29 May 2007

With 125 years’ experience, a solid reputation for exporting high-quality red meat and strong product demand, it is of little surprise that New Zealand’s pastoral meat industry has so much to offer international investors.

The industry is experiencing growing product demand. In 2006 the New Zealand meat exports value was NZ$4.6 billion, a figure that has increased 5.4% year on year for the past ten years and is set to continue its upward trend.

New Zealand has a reputation for world-leading farm productivity, processing innovation and product safety and it exports consistently safe, high-quality, high-value beef and sheep products globally. Pastorally reared in a disease-free environment with an absence of subsidies, its meat is produced relatively easily at low cost due to an ideal environment with ample space, rich soils and a temperate climate.

Investment New Zealand Investment Manager – Food and Beverage Adrian Bosher says as the international consumer trends continue towards safe, healthy food produced in an environmentally sustainable manner, the New Zealand meat industry’s market value and brand loyalty will grow in strength.

“The New Zealand meat industry has matured to develop higher-end products in the past decade, exported through well established channels to the European Union and the United States, accounting for 65% of total export value, and Japan, the Republic of Korea and Canada.”

Opportunities for investment include adding value to already high-end products prior to export through various partnership arrangements, such as value-based strategic alliances and direct investments in businesses.

Partnering with Northern Hemisphere producers presents an excellent way to avoid traditional seasonal product supplies. Opposing seasons offer the potential for a year-round consistency of supply with single-brand arrangements for pasture-fed meat, as New Zealand farmers ready stock when supply availability declines in the Northern Hemisphere.

“In addition to keeping production costs low and supplies steady, New Zealand’s pastoral environment produces meat high in essential fats such as omega 3 and low in unwanted saturated fats. This naturally nutritionally better meat is a high-value commodity that can offer great financial benefits,” says Bosher.

New Zealand’s meat processors are already delivering high-quality cuts that add further value to a seasonal supply relationship. Indeed, committed partnerships, such as Itoham Foods and Nippon Suisan, are beginning to see significant value gains.

New Zealand’s meat processors are innovative, successful and forward thinking. In the past 20 years they have developed from supplying frozen carcasses and half-carcasses to exporting high-value chilled cut meat products to international customers.

“Foreign technology providers have an excellent opportunity to introduce new practices and processing technology as the country’s processing industry is keen to work with research entities and technology providers to improve techniques,” Bosher says.

A further investment opportunity that takes advantage of New Zealand farmers’ knowledge and innovative primary production practices are the increasingly popular finishing farms – a way to increase meat value. Designed to condition animals prior to processing by either fattening them or promoting other qualities desired in the end product, the practice of finishing farms is under-developed in New Zealand.

“New Zealand offers an excellent opportunity to finish lamb and beef to a very high quality. Lean Meats’ successful relationship with boutique United States food retailers demonstrates how a New Zealand company adds value to the product by producing high-value, heavy lambs for export,” says Bosher.

With a reputation as an agricultural pacesetter, with growing product demand and a combination of excellent pastoral lands, cutting-edge science and on-the-farm innovation, New Zealand’s continued drive to increase production while reducing cost without compromising quality presents some excellent investment opportunities.

For more information, please contact:

adrian.bosher@investmentnz.govt.nz

+64 9 354 9037