Today I begin three weeks of research interviews in Europe on how to increase the value of New Zealand food exports by communicating the “credence attributes” to consumers (see current research for more information). “Credence” means things like our clean green image, animal welfare, food safety or anything else you can’t experience by consuming the product.
I will try to share some of the experiences that won’t be so easy to describe in a written research report, and also encourage readers to make comments, as many of you will have had your own experiences and thoughts that can add to this.
Credence: belief as to the truth of something: in other words attributes that need to be taken on trust, you cant experience them in the product as you can with taste or appearnance
Fonterra today announced the launch of the China-New Zealand Dairy Exchange Centre in Beijing.
Fonterra already has 5 farms in China and aims to be producing one billion litres every year in China by 2018. When complete these farms will milk about 15,000 cows and produce 150 million litres of top quality fresh milk every year. They will also employ 500 local staff.
The Centre is a joint initiative between Fonterra and China’s National Dairy Industry and Technology System to support the sustainable development of the dairy industry in both countries. “It is a key priority for Fonterra to contribute to the development of the Chinese dairy industry and we believe there is a lot to be gained by both New Zealand and China through the sharing of knowledge, research and dairy expertise,” said Kelvin Wickham, President of Fonterra Greater China and India. “Both parties have world-class dairy research and know-how so we are very pleased to be playing a key role in bringing this initiative to life,” he said.
The Centre will develop and oversee programmes in policy development in the China and New Zealand dairy sectors, academic exchanges, industry promotion, dairy technology research and personnel training.
Its first three initiatives will be:
1. Hosting an annual China-NZ Dairy Forum to bring researchers together to share research and best practice in key dairy issues.
2. Overseeing joint research by China and New Zealand dairy experts on dairy industry policy and technologies.
3. Implementing a “Golden Key” training programme to provide dairy personnel with training and technology solutions to assist China’s local dairy industry development.
Wang Yuchan, a scientist with the China Ministry of Agriculture’s National Dairy Industry and Technology System said today, “We’re very pleased to have this in-depth cooperation with Fonterra and the New Zealand dairy industry. We hope to leverage the China New Zealand Dairy Exchange Centre as a platform to learn more about New Zealand’s technology and expertise, jointly conduct research and development, and undertake technology exchanges and training on dairy sector issues. This will help us to promote the sustainable development of dairy in both New Zealand and China.”
2015 is the last year that the EU will have a quota on milk production (expires 1 April 2015). This means after that there will be no restrictions on increasing milk production. Currently if farmers produce over their milk quota they pay a penalty of 28 EUR/100 kg. In countries like the Netherlands the current high milk price means farmers are producing above quota and willingly paying this penalty.
EC’s quarterly agricultural outlook shows that the number of EU dairy cows increased significantly in 2013. The 2013 increase was greatest in the Netherlands (+3.6%), Spain (+3.6%), Ireland (+2.1%), Germany (+1.8%) and France (+1.5%).
Should New Zealand dairy farmers fear surging European Union milk production where there are 22.8 million dairy cows compared to less than 5 million in New Zealand.
Source: Ernst and Young 19 September 2013: Analysis on future developments in the milk sector Prepared for the European Commission – DG Agriculture and Rural Development
The reality is that most of the European Union milk production is consumed internally. Even so the European Union (EU) remains the one of the world’s major dairy exporters accounting for about 32 per cent of all export sales on a milk equivalent basis. Most of this comes from three countries, Germany, the Netherlands and France (see Figure 20).
The good news for New Zealand is that most of this is exported as Cheese. The European dairy industry is set up mainly to produce fresh milk and cheese, producing about 40% of total world cheese production. This means most of the increase in European production will go into cheese exports
Although only producing 3 per cent of world milk output, New Zealand is the second largest supplier of manufactured products to the world market with a 32 per cent share. However the largest share of this goes as whole milk powder. Cheese exports represent only about 15 % of New Zealand exports.
Source: Ernst and Young 19 September 2013: Analysis on future developments in the milk sector Prepared for the European Commission – DG Agriculture and Rural Development
So there may be a significant increase in production from the European Union, stimulated by high prices and the removal of quota, however this is most likely to affect cheese and skim milk powder exports. Figure 13 shows the changes in European dairy product exports and it can be seen there is significant growth in skim milk powder and cheese.
The removal of quotas in 2015 is likely to result in a decrease in small farms and an increase in larger operations in countries like Germany and the Netherlands. The long term effect is that the European Union is likely to become a stronger competitor on the international market as the industry in these countries become more competitive and able to respond to market signals.
In the long term New Zealand must remember that it is a small player in the overall dairy production market. Small changes in production and exports in the European Union or the US can have big impacts on the small percentage of dairy products that are traded (About 7 per cent of global milk production is traded in international markets each year). Small changes in demand for imports from countries like China can also impact significantly on dairy prices. The one thing that is for sure is that record dairy prices won’t last for ever. High prices will stimulate an increase in production from the most efficient producers until prices reach a new equilibrium. In the long term New Zealand will still have to be innovative in production and marketing to maintain its competitive advantage in the brave new word post EU quotas.
The full Ernst and Young Report : Analysis on future developments in the milk sector Prepared for the European Commission – DG Agriculture and Rural Development. Is available on the resources section of this site click here
McDonald’s aims to begin purchasing verified sustainable beef in 2016
The big question is, how do you define sustainable?
The answer to this is being sought by the Global Roundtable for Sustainable Beef (GRSB) a group made up of conservation groups, farmer associations, retailers and companies providing products and services to the global beef industry
GRSB prescribes to the “triple bottom line” approach in defining sustainability, meaning a a sustainable beef system must be environmentally sound, economically viable and socially responsible. This week they have published a draft document outlining “Principles and Criteria for Global Sustainable Beef” The draft document is open for public comment through May 16, 2014.
Natural resources – Global sustainable beef stakeholders produce beef in a manner that identifies and manages natural resources responsibly and maintains or enhances the health of ecosystems.
People and community – Global sustainable beef stakeholders protect and respect human rights, and recognise the critical roles that all participants within the beef value chain play in their community regarding culture, heritage, employment, land rights and health.
Animal health and welfare – Global sustainable beef stakeholders respect and manage animals to ensure their health and welfare.
Food – Global sustainable beef stakeholders ensure the safety and quality of beef products and utilize information-sharing systems that promote beef sustainability.
Efficiency and innovation – Global sustainable beef stakeholders encourage innovation, optimise production, reduce waste and add to economic viability.
These principles are being left somewhat general with the idea that they will be made more specific at a local level.
The importance of supply chain integrity has been highlighted by results that show a year after the horse-meat scandal tests in the UK show that 1/3 of food products are mislabelled.
Consumers are being sold drinks with banned flame-retardant additives, pork in beef, and fake cheese, laboratory tests show
Consumers are being sold food including mozzarella that is less than half real cheese, ham on pizzas that is either poultry or “meat emulsion”, and frozen prawns that are 50% water, according to tests by a public laboratory.
The checks on hundreds of food samples, which were taken in West Yorkshire, revealed that more than a third were not what they claimed to be, or were mislabelled in some way. Their results have been shared with the Guardian.
Testers also discovered beef mince adulterated with pork or poultry, and even a herbal slimming tea that was neither herb nor tea but glucose powder laced with a withdrawn prescription drug for obesity at 13 times the normal dose.
Americans alone consume 500,000 tonnes of beef at McDonald’s in a year — five and a half million head of cattle
McDonalds are committing to a goal of purchasing verified sustainable beef. This sounds simple, but it’s actually a big challenge because there hasn’t been a universal definition of sustainable beef. they are collaborating with World Wildlife Fund (WWF), Cargill, JBS, and others to develop the Global Roundtable for Sustainable Beef (GRSB). This multi-stakeholder group has drafted guiding principles and best practices for sustainable beef
Today I begin three weeks of research interviews in Europe on how to increase the value of New Zealand food exports by communicating the “credence attributes” to consumers (see current research for more information). “Credence” means things like our clean green image, animal welfare, food safety or anything else you can’t experience by consuming the product.
