Focus on Northern Ireland: Upbeat Ulster

22 July, 2011
Alyson Magee examines Northern Ireland’s beef and lamb industry and finds a vein of optimism running through the whole trade

Harnessing and highlighting the environmental positives behind its hilly grass-based production and adding value to its abundant, high-quality raw material are among strategies aimed at sustaining a successful Northern Irish beef and lamb industry.

A new streamlined generic promotional body with a decisive, commercial bent, farmer enthusiasm and an increasingly sophisticated processing sector are united in their determination to protect the Province’s food security and export opportunities amid the challenging trading environment currently prevailing.
Ongoing economic uncertainty is resulting in a price squeeze between rising production costs and tempered retail prices and, ultimately, is resulting in processing rationalisation in Northern Ireland (NI), similar to its neighbours and key trading partners Great Britain (GB) and the Republic of Ireland (RoI).

Red meat producers across the EU, meanwhile, share concerns over the evolving EU Single Farm Payment (SFP) and falling livestock numbers, while the processing sectors of NI and GB are together fighting forthcoming meat inspection charges.

Co Fermanagh beef, lamb and chicken processor Tenderlean went into administration last month (June) for the second year in a row, having been saved in April 2010 by an investor group.

“For smaller companies, trading conditions have been difficult,” says Phelim O’Neill, chief executive of the Northern Ireland Meat Exporters Association (NIMEA), as larger processors attached to big supermarket deals are faring better.

However, O’Neill remains optimistic: “All in all, we are feeling pretty upbeat about the industry. We do know farmers need more to produce beef and trading conditions are tough, but we’re optimistic and are getting more money into beef.”

Positive attributes boding well for the red meat industry of NI include a strong domestic market, with Kantar Worldpanel figures for the 12 weeks to 20 March reporting NI penetration higher than GB by 6% for beef (93% in NI) and 7% for lamb (43% in NI). And, despite diminished livestock numbers, the Province boasts self-sufficiency many times over, leaving an abundance of livestock and processed produce for export.  
“We have always believed we are one of the best producers in the world,” says Ray Elkin, Ulster Farmers’ Union (UFU) beef and lamb chairman. “There is no reason why we cannot compete with anyone. More markets are opening up worldwide and the opportunities are there. In the long-term, it will be the future.”

Streamlined LMC
The promotional body representing the NI beef and sheepmeat sectors, the Livestock and Meat Commission (LMC), recently completed a six-month restructuring programme aimed at streamlining its services including a number of senior management retirements and redundancies. “We’re here to serve the industry,” says Pat O’Rourke, LMC chairman, outlining the changes, which followed “an exhaustive consultation process”.
While NI Department of Agriculture and Rural Development budgetary restrictions prevented the desired privatisation of LMC, which would have offered greater commercial freedom, O’Rourke says: “We will get as near to it as we can.”

LMC is currently recruiting a new chief executive to head up its streamlined team of Cherrie Kenny, education services manager; Conall Donelly, economist; and Ian Stevenson, industry development manager. Its board will also be reduced from seven to five members.

Under the new structure, services will focus on the provision of market information; general industry services, such as addressing the carbon footprint of beef and lamb; Farm Quality Assurance management; and generic local promotion and marketing.

O’Rourke also serves as chair of the NI Red Meat Strategic Forum, which is pushing for adoption of a government-regulated single environmental standard for agriculture, allowing red meat producers to map out and improve their carbon footprint. He highlights LMC’s driving role in the Industry Feed Assurance Group — in which the organisation brought together representatives from the meat, poultry, dairy and grain sectors to address the 2008 dioxin scandal in RoI with safeguards — as typical of its decisive focus moving forward.

LMC’s Beef and Lamb Farm Quality Assurance Scheme, accredited under the Red Tractor Scheme and certified by NI Food Chain Certification, lays claim to higher standards than its counterparts in both GB and RoI.

Local promotional activity is focused on LMC’s schools programme, in operation since 1999 and including the food4life website, supporting the GCSE home economics syllabus in NI. Meanwhile, LMC’s freelance panel has conducted around 200 demonstrations at schools over the past year, says Kenny, covering issues such as hygiene, safety, traceability and nutrition. Maintaining NI’s high red meat penetration is the aim of the programme, with participating schools evaluating awareness of beef and lamb before and after the events.

Export opportunities

As part of the restructuring, Invest NI last year took over responsibility for international marketing and promotion of the Province’s beef and lamb from LMC. With greater resources at its disposal, Invest NI offers advice on account management, design, product development, packaging, supply chain and productivity, as well as export assistance through trade missions, exhibitions and ‘meet the buyer’ events.

Over the last five years, Invest NI has hosted 90 key buyers from France, Italy, Denmark, Sweden, France and the Netherlands on nine inward meat-buying missions. “The red meat and poultry sector is a strategically important industry that currently generates around £1bn annually to the local economy and is a key source of employment in rural communities across Northern Ireland,” says Nigel Hardy, Invest NI’s Food Sector marketing manager. “We will also continue to encourage and support our companies to focus resources on measures that increase efficiency, productivity, innovation in areas such as higher value-added products for niche markets, and strengthen their overall competitiveness in European and other global markets.”

Beef

“Beef production at farm level has not fared well,” says O’Rourke, with price rises failing to counter more sharply climbing production costs. “This has been particularly difficult to understand against evolving world trade developments, where the supply/demand relationship for beef should have favoured producers.”

Looking at total cattle slaughtering in NI for the year to 2 July, overall numbers are down 3%, accelerating to a 7% decrease to 41,600 head in the final five weeks of the period. Prime cattle slaughtering has taken the greatest hit — down 14% in the five weeks to 2 July — while an increase in cow slaughtering “has tempered it somewhat”, says Donnelly. “It is driven mainly by the availability of young bulls,” he adds. “Last year, there were a lot of young bulls in the system but numbers are now under pressure.”
Cattle numbers on the ground are also lower, and imports are falling from RoI but increasing from GB year-on-year. Conversely, NI exports to GB for direct slaughter have fallen, but have risen to RoI where higher prices are available.

Increased exports of dairy bull calves to the Continent last year will put pressure on availability later this year into 2012, says Donnelly. “On the flip side, calve births are up,” he says, with a 4% rise in beef sired births for the first half of 2011 expected to come into the system in late 2012, improving availability into 2013. Beef cow registrations have also increased.  

Tight supply — together with rising production costs — has pushed NI beef prices “well ahead of this time last year”, says Donnelly. The average price for prime cattle (steers, heifers and bulls combined) has risen by 9% over the last six months to £2.91/kg in June.

Prices peaked in May before coming under pressure in June, but have been coming back at the end of the month, says Donnelly, with quotes rising at factories in early July. However, with input costs such as feed, fuel and fertiliser rising sharply, he adds, “You couldn’t be certain, looking at prices, that farmers are any better off.”

“An extra 40p/kg would be needed just to meet the feed price increase alone,” says Elkin.
UFU supports the efforts of the EU beef working group to create a framework for fairness in the beef supply chain, calling for retailers to work more closely with farmers. A further challenge is “bringing young farmers in”, says Elkin. “They are more likely to go into poultry or dairy unless they see a rise in profitability. No farmer is looking to become a millionaire. We just want a fair price to sustain us into the future.”

Lamb

In the lamb sector, Foyle Food Group’s withdrawal from lamb processing last summer removed as much as a third of NI’s lamb processing capacity, leaving a core trade of ABP, Linden Foods and Dunbia.

“They may have a smaller lamb industry, but these companies are going into more value-added,” says O’Neill. “Lamb has a short cycle compared to beef and, right now, they’re trying to make more from less.”
While lamb throughput at NI processing plants is not far off 2010 levels for the year to date, much lower volumes are going for export as a result of Foyle’s exit from lamb processing. Nevertheless,  between half and two-thirds of NI production is export-bound, destined mostly for RoI, with small volumes including cull ewes also going to GB.

“It’s that export trade that’s more or less driving trade in Northern Ireland,” says Donnelly, with a lot of exports into RoI and GB servicing halal trade and/or bound for Continental markets. “But processors in NI also have access to those markets,” he adds.

Year-to-date slaughtering numbers are down by around 40% including a 29% drop to 28,500 head for the five weeks to 2 July. “After July and August, we’ll see a better reflection of availability,” says Donnelly, with current figures skewed by export trade.

As with the beef industry, prices for lamb are “well ahead of this time last year”, he says. “Spring lamb and hogget prices are very strong.”

The average year-to-date price for lamb and hoggets — dead- and liveweight — is 50p up on 2010 at £4.30/kg, with prices having peaked in early- to mid-May before coming under pressure in June, but beginning to recover. “It’s a similar trend to last year,” says Donnelly, with no guarantees but a trade boost anticipated ahead of Ramadan.

Introducing VIA
NIMEA has been involved in the introduction of Video Image Analysis (VIA) grading of carcases across NI slaughterhouses, replacing LMC’s manual classification services. With one smaller processor the only one to experience any difficulties getting it up and running, VIA has gained widespread acceptance, says O’Neill. “The next challenge will be how we can exploit it.”

And NIMEA shares the GB industry’s misgivings over the introduction of meat inspection charges, campaigning alongside the British Meat Processors’ Association in opposition. “Bordering the Republic as we do, it would place the industry at a particular competitive disadvantage,” says O’Neill.

“There is good work being done out there by farmers with an enthusiasm for the future of the industry, and going out and promoting grass-based farms and looking at the best ways of doing things and how to drive efficiencies” – David Thompson, UFU beef and lamb and hill farming policy officer

PROCESSOR PROFILES

Linden Foods
Investment in added-value product lines is creating a sustainable future for Dungannon-based Linden Foods, which officially opened its new £10m “high-grade” NPD and retail packing facility in January.

The site, adjacent to Linden’s existing processing facility on the Granville Industrial Estate, was up and running in November 2010 to service key customer Marks & Spencer’s (M&S’) Christmas trade.
An on-site team of development chefs produce innovative ready-to-cook foil-based and skin-packed products. Added-value lines now account for around half of all processing at the site, which also offers convenience counter packs and further processing lines going into manufacturing.

“People are always wanting something new,” says Linden MD Gerry Maguire. “Products may sell well for a year but then wane, and the kitchen offers great scope for new development. If you add flavour and sauces, people are more likely to like it and buy it again.”

Linden also supplies retailers such as Morrisons, Dunnes, SuperValu and Centra – and Tesco indirectly through Vion and Hilton Meats – while export trade is very important to the business, with markets extending from Italy to China.

“Business is tough, with commodity prices driving the price of grain,” says Maguire. “It’s a market in which consumers are being constrained themselves. There’s almost a fear out there to raise prices, but even mince can only go up in price. The whole sector is going to be challenged.”
Linden’s physical presence in markets such RoI and GB allows the business to tap into the premiums associated with local sourcing; supplying M&S in both NI and RoI with local meats. “Local is an area where people may spend a little more,” says Maguire.

In addition to the Dungannon site, Linden is a majority shareholder in Co Fermanagh-based premium meat and poultry supplier Kettyle Irish Foods, a 50% shareholder in RoI-based beef specialist Slaney Foods and sheep processor Irish Country Meats, and operates a small standalone slaughterhouse in GB, Linden Foods Burradon.

Meanwhile, Linden Livestock has successfully launched British rose veal into the marketplace and is looking at rearing Aberdeen Angus crosses “to try and keep that raw material at home”, says Maguire.

C&J Meats
Co Armagh-based C&J Meats specialises in beef at the “upper end of the carcase quality spectrum”, processing around 300t of beef primals per week.

“Our goal is to build strong relationships and trust with customers by supplying high-quality, consistent products,” says Adrian Loughran, C&J Meats business development manager. “If you get it right, they keep coming back.”

Located amid orchards in a former fruit-processing plant, C&J Meats brings together the expertise of 16 years at Omagh Meats for Loughran, while his two partners in business boast a background with ABP and in retail butchering/wholesaling.

The company’s recipe for success is the correct carcase specification, together with correct processing and correct packaging, all aimed at achieving customer satisfaction. Getting the right product to the right customer at the right time is vital, he says.

Carcase beef — hand-picked daily to tight specifications — is bought in from abattoir partners and processed at the site, which was redeveloped in 2008 to expand capacity. “Money is going in,” says Loughran. “We see a future in the business.”

As well as its own (non retail-fronting) label, using the strapline ‘Thinking Inside the Box’, C&J Meats supplies the catering trade with C&J Plus+ and has developed the Shannan Mature Label, produced from selected heifer carcases of 280-310kg with a customer.

Vac-pac primals, pad cuts, fresh and frozen trim, diced and retail-ready beef are supplied to multiples, catering butchers, independent butchers, wholesalers and further processors, with 95% of business going outside NI — largely to GB and RoI but also to the Continent.

“As a small to medium-sized company, we can adapt to meet customers’ needs quickly,” says Loughran. “We have excellent butchers working for us and can work to very exacting cutting specifications.”

Dunbia
Dunbia was named Processor of the Year at MTJ’s Meat & Poultry Processing Awards earlier this year, recognising continued investment in its workforce, innovation, wider supply chain and corporate social responsibility areas, such as its communities and the environment.

A supplier group — offering specialist advice on nutrition, grades and welfare, as well as discounts on feed — was launched in autumn 2010, with “the aim of building a sustainable food chain for the future”, says Karen Birnie, Dunbia marketing manager. The group saved 1,500t of carbon through waste reduction initiatives, including a new effluent treatment plant at Dungannon, and trained over 400 operatives in Institute of Leadership and Management programmes.

At Belfast’s Balmoral Show in May, such initiatives continued with the announcement that one of Dunbia’s pork producers was the first to achieve Freedom Food accreditation in NI.

Based in Dungannon, Dunbia operates 10 sites across NI, GB and RoI and its strategy is to be in every region, says Birnie. “Regional is a key selling point for Dunbia’s customers.”

The group supplies beef, lamb and pork, with NI sites including primary processing and retail packaging at Dungannon and pork processing at the former Stevenson & Co site in Ballymena, (acquired by Dunbia in 2009).

Customers of the NI plants include retail, catering and wholesale markets, with the majority of processing destined for the UK multiples, but exports to markets such as France, Italy and the Netherlands also increasingly important. Dunbia’s sites in RoI are largely export-focused. “Added value has been massive over the last few years,” says Birnie.

Dunbia, which has a dedicated NPD team with a head development chef and technologists, has picked up 14 awards for its products over the last three years.





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