Angus burgers to put $5m into Kiwi farmers' coffers

BY JON MORGAN
Last updated 05:00 26/08/2009
McDonald's
Reuters
GROWTH INDUSTRY: McDonald's is New Zealand's biggest beef buyer and the angus deal will lift its annual purchase to 25.2 million kilograms.

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World burger giant McDonald's has given the New Zealand meat industry a boost with a deal to buy an extra 500,000kg of angus beef for two new premium burgers.

The contract is estimated to be worth at least an extra $5 million to the industry.

The meat will be used in angus burgers in the United States, Canada and Australia, as well as in New Zealand, where they will sell for $7.20.

In North America, the grass-fed New Zealand angus meat will be mixed with grain-fed American angus.

Angus is noted for a fine texture and slight marbling that gives it a special flavour, and has been a four-year winner in the Steak of Origin taste contest.

McDonald's is New Zealand's biggest beef buyer and the angus deal will lift its annual purchase to 25.2 million kilograms, 20 million of which goes overseas.

New Zealand managing director Mark Hawthorne said the burgers would be more expensive than others on the menu, reflecting their size  155g patties, compared with the normal 110g  and the premium the chain would have to pay to get them.

He would not say how much the contract was worth.

"There will definitely be a premium, but we haven't locked it in. It's a bit of a risk, but the way the beef industry works, if you try to lock in a premium for too far down the track they actually build it in and it becomes permanent."

AngusPure chairman Tim Brittain said the farmers' margin had not yet been set by Silver Fern Farms and Anzco, the two meat companies that would supply McDonald's, but he expected it to be around the 5 per cent paid to angus farmers in the AngusPure programme that supplies restaurants. An industry observer estimated the contract at being worth at least $5m to the industry.

The extra 10,000 cattle needed for the deal will come from contracted farms in Waikato, King Country, Canterbury, Taranaki and Hawke's Bay. They will have a purebred registered angus sire and a dam that is at least 50 per cent angus.

Mr Brittain said the deal was a shot in the arm for the angus breed, the biggest beef cattle breed in New Zealand. The effects of the contract had been felt at angus sales in the past three months as farmers readied themselves for the start of the contract.

Prices had risen to an average of $6000 a bull and all had sold.

McDonald's, which serves 60,000 burgers a week to more than a million customers in New Zealand and spends $120m a year in food and packaging, was confident it could sell the extra beef, Mr Hawthorne said. "We hope to attract more people into our restaurants, but the buyers could also move over from our fish or chicken meals."

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He said McDonald's could not have introduced such a premium product three years ago.

"Our brand wasn't in a place where it would have the credibility. It's hard to sell a premium product when most of your restaurants have timber walls and plastic seats.

"But we've relaunched our brand with lots of new restaurants, the McCafe and other premium foods, and our service standards have significantly improved. We now feel in a position to do this with some level of confidence."

- The Dominion Post

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