all of our factories.

built our own factory. We have been testing the market through outsourced models. We are planning to develop

In the UK Campylobacter is a huge concern; in the States, it’s Salmonella. Are these pathogens an issue with you?

further processing line in the coming year.

There is politics and there is business. Does Georgian/Russian politics get in the way of business?

Keti: Campylobacter, Salmonella are threats everywhere. For that reason, we built not only factories and farms,

Keti: Relationship between Georgia and Russia is tensed,

but also established a modern veterinary laboratory

parts of Georgia are occupied by Russia. Tensed political

accredited with ISO 17025 standard where microbiology

situation introduces additional risks to the business,

tests and serology tests are undertaken on the daily basis.

but at the same it is important to note that Georgia as a

We are checking our products and general biosecurity

country represents interesting investment opportunities in

levels regularly, and thus ensuring that our customers get

different sectors and potential for business development.

the best quality product.

January~February 2018

Meat Packing Journal

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The year we stop the waste Want to cut back on food waste at your plant and save money? Look no further than your metal detector. MPJ reports

year – around 1.3 billion tons – gets lost or wasted. In the USA it’s about 40 percent of its food production is wasted. According to FAO, in developing countries food waste and losses occur mainly at early stages of the food value chain and can be traced back to financial, managerial

and technical constraints in harvesting techniques as

The US and Caribbean were lashed by three major

people – that’s close to the population of the USA. In Latin

hurricanes. Monsoon floods killed thousands in the Asia

America, the waste figure is the same.

here are changes afoot. As this is being

well as storage and cooling facilities. Strengthening the

written, Eire, Pennsylvania, is digging

supply chain through the direct support of farmers and

itself out of a record snowfall, while fires

investments in infrastructure, transportation, as well as in

are still smoldering in California which

an expansion of the food and packaging industry could

is experiencing temperatures 10-20

help to reduce the amount of food loss and waste.

degrees F over normal. Earlier in 2017, over 260 high

Will this matter?

temperature/low rainfall records were broken in Australia.

The food currently lost in Africa could feed 300 million

Subcontinent. Are these climatic events caused by man

In medium- and high-income countries food is wasted

or just a naturally occurring events that have been going

and lost mainly at later stages in the supply chain.

on since the Earth was formed? That’s debatable. But one

Differing from the situation in developing countries, the

thing that isn’t is the waste caused by man.

behavior of consumers plays a huge part in industrialized

In 2012 food waste campaigner Tristram Stuart gave a

countries. The study identified a lack of coordination

TED talk in which he compared the world’s food supply to

between actors in the supply chain as a contributing

nine slices of bread. It must have hit home with many; it’s

factor. Additionally, raising awareness among industries,

since been watched over a million times.

retailers and consumers as well as finding beneficial

As he describes it, every year one slice of bread is lost on the farm due to poor handling, lack of sufficient storage, etc. Three slices are fed to animals to produce

use for food that is presently thrown away are useful measures to decrease the amount of losses and waste. For us in the meat and poultry industry, a proportion

meat, eggs, and cheese. Unfortunately, animals are

of this we cannot do anything about it; it is literally out of

poor at feed conversion, so only one slice comes out of

our hands. Consumers will forget what they have in their

these three in usable protein and the other two end up

refrigerators until it’s well beyond the edible stage, sell-

as manure. There are now six slices left out of the nine.

by-date versus use-by-date can be confusing, and meat/

Two of these slices are lost to food that ends up in the

poultry won’t be kept properly cooled.

garbage for various reasons – sell-by-date confusion,

However, there are parts of the production process in

spoilage, imperfect appearance, etc. In the end, we’re left

which we could do much more, and this includes working

with only four slices out of the original nine.

at preventing recalls and packaging food in a manner to

In the six-years since Stuart gave that talk, nothing has changed except food waste figures have only gone up.

reduce waste. MPJ has asked equipment leaders, in both metal

Current FAO figures show that around one third of the

detection and packaging, as to how we could be doing

food produced in the world for human consumption every

better.

January~February 2018

Meat Packing Journal

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Stopping metal detector false reject food waste Reducing food waste in production is a growing priority for manufacturers, particularly in the meat, poultry & fish sector, and false rejects from metal detectors can be a major contributing factor. Phil Brown, European sales director at Fortress Technology, explains to MPJ how the challenge is being addressed

greenhouse gas emissions by the same proportion and reduce the impacts of supply-chain water use. Signatories include the major grocery retailers and brand-owners such as Arla, Unilever, Nestlé, CocaCola and Premier Foods. Environmental accountability and reporting are now facts of life for most food manufacturers, whether they are Courtauld 2025 signatories or not. But of course, as well as demonstrating corporate social responsibility (CSR), being able to reduce food waste in the first place has – like energy efficiency –

actory food waste is a huge – and growing – issue for manufacturers, and one where

a direct impact on any company’s bottom line.

Mechanics of waste reduction

choices about production equipment, including metal detection and other quality control, can have a surprisingly significant

impact on outcomes. There are especially acute challenges – and sizeable opportunities – for the protein sub-sector, given that it accounts for the largest single share of food waste across all categories. While consumers hear messages about cutting food

taff training and improved processes are helping to cut factory waste, yet so too are decisions about which equipment to buy and how best to control it.

In the case of product inspection, specific features of

likely contaminants, the product, packaging, processing and supply chain may determine whether metal detection

waste in the home and retailers publicize their own

or x-ray is chosen for a particular point on the line. For

efforts, losses from businesses supplying those retailers

example, x-ray technology cannot be applied to product

cannot be ignored.

in free-fall, such as portioned meat snack products above

According to the Waste and Resources Action Program (WRAP), surplus and waste food from UK manufacturing

a bagging machine. In other settings, x-ray may make better sense

(including third-party logistics) was 2.4 metric tons (MT)

where it can add further quality control functions, such

in 2014 – 10 times the volume from retail, and 4.2 percent

as checking fill levels or the completeness of a multi-

of the country’s food production. Of this, some was

component pack.

redistributed to food banks and other beneficiaries, some

Yet, in many cases, the decision will depend on a very

was recycled as animal feed, but 1.7 MT remained as food

careful evaluation of the pluses and minuses of each

waste with much going to landfills.

technology. No supplier of either x-ray or metal detection

In its report, WRAP highlights the meat, poultry & fish

can guarantee 100% infallibility. Some businesses

sub-sector’s 540,00 MT contribution, or some 31 percent,

may run away with the idea that x-ray, as the more

of the industry total. This is more than any other category,

‘modern’ technique, should be the default choice. In

and over 10 percent of its own production tonnage. When

fact, arguments either way are more nuanced, and the

the analysis drills down to theoretically avoidable waste,

assessment needs to be approached with much more of

protein’s 160,000 MT figure accounts for 18 percent of the

an open mind.

food & beverage (F&B) industry’s 870,000 MT total. It is indicative of the seriousness with which these

X-ray will always come at a higher (and often significantly higher) installation and lifetime cost than

losses are now viewed that reductions in food waste play

metal detection: up to 100 times the cost of ownership,

a prime role in the UK’s Courtauld 2025 Commitment. This

in extreme cases. Food manufacturers should be wary of

voluntary scheme has as its first objective a 20 percent

any advice implying that ‘you cannot put a price on food

reduction F&B waste. It also aims to cut F&B-related

safety’. In fact, every major decision involves a minute

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assessment of cost versus risk, and it is disingenuous to

of an entire operation, while repeated stoppages and

suggest otherwise.

trouble-shooting will incur unnecessary cost. Reliable

The sensitivity of both types of system will depend on a series of variables, from the potential size and

estimates put the cost per line of false rejects at up to £14,000 ($18,813), depending on the scale of the problem.

composition of possible contaminants to the liquid

Optimizing detection

content and consistency of the product matrix. Factory space and the radiation safety requirements of x-ray systems may be among other considerations influencing food manufacturers.

Enough... and too much

emonstrating its innovative approach, Fortress has taken an industry lead in reducing food waste in other ways.

High-speed, multi-line packing operations have

a number of options when it comes to contaminant

As discussed, neither an x-ray nor metal detection

detection. Manufacturers can channel multiple lanes

system can be expected to identify every

through a single, large metal detection aperture. The clear

contaminant in the course of its lifetime. Because

drawback here is that the larger aperture size sacrifices

the size, orientation and density of contaminants – among

valuable levels of sensitivity. In addition, any reject system

other variables – will affect detectability, both types of

will remove an entire line of product across all of the lanes

technology are inevitably set up and calibrated in order to

being checked, so creating unnecessary waste.

err on the side of caution. Of course, manufacturers will want to avoid excessive

Of course, there is the option of positioning a separate metal detector over each lane. This will mean product

levels of false rejects, too. This is where the competing

is only ever rejected from one lane, but the approach

demands of food safety and food waste overlap – and

has major impacts in terms of cost and space efficiency.

where the latest metal detection technology can help to

In today’s food factories, many of them working around

cut waste while maintaining safety levels.

legacy equipment and within severe spatial limitations,

False rejections, which occur when perfectly good product is identified as containing a contaminant, are

compact design is often a prime consideration. The Fortress solution, already installed on multi-line

most common on lines handling ‘wet’ items. While

operations checking meat burgers and salad pots, is a

this way of categorizing products does include those

single metal detection system with multiple apertures

literally wet or moist consistencies so typical of most

for each lane and a single operator panel. Each aperture

meat or fish products, it also refers to any food matrix

is sized as closely as possible to the product. The same

containing high levels of salt, such as processed or cured

multi-lane approach could be used for trays of different

products, or other mineral fortification. The common

sliced meats or a range of cuts for multi-packing.

element is a strong ‘product effect’, which registers

Potential benefits are immense. On five conveyors,

relatively high conductivity and magnetic permeability,

end-users can save up to 50 percent of the space

mimicking the signal picked up from metal, and so

required by individual metal detectors, around 17 percent

making any distinction between the two hard to establish.

of the installation cost, and up to 65 percent of the total

Traditionally, stainless steel has been especially difficult to

cost of ownership with reduced maintenance and parts

detect in wet products since any signal can be effectively

requirements, says Fortress.

disguised by the product effect. Fortress Technology’s most recent innovation in this

Most impressively of all, on a five-lane configuration, the system automatically reduces food waste by 80

area, the Interceptor metal detector, applies both high

percent, even before the benefits of increased sensitivity

and low frequency ranges in order to isolate the product

are considered.

signal, and more readily identifies any contaminant

This is only one of the more recent developments in

signature beyond that. Trials with stainless steel in wet

metal detection with a direct bearing on the amount of

products have shown that Interceptor enables the

food waste meat, poultry & fish manufacturers generate.

pinpointing of contaminants as little as half the size of

It serves to demonstrate that food safety on the one hand

those detectable by the previous generation of metal

and concerns about cost and wastage on the other do not

detector equipment.

necessarily pull the food industry in opposite directions.

Finally, false rejects don’t just impact the physical

Technological improvements can help to contain costs,

waste where perfectly good meat and fish is discarded.

maximize space and significantly reduce the annual half a

Lower factory yield can undermine the cost-effectiveness

million tonnage of food waste.

January~February 2018

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Maximizing detector performance Not a day goes by that somewhere in the world a food recall isn’t taking place. At times the cause of tons of food product – and company reputation – being destroyed is a small piece of solid material. Jim Oko, director of Process Engineering at Stellar explains how to get the most out of your system to prevent food recalls.

price, they’re still more expensive than metal detectors and cost more to maintain. So should you opt for x-ray or metal detection? Every food facility today should have both, but where and to what degree depends on your product, processing and HACCP plan.

Redundancy and line independence

very plant is unique, of course, but two crucial stages for detection are:

by Jim Oko

Incoming raw materials — to prevent any

contaminated raw ingredients from entering the

processing lines in the first place

ajor food recalls are a reminder of how

Post-packaging — to ensure no contaminants that

critical detection technology is for a

may have been introduced in the processing are shipped

food facility — and lately, it seems we’re

out to the consumer

being reminded far too often. There are a lot of variables when it comes to

When it comes to detection systems, the more “checkpoints” you have, the greater the probability of

x-ray and metal detection systems: What should you buy?

catching a contaminant. Redundancy can keep potential

How much protection is enough? How do you maximize

contaminants from slipping under the radar and triggering

performance? Let’s start by understanding the difference

a costly recall.

between x-ray and metal detection technology. Metal detection systems are generally less expensive

Adding more x-ray detection mid-process can help you pinpoint the source of the problem in the event of

and last longer than x-ray systems, but they are

contamination. If you establish line independence by

sometimes limited due to product composition and other

having an x-ray on each line, you can narrow down a

issues that can lead to false positives with wet or salty

contaminant to an individual line. This can save you a lot

products or with metallic packaging. Plus, there’s the

of product and money compared to having to throw away

obvious: they can only detect metals.

or recall everything because you don’t know the exact

On the other hand, x-ray systems can detect most

source of contamination. If you can detect an issue with

solid particles including metal, glass, bone and plastic.

the raw material early in the process, you can eject it from

However, in most cases, they cannot detect aluminum or

the system before wasting packaging.

wire contaminants, and although they’ve come down in

January~February 2018

What else your x-ray system can do for you? When we

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talk about x-ray systems in food facilities, we tend to think of detecting foreign objects, but this technology has a

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isn’t always the manufacturer’s fault, but often times it is. Ultimately, the “mystery” of why recalls still happen

variety of applications:

comes down to how dedicated manufacturers choose to

Verifying third-party product — By scanning raw

be when it comes to food safety and detection. There are

materials provided by an outside vendor, you can confirm

USDA minimums in place, but they’re just that: minimums.

that the composition is accurate and that there are no

One of my mentors once told me, “If you’re not

contaminants present before you ever introduce that

confident that the product is safe enough to feed to your

material into your facility.

own children, then don’t send it out the door.”

Fat-to-lean analyzing — Since x-rays can detect

This is often a matter of company culture — and I don’t

differences in density, you can use your system to

just mean the nice words in your “corporate philosophy”

measure the fat-to-lean ratio when blending certain meat

or “core values,” it’s putting your money where your mouth

products.

is. Going above and beyond the minimum means adding

Packaging seal contamination — X-ray systems can

redundancies, investing in proper detection technology

detect if liquid or meat interfered with the seal during the

and implementing it at various stages of processing.

packaging process. Seal contamination can create a leak

When you invest in any piece of equipment, it’s

which could diminish shelf-life or ruin product outright.

important to fully educate your staff and keep up with

Confirm unique packaging requirements — Since x-ray

preventative maintenance so the equipment operates at

equipment can serve as a vision system, you can program

its peak parameters all the time. This is especially true

it to confirm that certain packaging elements, such as

with x-ray systems, which require routine calibration.

labels or oxygen scavengers, are properly included before the product leaves the facility.

Teaming up with an experienced and objective consulting partner can ensure you invest wisely in equipment best suited for your needs. The money you

So why do recalls still happen?

spend up front on proper detection equipment is always going to be less costly than a major recall and potential

lawsuits. Your detection systems are essentially the last

ith all this advanced technology, it makes

line of defense between your product and a disastrous

you wonder why so many recalls still make

recall. It’s the last place you should be cutting corners.

headlines around the world.

Sure, there are cases in which external factors are

Jim Oko is the Director of Process Engineering at Stellar,

to blame. For example, you can produce salami for

a fully integrated design, engineering, construction and

a supermarket deli and do everything right, but the

mechanical services firm based in Jacksonville, Florida.

problem happens once the product has left your facility:

Discover more best practices, food industry insights and

metal shavings from a meat slicer get into the product, a

useful information on Stellar’s award-winning blog, Food for

product isn’t stored at the right temperature, etc. A recall

Thought (www.stellarfoodforthought.net)

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Keeping bones out Poultry consumption continues to rise around the world, a trend FAO is projecting to at least 2025. Much of this is being fueled by continuing advances in processing equipment. However, at the speed a chicken line operates, bones remain a problem in finished product. Yousef Fatayer, project support group manager at Eagle Product Inspection, looks at how x-ray can eliminate this problem in this piece written exclusively for MPJ

have emerged as wealth has increased – with KFC, for example, being the most popular fast food restaurant in the country. Finally, European production and consumption of poultry remains strong, with an estimated 103.6% self-sufficiency rate in 2017 – a figure that has risen steadily since the European Union became a net exported of poultry in 2008.

Challenge of bone detection

constant across the global poultry market is the drive for greater transparency in farming and production methods and a call for greater levels

of safety. Consumers are far more informed today given the broader access to information, and are therefore more

by Yousef Fatayer

conscious of how the products they buy are produced. This has led governments, regulatory bodies and retailers

onsumption of poultry products globally is on the rise. It is predicted that between

to introduce far more stringent controls – particularly where the detection of foreign bodies is concerned. For poultry processors, the detection of bone is a key

2013 and 2023 the industry will grow at

challenge. Product entering the retail supply chain with

a rate of 3.2 percent a year, with uptake

bones present where they should not be has the potential

set to increase faster than pork and beef

to harm a customers’ brand, and a negative consumer

products. Changing consumer behaviors and attitudes

experience or, worse, a product recall that could have a

have helped fuel the increase in poultry consumption,

serious impact.

alongside a growing population worldwide. A 2016 report

X-ray systems allow for quality assurance of poultry

– Poultry Trends - highlighted that developing countries

products during various stages of production, and are

will account for 73 percent of additional meat output over

capable of detecting calcified bone down to 2.0mm

the next decade, with poultry the main driver of additional

in a number of presentations. With pipeline inspection

gains due to its low production costs relative to other

technology, pumped products such as chicken filets

meats such as beef and pork.

and ground meat can be inspected during the initial

In the US, a recent report by Technomic, 2017 Center

phase of the production process, before the processing

of the Plate: Poultry Consumer Trend Report, compiled

and packaging stages. This can prevent downstream

findings from more than 1,500 consumers, and outlined

equipment from potential damage from physical

that poultry remains the protein of choice – with chicken

contaminants and other problems.

consumption being bolstered in recent years by increases at breakfast and snacking options. According to the report, the US is projected to

X-ray inspection systems are also available to inspect bulk-flow (or loose) poultry within the initial stage of the production process. This is the most common

continue to lead poultry production, with output of over

presentation, and X-ray is the ideal solution when

23 million metric tons by 2025.

detecting for multiple sources of contamination – such as

In the same timeframe, China is expected to produce output of 15.8 million metric tons – with rising incomes

calcified bone, metal, glass, and some rubber and plastic equipment components.

and the emerging middle classes demanding more and

Within the poultry sector, the fresh prepared retail

more meat. In addition, more western style eating habits

category – generally refrigerated products which are

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fully or partially prepared for consumer convenience â&#x20AC;&#x201C; is an area which is also growing in popularity amongst consumers. A considerable amount of packaged poultry items fall under this category. Advanced X-ray inspection technology designed for packaged products can perform various quality checks, including detection of physical contaminants, mass measurement and missing component checks. Product trapped in seals can also be identified and rejected. All of these factors add considerable value to the overall inspection process of the product and ensure consumer safety is optimized.

Sanitary design

oultry products are particularly susceptible to

Total cost of ownership

bacterial contamination, with poultry processing taking place in some of the harshest environments

within the food industry. The challenge to ensure that poultry is inspected in a hygienic manner is one of the top priorities for processors. Traditionally x-ray inspection technologies have been equipped with protective curtains, to protect

hen making capital purchases it is vital to factor TCO into the equation. The cost of a system over its lifetime should not be

ignored or obscured by the purchase price. Elements

operators from radiation emissions. While an effective

such as longevity in the field and of components are

means of ensuring operator safety, these curtains can

very important considerations, as is the durability of the

cause sanitation issues in poultry inspection due to direct

systems and the amount of operator intervention required

contact with the product in its raw state.

in day-to-day operations â&#x20AC;&#x201C; whether that be related to

Recent developments in x-ray inspection technologies

set up or sanitation procedures. One of the key points to

within the poultry industry are addressing the concerns

bear in mind is to work with a supplier with a track record

of such issues. For example, systems designed with a

of producing robust systems that are designed to tackle

conveyor which inclines at a gradual angle, allowing for a

the job in hand. In doing so, processors can then be

curtain-less tunnel, are now available. This prevents the

reassured that the system can be relied upon to perform

risk of bacterial contamination being spread from one

its intended functions with reliability, longevity and

product to another, reduces the risk of harborage, and

productivity in mind.

at the same time prevents the pathway of radiation from

Eagle product inspection

coming into contact with operators. X-ray systems should conform to IP69 ingress standards, enabling them to withstand the poultry industryâ&#x20AC;&#x2122;s rigorous, high-pressure, high-temperature wash down procedures. They should ideally be built to meet North American Meat Institute (NAMI), NSF/ANSI/3-A

he Eagle Product Inspection line of x-ray inspection systems evaluates in process and finished products for contaminants such as metal,

14159-1 & 3, and European Engineering & Design Group

glass, stone and bone while also having the ability to

(EHEDG) standards for sanitary construction and operation

analyze the fat content of meat, count components,

- ensuring that complete design due diligence has been

check seal integrity as well as measure mass and assess

performed so that HACCP critical operations are met.

fill levels.

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Demand grows for Plastic Age to end Big changes are going to have to come to packaging this year. However, MPJ sees no one taking the lead. A show of hands anyone?

threat to entire populations.” How popular was Blue Planet II in the UK? It was the most watched show in 2017. And, now it’s appearing around the globe. If you think that people aren’t going to start questioning why 7 million tons of plastic are dumped into the world’s oceans every year, think again.

by velo mitrovich

MPJ believes that this year globally this year consumers are going to demand a reduction in plastic

packaging. The question that needs to be answer is: will

The people behind 'Blue Planet 2' say there was

‘The frog does not drink up the pond in which it lives’,”

seldom a time when they were filming that they didn't

said lead speaker Richard Coles, director of Emagine

come across plastic in the sea.

Packaging. Coles said that consumers are going to drive

n a recent series by the BBC called ‘Blue Planet 2’, the scene which had the whole UK taking was not

the meat industry lead or be forced to follow? At a recent international conference in London, Food

the sperm whales vertically sleeping, the all-teeth

Matters, speaker after speaker during the packaging

Bobbit worm, or the bird-eating fish, no, it was the

presentations spoke of the need to reduce the amount of

feature that showed the absolute mass of plastic in

packaging material.

the oceans.

“There would rarely be a dive where I wouldn't find

“My favorite quote comes from the Sioux and it goes:

the $1 trillion industry to be more ethical and sustainable.

some form of plastic from a thread of plastic fishing line,

Big changes coming

sweet wrappers, or plastic bottles,” assistant producer Sarah Conner tells BBC Newsbeat. “Some scientists think that entanglement in marine plastic is the most significant welfare threat of human origin in the ocean,” says executive producer, James Honeyborne. "In some cases, it can also be a conservation

January~February 2018

he dominant position that China holds in global manufacturing means that for many years China has also been the largest global importer of

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many types of recyclable materials. Last year, Chinese manufacturers imported 7.3 million metric tons of waste

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plastic proliferation crisis. Andy Clarke, CEO of one of Britain’s biggest

plastics from developed countries including the USA,

supermarket chains for six years, says the only solution

Japan, the EU and UK.

was for retailers to reject plastic entirely in favor of more

However, in July China told the World Trade Organization that it will ban imports of 24 categories of recyclables and solid waste by the end of the 2017. This

sustainable alternatives like paper, steel, glass and aluminum, he tells the Guardian. “Go into any supermarket in the country and you will

campaign against yang laji, or “foreign garbage”, applies

be met by a wall of technicolor plastic,” Clarke said. “Be it

to plastic, textiles and mixed paper. One of the reasons for

fruit and veg or meat and dairy, plastic encases virtually

this is China” own garbage and recycles from its growing

everything we buy.

middle-class consumers. According to the Independent, this applies equally to

“Regardless of how much is invested in Britain’s recycling infrastructure, virtually all plastic packaging will

other countries including the EU, where 87 per cent of

reach landfill or the bottom of the ocean sooner or later.

the recycled plastic collected was exported directly, or

Once there, it will remain on the earth for centuries.

indirectly (via Hong Kong), to China. Japan and the US also rely on China to buy their recycled plastic. Last year, the US exported 1.42 million tons of scrap plastics, worth an estimated $495 million to China. If US, EU states, and other countries have passed

“It is vital that the UK packaging industry and supermarkets work together to turn off the tap.” However, going by the West’s never-ending attempts over the last 50-years, this is a lot easier said than done. Indeed, the only thing that has changed every year is

local and state laws that an x-amount of plastics must

the increase in plastic production. According to Forbes,

be recycled and now the main buyer of used plastics is

last year alone a staggering 1 million plastic bottles were

saying “no more”, then the reduction and elimination of

made every minute.

plastics – when possible –will have to be the key. The former boss of Asda is calling for supermarkets to

We in the meat industry want the best possible world for our grandchildren, a world with only sustainable and

stop using plastic packaging saying billions of pounds of

ethical packaging. Consumers, too, want the same thing.

investment in recycling has failed to resolve the world’s

Will this be the year we start making a difference?

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Consumers want more from skin packs Vacuum skin packaging continues to set the pace, but it’s not perfect. MPJ looks at companies bringing it to the next level.

While skin packs offer long shelf live – up to 21 days and beyond – this becomes a moot point, according to Meat Promotion Wales, due to consumers not keep the packaged meat at temperature 7ºC (44ºF) or below. In the absence of oxygen, this will allow the growth of pathogen

C Botulinum.

realized too much of the weight of the fish they paid for

pack the color doesn’t stay brilliant red but goes more of

was water. In addition, while an ice glaze kept the frozen

a dark brick red or even brown. Although once exposed to

fish from freeze-drying, it hid the seafood, destroying any

oxygen the ‘fresh’ red color returns – blooms – in about an

attempt at presentation. With skin packs, not only did ice

hour, not all customers are convinced. Some stores have

glaze become something of the past, but the true colors

had to do marketing campaigns to promote skin packs.

of the fish were on view to the consumers.

In addition, vacuum skin packaging works best with flat

t’s hard not to see the impact that vacuum skin

Another issue with vacuum skin packs that modified

pack packaging has had on the protein market.

atmosphere packaging (MAP) dodges is the color of the

Seized first by the seafood industry, it totally

meat. Customers judge the freshness of red meat in a

transformed its frozen and fresh industry. Frozen

supermarket cooler case by its color; the redder the meat

fish fillets or shellfish were no longer coated in an

the fresher it is. In this aspect, MAP comes out way on top.

ice glaze, which had long infuriated consumers as they

With fresh seafood, skin packs increased shelf life. An

Without oxygen or other atmosphere, in a vacuum skin

pieces of meat, such as steak fillets; cuts of meat or

upmarket seafood seller in Turkey, who was the first user

poultry with irregular shapes can be a challenge to seal.

of skin packaging in the country, told MPJ that skin packs

As anyone knows with the frustration of trying to open a

changed everything for him. Throughout the world, those

bubble pack, there can be some difficulty for consumers

seafood merchants who took the leap to skin packs saw

in opening skin packs. However, there are answers.

sales increase.

Fins open easier

Meat and poultry producers were slightly slower on the uptake but today’s there is no going back. Last year British supermarket chain Waitrose said that it found skin packs reduced wastage, increased sales of meat products, and added significantly to meat and poultry shelf life. Some proponents say you can expect up to three to four weeks. Waitrose said it saw a huge 17 percent sales increase of its own brand ‘Essentials’ range of steaks when skin

ackdesign ID and meat producer Atria’s codeveloped new ‘Atria Easy Open Vacuum Pack’ which entered the Finnish market last year. How

well was it received? This package was the jury’s first choice in the Scandinavian Packaging Association’s Scanstar 2017 competition.

packs were introduced. In addition, the store said that it

While MPJ thinks calling the new vacuum pack

saved 30 metric tons of packaging per year because of

“revolutionary” is a bit of a stretch, Atria claims that is

the change.

indeed “revolutionizing” the Finnish ground beef market.

Skin packaging seals meat portions between a base

“‘Easy to open’ is seen in a completely new and unique

film and a heat-softened top film that is vacuum drawn

way – no scissors needed, pull the tab to open the

onto the meat surface to give it a tight pack. “Form-

package. The ground beef is easy to remove from the

shrink” packaging technology for products such as

opened package and put in a pan or bowl for preparation,”

sausages, are placed between two shrinkable films,

says Atria.

which are molded without wrinkles around the goods. Sealing seams can be kept extremely small. But not all is perfect in the world of skin packs.

January~February 2018

In addition to the exceptional ease of use, Packdesign and Atria claim there is over 50 percent less packaging material in the vacuum pack, compared to all other

Meat Packing Journal

reduc i ng

ground beef packages on the Finnish market. “The packaging adapts perfectly to the shape of the product, saving space during transport, in the store, in

waste

pac k ag i n g

Suomi Oy. “Versatile food products that are easy to use, are now also packaged as user-friendly as the contents.” Consumers have also embraced the innovative

customers’ shopping bags, in the refrigerator, and in

package design that “simplifies” their daily life. A pilot

the trash bin. Additionally, the ground beef is packaged

test conducted in the fall of 2015 demonstrated that

without the use of packaging gases and allows for a

97 percent of consumers liked the new design and 95

longer shelf life in the store.” Atria produces the packaging

percent of those who tried it once wanted to buy ground

in its own facilities.

beef in the new package in the future.

In Finland, ground beef is traditionally packed in a

Deep skin packs

MAP container. “Ground beef is vacuum packed around the world, but does not have the user-friendly packaging with the easy-to-open feature. Atria is the first to bring a truly innovative, easy to open vacuum pack to the marketplace,” says the meat company. “Ground beef is a daily life saver for the consumer”, says Anna Kultalahti, product group manager of Atria

meatpacking.info

eat sealing specialists Proseal says it has launched the world’s first semi-automatic tray sealer for skin deep packs.

The new Proseal GTR-E can seal products that sit up

January~February 2018

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to just shy of four inches (100mm) above the edge of the

has to wait for each tray to be sealed, the rotary operation

tray, making it ideal for large pieces of meat and joints.

of the GTR-E means a new tray can be loaded while the

As with all types of skin packs, the film wraps tightly

previous one is being sealed, delivering higher speeds

around the meat to extend the shelf life of the product

and efficiencies to meet production line requirements.

without the need for gas flushing, and provides enhanced presentation. Proseal tells MPJ that the GTR-E has been

Rhug Estate cutting plant manager, Gary Jones says: “We needed a tray sealing machine that would ensure our high-quality meat and sausage was both presented and

developed in association with the first customer for

protected effectively, in order to reach our customers in

the machine, Rhug Estate, an award-winning organic

premium condition.

farm in Denbighshire, Wales, owned and run by Lord

“With limited space available in our packing operation,

Newborough. This massive estate covers 12,500 acres,

we approached Proseal to help us come up with an

extending from unpronouceable Gwyddelwern in the

appropriate solution. The GTR-E meets our requirements,

north, Carrog to the east, Cynwyd to the south and

and we have been delighted with the high standard of

Maerdy to the west. The 6,700 acre in-hand organic farm

service from Proseal and the reliability and efficiency of

is the geographical core of the estate along with Rhug

the machine.”

Mansion being the main residence. The Glynllifon Estate

Oven ready pack

comprises of 7500 acres which includes the main in-hand faming enterprise of Ty Mawr. To meet Rhug Estate’s need for maximum flexibility, as well as being able to handle skin deep packs, the GTR-E can seal a wide variety of other pack types, including standard, gas flushed, and vacuum gas flushed trays, and

inpac (Klockner Pentaplast) is using vacuum skin packs for a new concept it calls ‘Prime Cook’. This pack allows consumers to cook a beef or lamb

ordinary skin pack trays. Tool changes between standard,

roasting joint on an oven tray in 30-45 minutes, with what

skin pack and skin-deep formats take just five minutes,

it claims will have all the tenderness and delicious flavor

says Proseal.

of a slow-cooked joint.

The new model also incorporates Proseal’s innovative,

The Prime Cook pack’s vacuum skin pack protects and

in-house developed E-seal technology, a high precision,

preserves high-quality joints from meat processor Dunbia,

high force electric seal system that creates a very tight

which are part-cooked (sous vide) in a hot water batch.

and reliable seal each time while reducing compressed

Linpac says the packaging extends the pack’s shelf life

air usage by over 90%, thus delivering important energy

and prevents supply chain damage. A perforated rPET

and cost savings.

insert captures and conceals the meat juices released

Proseal says the machine’s semi-automatic operation

during the sous vide cooking process to enhance shelf

makes it ideal for smaller scale enterprises, which do

appeal, enabling consumers to them use them to make

not require a fully automatic in-line tray sealer, while its

gravy or baste the meat after cooking.

compact dimensions mean it can fit into the smallest of factory spaces. Unlike traditional manual machines where the operator

January~February 2018

Prime Cook has been nominated for a Starpack Award which recognizes excellence in packaging and celebrates groundbreaking developments.

Meat Packing Journal

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jason

kay

Digitization is Key to Averting the Global Food Crisis A number constantly being batted around by everyone from the UN to NGOs to food processors is 9 billion – what the world’s population is expected to reach by 2050. While many see this number as a tipping point when we will no longer be able to feed the world’s population, one voice disagrees. Jason Kay, CCO, IMS Evolve, explains the role digitization is playing in transforming the cold food chain to eradicate waste, improve food safety, and mitigate the risk of a global food crisis.

12 billion – far in excess of the current seven billion population – yet more than one billion people are under fed. The UN estimates that, on our current path of food consumption and waste, by 2050 we will reach a tipping point and the world will be in a food crisis. The problems extend from agriculture all the way through the food supply chain to the home, where food wastage – in more economically developed countries at least – is excessive. The UN target calls for the world to cut per capita food waste in half by 2030 – but while changing consumer education and expectation is essential – as in the drive to increase biodiversity – it is within the food supply chain that these changes will come together. Without democratizing an incredibly consolidated food supply market, it will be impossible to reduce wastage, embrace innovation and change consumer behavior. Systemic change is essential.

by Velo Mitrovich

In this issue of MPJ we’ve started a new feature entitled Future Protein. In preparation for this, during much of the last year I’ve been talking to a range of people who see the answers to our growing food crisis in everything from insects to lab cultured meat. But you see our current production level is adequate to feed well beyond the 9 billion we’re expected to reach by 2050. Not to say you’re a lone voice in the wilderness but...

If I understand correctly then, you see then not so much our population as unsustainable, but instead more on how we manage the distribution of food – our cold chain – is what is unsustainable? Exactly. Over the past 50 years, the economies and ethics of food production have fallen out of sync. Farmers do not want to produce food that is wasted, but every aspect of this low margin model results in wastage. Fears regarding food safety, especially with regards to meat and poultry, combined with failure of cold chain equipment, leads inevitably to food being destroyed. But basic process

Jason Kay: The world today has a vast, genuine problem with food – from a lack of biodiversity to excessive

failures are just one aspect of the problem. The sheer cost of managing suppliers to ensure

wastage, from poor health linked to over consumption

product consistency and safety makes it difficult for

to massive food poverty. We grow enough food to feed

retailers to embrace new, innovative providers; while

January~February 2018

Meat Packing Journal

jason

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those with existing contracts cannot afford any risks associated with late delivery or under supply, and hence build in significant contingency. The result is not only more wastage but also minimal opportunity to invest in innovation, to explore opportunities for new, healthier food options or embrace automation to improve efficiency.

Are you talking 10, 20, or even 30 years in the future or is this something that is achievable now?

sounds almost too easy, which begs the question, then why isnâ&#x20AC;&#x2122;t anyone taking this tact? They are. This approach is already being used by forward thinking organizations that are using digital and automation strategies today to reduce avoidable loss of

Clearly the systemic change required if the world is

food, achieve huge reduction in reactive maintenance

to avoid the predicted food crisis cannot be achieved

costs, even reducing customer complaints. While supply

overnight. In a difficult, low margin market, with small

chain complexities have traditionally made it easier and

numbers of players fighting hard to retain share, it is

safer to store all chilled foods at the lowest temperature

incumbent upon innovators and disruptive market players

required (by meat), this can reduce the quality of some

to leverage digitization to drive that change.

other produce, such as dairy, and relies on more energy

The most obvious role of digitization is in minimizing

than is otherwise necessary. By integrating the data

avoidable waste. When one in three freight journeys in the

from the existing machine sensors with supply chain

UK is food, the use of real-time information to improve

and merchandising systems as well as the fridge control

routing and distribution planning is key to improving

systems, each machine can be automatically set at the

resource utilization. Meat and poultry in particular make

temperature to suit the specific contents, ensuring safety

for sensitive cargo that leave no room for error; bacteria

while radically reducing annual power consumption.

will double three times faster on poultry transported at 32

Together these changes result in a reduction in revenue

degrees Fahrenheit, for example, then it would at just four

expenditure of tens of millions and, in large estates,

degrees cooler. Using existing sensors on refrigeration

percentile point gains on capital employed can run into

units, heating units and air conditioning systems to raise

many hundreds.

alarms when problems occur to enable immediate rerouting or allocation of items, plus the use of predictive

For all of its ease, it sounds expensive.

maintenance to avoid equipment downtime, can therefore have a very significant impact on food wastage,

Critically, this is being achieved by deploying an IoT layer

not to mention food safety.

over the existing infrastructure â&#x20AC;&#x201C; clearly it is not feasible for retailers to rip and replace control infrastructure

I hate to say it but what youâ&#x20AC;&#x2122;re proposing in a way

meatpacking.info

across hundreds or thousands of locations. The impact

January~February 2018

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on both profit and customer experience would be hugely

the correct processes at every stage of the supply chain,

damaging.

from farm to retailer, digitization provides a full audit

Instead, by leveraging edge-based processing to

trail of trusted information. This approach delivers low

ensure information from existing equipment throughout

cost governance, radically reducing the cost of supplier

the supply chain is both actionable and actioned to

ownership for retailers and opening up new opportunities

make immediate changes, retailers are able to achieve

for suppliers to enter the supply chain and create the

IoT capacity at pace and with no downtime. It is this

democracy that is essential to enable innovation.

frictionless approach to digital adoption that will be key to releasing measurable value.

And it is this innovation that will be key to moving away from the entrenched practices of food procurement that have embedded consumer expectations and

What is IoT?

misunderstanding across the board. Following significant consolidation, both retail and restaurant markets are

IoT stands for Internet of Things; it represents connection

dominated by a small number of organizations delivering

of multiple types of controls, machine classes and assets,

a consistent and stable customer experience, one

bringing them all together to communicate in one unified

that offers products of identical size, shape and price

language and leverage a brand new stream of existing

irrespective of season or country of origin, which has

data that can then be used to drive valuable outcomes.

built a market predicated on waste. A democracy of

This, in business, provides a complete view of an estate in

participation within the food market will help to educate

real time.

consumers, improve understanding of food quality and

It’s not necessarily a new concept; people have been

the implications to health, and facilitate the introduction

talking about the potential of connected devices since the

of new products and practices, including biodiversity, that

late 1980s and we, at IMS Evolve, have been applying this

deliver a new consumer experience.

technology at scale for more than a decade. It has been

A more predictable marketplace will also encourage

in the last couple of years, however, that IoT has gained

investment, enabling SMEs to enter and embrace

considerable momentum - a testament to its potential

automation to replace the reliance upon cheap labor to

to improve customer experience, drive down costs, and

improve productivity. The result should be not only less

transform business operations. Organisations across every

wastage and a fairer distribution of food globally but also

market have now embarked upon pilot IoT deployments

a better consumer experience with access to fresher,

to prove the value of the data derived from a vast array of

healthier and less heavily processed food. In effect, the

devices and sensors. By leveraging and contextualizing

adoption of IoT to minimize avoidable waste within the

the data and embedding information within existing

retail cold food chain is the essential first step towards

core processes, from stock management to logistics,

full digitization throughout the food production lifecycle

organisations have begun to drive measurable value.

– digitization that will underpin the global response to the

In the main, however, these deployments have been

developing food waste crisis.

single solution – designed to demonstrate the viability of the technology rather than addressing core business issues. Now that the potential of IoT is established, it is time to evolve beyond these single issue deployments and determine how best to embed IoT across businesses

With the population clock ticking, I’m back to my question: 10, 20, or 30 years more years to come because time doesn’t seem to be something we have?

as a whole to bring about large scale change – such as, in this instance, within the cold chain.

A fundamental change to the global supply chain will take time. But there are very significant changes that

And this would be your frictionless approach you mentioned.

can be made today that not only begin to address the wastage endemic within the food chain but also release the investment required to support the adoption of

With this approach organizations can achieve a significant

digitization throughout the infrastructure that will be key

revenue uplift – without the need for massive investment.

to transforming the end to end business model.

Indeed, it is the compelling ROI from this initial step

It is by embracing digitization to improve food safety

of leveraging existing equipment that will be key to

and advocacy that the market can democratize access

providing the investment that will underpin the next level

in order to generate the innovation key to making

of digitization – the use of traceability systems to manage

fundamental change, from automation to enhanced

the advocacy, source and safety of food.

productivity to improving consumer education and

With the ability to confirm not only that products have been correctly produced but that they have followed

January~February 2018

supporting essential change in global food production and consumption.

Meat Packing Journal

OVER

15017

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