Waitaki well placed to cope with new demands in meat industry

Press, 12 February 1986, Page 39

Waitaki well placed to cope with new demands in meat industry

Waitaki NZ Refrigerating, Ltd, enjoyed a year of record throughput levels, relative industrial harmony, and expansion and development of trading and added-value operations, says the managing director, Mr A. R. Hutton, in his review for the year ended October 1, 1985. But Mr Hutton says that the new year will bring a great variety of challenges under the new direction of the meat industry. “The New Zealand Meat Producers Board, which had assumed control of marketing of sheepmeat in 1982, handed responsibility back to meat exporters on December 21, last year,” he says. “The interim ownership by the Meat Board assisted industry development. It is important to remember that the farming industry has increased sheep meat production by 50 per cent in recent years against increased Government protection for farmers in those countries which are our markets. "New Zealand Government protection and incentives are now finished, and farming should return to a more normal production pattern.

"Waitaki welcomes the return to private enterprise, but acknowledges the most difficult circumstances the Meat Board and its staff have faced as a result of Government support to farming. “The use of taxpayers’ money in subsidising farm inputs thus boosting production to the point of market saturation and then having to render sheepmeat into tallow and meatmeal should never be repeated. There is still a surplus of sheepmeat which will continue for 2 or 3 years and product that is not exportable or is surplus to market requirements will be sold at a realistic price”, Mr Hutton says. Sheepmeats in new marketrelated forms are in strong demand, he says. “Consumption of red meat, including sheepmeats, has diminished internationally over recent years. There have been several reasons for this, not the least is a concern that red meat is a health hazard.

"Only recently research has revealed that sheepmeats and other lighter coloured meats from animals grazed in the open are not responsible for the health problems attributed to them.

“We intend to ensure that this message is widely understood. Our intention is to increase the consumption of sheepmeats in the traditional markets for our products. We are confident markets, such as the United States, Europe and Japan, will respond to this message, Mr Hutton says. North America is potentially a huge market and sales of lamb are increasing at an unprecedented rate. There are now strong indications that the demand for lamb is also increasing internationally. The pastoral industry had a good year but is faced with some financial difficulties as farmers adjust to the real world — the marketplace. It is the world market which pays the price for its products.

The company is working with all the major sheepbreeders in New Zealand encouraging them to undertake breeding and progeny testing trials to produce a new animal carcase that will provide the raw material for the world food industry. The company introduced a WX grade of lamb, the value of which is considerably higher than that of traditional grade lambs. The application of new technology in processing operations has been maintained during 1984-85. The success of the new pelting machines at Nelson, Wairoa and Marlborough has been gratifying. All these plants show quite significant carcase processing advantages over our conventional plants.

Planning for the introduction of similar systems at other works is well advanced, and will be introduced in association with further processing of the carcases. Referring to new product development, Mr Hutton says:— “We have placed considerable emphasis on developing new products and now have two product development ventures. In May, our Noelke joint venture launched four specialised products for sale under the Zealambi label.

New products are being continually developed and market tested. There is considerable potential for sales of products developed by the biochemical staff who have made extraordinary headway in the last year. "New technology, as a result of world demand for health foods and pharmaceutical products, has enabled us to recognise that some of those products that went to waste now have very important commercial uses.

“The company is in the process of building a new laboratory and refining area at Islington to produce freezedried organs for the health food market offshore, for refining blood into serum and albumin, and by using ion

exchange techniques for extracting fine proteins from other animal products.” n market development, Mr Hutton says:— "Market development and product development of course interact. "Waitaki has strengthened its presence in key international areas by locating staff in the main marketplaces. This has created a network of contacts to enable existing customers to be better serviced, new customers to be sought out and for product development and specification modifications to be more effectively relayed to Waitaki’s production units in New Zealand.” The company is now represented in its own right • in London for UK/Europe — for consumer cuts and further processed product; • in Singapore for the South East Asian region; • in association with others in Dubai, Japan and U.S.A. The company is also represented through agency arrangements worldwide. Carcases and qffals continue to be marketed in the UK by Towers and Co Ltd, which is 50 per cent owned by Waitaki. "Establishing this representation was done only after careful consideration as it requries considerable financial resources. We believe that the benefits will far outweigh the costs involved and the internation trading network thus established will lead to a better return to the producers. "The New Zealand meat industry can no longer operate in over 100 countries by telex and telephone from a sales desk in New Zealand an an annual visit to the market,” Mr Hutton says.

Record throughputs in all 9 plants paved the way for another excellent processing result; total sheep and lamb killings at 11,976,735 being 17.5 per cent up on the previous record year while cattle killings at 172,577 were 27 per cent up.

The record throughput resulted primarily from:— » A higher retention of ewes on farms at the end of the previous season followed by improved lambing percentages in many districts. • The known end of Supplementary Minimum Payments at October 1 resulted in unusual numbers in September, 1985. • Severe drought conditions in some districts. • A comparatively stable industrial climate. • Positive management attitudes. With shift work an established feature in some of our boning rooms, we will now begin to see the fulfilment of our planning in recent years with the harnessing together of:— © Improved dressing technologies to contain the expenditure on the carcase. • New chilling, boning and packaging facilities capable of quality processing. • Shift work in those new facilities to obtain significantly better use of such capital intensive assets. Lamb carcases cut and boned increased 26 per cent over the previous year. The processing of lamb carcases in a fresh chilled state nearly doubled over the previous year, and reflected Waitaki’s commitment to pursue strategic marketing of top quality lamb cuts for the consumer. The Group’s branded consumer products comprising sheep and lamb, beef meats and fancy meats are now available in many of the world’s retail markets. The future principal direction for the company is to service chilled lamb and beef markets with high quality products through the sound and stable opportunities that exist in UK/Europa/Middle East/South East Asia/Japan and North America. The growth in chilled products is placing real pressure on traditional carriers to deliver products in first class order to these markets. Our distance from the markets makes this difficult, Mr Hutton says. Prices for rendered products reached record levels during the year but latterly dropped away markedly because of the world surplus. Demand for natural casings has shown a marked improvement and indications for the new season are good. Pacific Foods, the joint venture with Noelke of Germany, which has developed specialised products In reformed meat under the Zealambi label is now producing and marketing these new products in Singapore, Malaysia, and New Zealand with other markets due to be opened up. The local trade subsidiary, Tenderkist Meats (NZ) Ltd, continues to make a good contribution to the group’s profitability. The tanning industry worldwide has generally had a good year with leather in high demand. Waitaki’s investment in this sector has also performed well with good profitability for its hide and pelt products in international markets and from the G. L. Bowron Ltd range of wool, skin, consumer products, and the steadily improving nappa leathers from Waitaki’s Pukeuri Tannery. Bowron’s completed the acquisition of Australian Tanned Products in Blayney, NSW and established market service warehouses in Sydney, Australia and Bristol, UK, to be able to service customers in these two key market areas more effectively. The associated companies of Windward Skins, Ltd, and Hawke’s Bay Hide Processors, Ltd, performed steadily. The group, through its subsidiary, Phoenix Chemicals, Ltd, is benefiting from rapidly increasing sales of pharmaceutical products. The outlook for 1985/86 is for further significant sales in-

creases. Research and development expenditure in these products has been considerable but results are showing that it was justified. Referring to investments, Mr Hutton says that at balance date the group held 32 per cent of the shares of Reid Farmers, Ltd. The Town House operation did well but rather than embark on the necessary expansion the directors decided to accept an offer from Dominion Breweries to purchase the three hotels.

Polarcold Stores (SI), Ltd, Pacific Maritime, Ltd, Thos Bracken and Company, Ltd, the Waitaki processing division, and the farm and building supply companies all traded with excellent profits, Mr Hutton says.