Delivering on a promise of quality

BY JON MORGAN

Fulfilling a promise to diners that the lamb they are about to eat has been produced by farmers who care about quality, the environment and animal welfare.

That is the key to improving returns to the country's struggling sheep farmers, according to AgResearch chief executive Andrew West.

"Everybody in the value chain who produces that cut of lamb has to get in behind it and make sure it lives up to the promise," he said after talking to farmers in Dannevirke last week.

This meant farmers could not change between processors on a whim. "There's no promise, if they do that. What we're looking for is a promise that is built up around production systems, environmental integrity, animal welfare standards, that is unique to a set of promises made by a supermarket or a restaurant chain. You need farmers who live up to that promise."

Different restaurant chains, different supermarkets would make different sorts of promises. "So your production environment is going to be somewhat different to match each promise.

"You can't just chop and change between which bit of the chain you supply into because you're not going to meet the entry requirements, you're not going to meet the promise."

Dr West's views come at the height of the processing season, nine months since the Agriculture and Forestry Ministry issued a report on the meat industry that warned of dire consequences during the next 15 years if no changes were made to the present structure.

However, meat companies report not enough farmers are committing to long-term supply contracts, preferring to supply whichever company is offering a few cents more than its competitors on the day.

In some ways, the farmers cannot be blamed for this. Many in the North Island's prime sheep-country are enjoying their first benevolent summer in three years. Rain and sun are combining to produce lush pastures.

Farmers are holding lambs for as long as possible, to get the paddocks ready for the winter to come and to add extra weight.

With banks taking a tougher line on debt, many farmers are hoping the summer's bounty will be translated into more money in their much-reduced bank accounts.

Some are also suspicious of the meat companies, not wishing to become entangled in contracts they fear may not be honoured.

One or two of the companies have also found recent times to be financially challenging. This season is proving difficult for the companies. With lambs slow to come forward, they struggled to fill orders for chilled product for the British and European Easter market. Opportunities for more sales were lost. Now they fear that when the lambs do turn up, they will be too big to find the best markets for.

Dr West said he could understand why farmers were playing the field this season, after surviving some tough years.

"That's why I've always been an advocate for fewer and bigger meat companies. Not just because they can take on the market, but because it gives farmers less choice, less ability to shop around, they have to commit to the big processors.

"When they have less worry about procurement, the companies can put more effort into marketing."

However, achieving this was up to the companies' shareholders, most of whom were farmers.

He told the farmers of AgResearch's "rough calculation" that the carbon credit income from planting the hills in trees was currently equivalent to the income from sheep farming.

"If you're a landowner, you just want a decent return on operations and a reasonable capital gain. If growing tea can knock cows off the best dairy land in this country, then growing trees to reduce global warming can potentially do the same to sheep hill country."

Speaking later, he also said there would be a price to pay if trees were to take over from sheep. Whole communities would disappear as the few people needed to look after trees replaced sheep-farming families.

There would also be an impact on tourism. "The tourists who like to see that beautiful landscape in the foreground and mountains in the background aren't going to be very happy."

To prevent this happening, the sheep industry should work more closely to extract more value from the product as it passed along the chain from the farmer to the diner.

Dr West supported the view of British food industry consultant David Hughes, that co-ordinated marketing based on New Zealand lamb's unique attributes could be an answer.

This began with the farmer's story, highlighting the historical, environmental and welfare aspects, and with building a brand around a region (Canterbury lamb) or New Zealand as a country.

The lamb would be presented in supermarkets in small, easy-to-cook packages aimed at affluent diners, rather than as big roasts whose buyers were literally dying out.

And maintaining impeccable standards of quality was essential, both on-farm and at processing.

However, this meant making a promise of quality and provenance to the diner that everyone in the value chain had to keep.

Farmers had to commit to "the long haul, take the good with the bad".

"The promise made to the consumer has got to be unique and it's got to be able to extract a bigger price. All of that is possible, we're just not sufficiently structured yet to make that happen."

The wine industry had shown how it could be done. Winemakers owned the grapes and controlled the quality - they could keep the promise.

HOPE ON OFFER

* Dr West offered some hope for farmers who fear wool is a lost cause: When all else fails it could be eaten. Wool has six of the eight amino acids the human body needs to survive but cannot supply itself. "We don't have the science yet to make an edible protein from wool, but it's a real potential. I'm not saying wool will go down that pathway, but there's exciting possibilities to look at."

WORK BACK FROM THE DINER

Three companies are working together to define the promise to diners that Dr West talks about.

Meat co-operative Silver Fern Farms, farmer-owned genetics co- operative Livestock Improvement and rural services company PGG Wrightson are researching ways to more closely align the farmer with what the customer wants.

Silver Fern chief executive Keith Cooper describes it as "awfully comprehensive".

The idea is to work back from the dinner plate, discover what the diner prizes in a lamb dish and then work out how to deliver that consistently.

"If we can define what drives the quality of the product, such as what influences come from genetics and from the different types of forages, and how we can manage that through the supply chain, then it is a start."

The biggest part of the work would be in quantifying a best- performance model for a farmer to follow.

"That is about getting inside the farm gate and devising the optimal model to growing the most favourable forages to optimise the best on- farm values."

He envisaged the creation of a huge database, with a use similar to that created by Livestock Improvement for the dairy industry.

"They identified the best genetics and now there's an optimum model that everyone benchmarks themselves against."

For sheep farmers, the optimum model would allow them to grow the best forage for their genetics to turn into efficient growth.

From a marketer's point of view, the benefits would be in ensuring efficient supply of desirable meat and in knowing the best qualities of each animal.

"It's a bit like the way the Tegel chicken guys work. They know what the product's going to be like because they know what genetics and feed they've put in to produce it.

"We will be trying to do that in a similar way. We will know the inputs, the influence they have, and therefore we will know the output."

- © Fairfax NZ News