China long haul says Blue Sky

BARRY HARCOURT/147871

RED MEAT: Blue Sky Meats chairman Graham Cooney discusses the company's plans to supply high-value meat products into China.

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Southland-based Blue Sky Meats is eyeing the prospect of supplying high-value meat products to China but warns it could take 10 years to achieve the full market potential.

Company chairman Graham Cooney said the signing of a Free Trade Agreement with China last year and an expectation that the Chinese currency would continue to appreciate over time had triggered the move.

The focus would be on higher value products, a step forward from the lower value meat and offal currently sold in that market, which would continue.

Traditionally, the lower value product had been sold as a commodity to suppliers and finishing product companies that developed it into customer-ready goods.

It was felt there was an opportunity to supply a premium product to target expatriates and increasingly affluent Chinese, as well as luxury restaurants and hotels, he said.

However, it was not likely to happen immediately and could take up to 10 years to develop the market and see the full benefits.

The company was fortunate to have New Zealand contacts in China, which was helping to open doors. Letters of intent signed with Chinese importers and processors were being followed up.

Earlier this year, Blue Sky Meats reported a significantly improved trading result of a $3.9 million after-tax profit for the year ending March 31, compared with the previous year.

Higher processing numbers, particularly of capital stock because of farmers moving from sheep to dairy, in the first three months and a favourable New Zealand dollar had boosted the company's profit.

Extra stock was turned away in summer because of pressure on space availability but that eased in March. The kill for the year was 1.7 per cent higher than the previous year.

In the annual report, Mr Cooney said the challenge would be to maintain prices so farmers could be deterred from converting to dairy.

Initiatives to address that included the completion of a new $4.5m rendering plant, investment in research on a different way to handle pelts to maximise quality and returns, and the exploration of new market options.

Blue Sky was also one of nine companies, along with the Foundation for Research Science and Technology, involved in a $16.7m research programme to extend automation on slaughter chains.

It is expected the improvements will deliver improvements worth up to $43m a year within five years.

- © Fairfax NZ News

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