Food
A multimillion dollar deal with a farming corporation in China will see New Zealand’s Alliance Group become one of the largest exporters of meat in that market.
The “grand alliance” between Alliance Group and Beijing Businesman Chen Xibin, who owns Grand Farms, will help to boost large volumes of valued-added sheep meat and venison products into the Chinese market
The deal was signed at an event in Beijing, where Prime Minister John Key is leading a 40-strong trade delegation.
Alliance chief executive David Surveyor said it shifted the relationship from a transactional one, to a value-added one, which included services and expertise training.
But the deal is around the export of frozen meat only. Restrictions on chilled meats meant New Zealand could not export chilled meat to China, although Australia delivered its first shipment of chilled meat this year, under their FTA.
Surveyor said he believed chilled meat exports were inevitable, but could be some time away.
“These are matters for Government obviously to work through, but there’s a great usefulness to New Zealand and to Chinese consumers to see chilled happen.”
Alliance Group is a co-operative owned by 5,000 farmer shareholders, headquartered in Invercargill, with eight plants across the country.
It’s New Zealand’s largest sheepmeat processor, and it’s second largest meat exporter.
Its in-market partner in China is Grand Farms, China’s single largest importer of sheepmeat. The company processes 70 per cent of the lamb supplied by Alliance Group into lamb rolls, kebabs and finished retail ready products.
Volumes of exports to China have already increased by 35 per cent over the past five years.
Alliance general manager marketing Murray Brown said the agreement was built on a 17-year relationship already established with Grand Farms.
“We’re looking at more value in terms of retail packs of lamb and retail packs eventually of venison and beef under the Pure South brand to go to retail.
“But basically [Chen] wants to be the largest importer of sheep meat, to support his investment in processing facilities in the market.
“Largely through us, and it will reach a level at some stage where we won’t be able to service it so then the next stage after that, which is a discussion we’re yet to have, is do we source it on their behalf,” said Brown.
Surveyor said Alliance used to be a much larger company than Grand Farm, but the rapid growth of Grand Farm was a testament to the scale of the Chinese market.
“There is some prospect that at some moment in time, we won’t be able to meet all of their needs, and so I think that creates that opportunity for us to perhaps be able to work with some of the other players in the New Zealand industry.”
Grand Farm owns 96 meat shops, operates 260 branded meat counters in selected hypermarkets and supplies to over 1000 hypermarkets in China.
Surveyor would not comment on the value of the deal, but said Alliance put about 20 per cent of its total volume into China.
“We’re about $1.5 billion in turnover, and by far the majority of that is through Grand Farm.”
