Gisborne-based Integrated Foods managing director Gary Alexander with Dorset ewes carrying Rideau Arcott composite-breed lambs developed by the Canadian government. Photo / Liam Clayton
Gisborne-based Integrated Foods managing director Gary Alexander with Dorset ewes carrying Rideau Arcott composite-breed lambs developed by the Canadian government. Photo / Liam Clayton
Integrated Foods Ltd has taken its pasture to plate, vertically-integrated business model to a new level with its successful foray into the North American market. IFL managing director Gary Alexander explains.
By Debbie Gregory
The agribusiness behind one of New Zealand's biggest Maori incorporations has gone global.
Integrated Foods Ltd is the commercial food arm of Mangatu Blocks, a Gisborne-based business with more than $200 million in assets.
Because it is Maori land it was important to ring-fence the land away from any commercial risk, so IFL owns all livestock and pays Mangatu rent for the use of the land.
Gary Alexander was employed by Mangatu to run the business in 1994 after Alan Haronga, who was looking for a new perspective after working in Wellington as an accountant, became chairman.
Alexander had emigrated from Canada with his wife and three young sons to take up a teaching fellowship at Lincoln University.
After the fellowship, he decided he didn't want to go back for the Canadian winter and worked for Landcorp for about four years and Applefields before starting with Mangatu Blocks.
At that time there were 16 fairly autonomous farms, each run by a manager.
Alexander had an interest in building a vertically-integrated food business from the farm all the way to the marketplace.
That meant taking control of farm production, and developing its own processing facility, products, sales and marketing.
Integrated Foods Ltd was formed in 2003. It included two other smaller Maori entities as shareholders - Tahora 2C2/2 Incorporation and the Paokahu Trust.
In 2006, it bought an export lamb processing facility in Hawke's Bay - Fresh Meats NZ.
It is the smallest lamb processor in the country, dealing with a little over 1 percent of the New Zealand lamb kill.
Around half of the product goes to the domestic market and the rest to export markets in Switzerland, Singapore, Hong Kong and China.
Last year it added a cold store and freezer facility, and it is looking into all kinds of ways to add value to the lamb processed there.
But knowing demand was increasing more than supply, resulting in record international lamb prices over the past two years, it was time for the next step.
A Canada Sheep and Lamb Farms lamb-growing facility being developed at Stony Mountain, Manitoba, that provides lambs with a clean, dry environment where temperatures can drop to -40C. Photo / Supplied
'Eyes wide open'
After much "looking with eyes wide open" - a core value for IFL - Alexander and the IFL directors decided they needed a "pull strategy" to get their New Zealand product into the North American market, and in 2013 they started up a new vertically-integrated supply chain in Canada.
"Consumers eat 52 weeks of the year and we were not producing lambs all year round, so we looked to achieve this ... we needed to have year-round lambing."
The New Zealand farms were joined together from the original 16, "meaning less farms, less managers and more focus".
"We had the genetics in New Zealand to get more lambs on the ground in the off-season but then what do we do when it is the middle of winter and there is no grass to feed weaned and growing lambs?"
It has taken a long time and involved a radical rethink for everyone.
"Consumers want the same eating experience every time they eat lamb, so we can really differentiate ourselves if we can put lambs into the market 52 weeks of the year, at the same age, and having been fed the same feed, to produce a consistent product all year round."
In New Zealand, with a pastoral system, this is extremely difficult.
"Sheep are seasonal breeders, so there is the Romney gone for out-of-season production but then Romneys are there for a reason. We have facial eczema here and need genetics for that."
Then feeding, a high-performance ewe requires high levels of feeding, and there is a grass deficit for a big part of the year.
With the core values of "eyes wide open" and "transform the ordinary", IFL looked around the world.
"We don't know everything and are always looking for new systems and strategies."
The opportunity to advance in Canada came about when Alexander heard about a breeder who had a composite breed of sheep developed by the Canadian government at the Agriculture Research Centre Ottawa (Arcott), and which were released to breeders in the 1980s. The Canadian was looking to expand the genetic base he had built up over 40 years and then have someone take over the expanding flock.
"So we went into partnership and now have the majority share in the business, Canada Sheep and Lamb Farms Ltd.
"The Rideau Arcott breed of sheep, as they are named, are bred for purpose - to produce high numbers of lambs, year round, and milk well to feed those lambs."
Since 2013 the flock has been built up to be the largest intensive flock in North America, possibly the world.
Consumers eat 52 weeks of the year and Integrated Foods aims to produce a consistent lamb product all year round. Photo / Supplied
40 years of selection
The sheep flock had 40 years of genetic selection for intensive lamb production.
"With the new Canada farming business we have got year-round lambing - lambs are born every day of the year and each ewe will lamb three times in two years.
They are highly fertile. Triplets and quads are common, and quints are not rare.
With the farms near large cropping and food processing areas, there is no shortage of livestock feed and bi-products from food production which are useful for sheep.
"There are proven intensive management systems in place with access to large quantities of high-quality livestock feed."
Because the ewes are intensively cared for, they produce longer - for up to 12 years, so less replacement ewes are needed. In New Zealand most ewes need replacing at a maximum of six years.
The Canada operation started with a ewe flock of about 3800 in 2013 and is now close to 30,000 ewes. The plan is to grow the flock to 55,000 by the end of 2018.
The Canadian breeding units are north and south of Winnipeg, in the province of Manitoba in the centre of Canada.
"It continues to grow to plan. Some of the lambs are produced under contract at multiplier and grower units, and interest in lamb production is increasing. It is a good way for people to use their land and make an income without a huge outlay - we continue to own all the livestock."
The opportunity for lamb is huge, Alexander says. Sixty percent of the lamb consumed in Northern America is from New Zealand and Australia.
If IFL can capture 2.5 percent of the existing market, it would use all the IFL product it produces in both Canada and New Zealand.
Canada's 36 million people consume about one kilogram per capita each year.
South of the border there are another 323m people in the United States eating about half a kilogram of lamb per capita. It's another very lucrative market to tap into, and the price of the domestic product is far higher than imported lamb in those two markets, Alexander says.
Double the NZ farmgate price
The farmgate price a farmer receives is about double what it is in New Zealand.
"The attitude of retailers to New Zealand and Australian product is that it is perceived as being cheap."
The administration of the Canada operation is run from Gisborne, with operational staff on the ground in Canada.
It includes owning about 1100 acres on various farms, including a state-of-the-art lamb nursery system, because ewes are never allowed to raise more than two lambs, and a large percentage of ewes have triplets or more.
Having a Canadian-New Zealander at the helm, and the technology available now, have enabled a relatively smooth business venture into Canada.
"Firstly I understand the culture and farming systems there - I came from it. Also, the ability to Skype and conference-calling means we can communicate with people over there like they are in the same room."
Another huge technological advantage is that all sheep in Canada are given an electronic RFID ear tag at birth.
"We know everything about those sheep. They are entered at birth and tracked over their lifetime using Farmworks software and database. In New Zealand we only know what is going on when we bring them in, and not down to the resolution of the individual animal."
Canada Sheep and Lamb Farms is in a "unique situation" .
"The right type of sheep are there, the feed is there and the market is there."
With the Canada operation pumping, the goal is to develop a New Zealand lamb production system capable of weaning three market lambs per ewe per year - through bringing the genetics and adopting some of the technology from Canada back here. At the moment New Zealand production is more like 1 to 1.25 market lambs per ewe per year.
"There is huge opportunity for our New Zealand sheep production system to reinvent itself and transform the ordinary."
IFL also farms cattle
"And they do make us money, but our focus is lamb. Cattle are there to help keep the pastures right for the sheep."
The development over the past two decades has been about building capability across the value chain and extracting value all the way through.
Now, meat substitutes from cellular agriculture and plant-based protein have been introduced in the world. These technologies will be less resource-hungry, absolutely pure, consistent and potentially very cheap.
"We need to be thinking about this - as I recently heard someone say, if you don't like disruption you are going to hate irrelevancy.
"In my mind, the traditional farm situation has to change. The lamb business of the future needs a planned, fully-integrated global value chain producing new, distinct and consistent products.
"We are never going to win the cheap game, so we intend to play the unique game."
Alexander says the New Zealand lamb industry may struggle to provide the product the consumer of the future wants. A lamb is classed as a lamb anywhere in age from 12 weeks to 12 months, and with that age difference and other factors such as sex, size and what it has been fed, there will be a range of different taste experience. Some not so good.
Looking ahead, in the not-too-distant future, the plan is to have the Canadian business build capability in finishing lambs to specification, as well as processing and marketing and extracting more value through manufacturing value-added products.
Opportunities for work within the global IFL business are wide-ranging, with positions in areas like science, business, accounting and human resources, not just farmers.
Leader in integrated food operations
Integrated Foods Group manages 16,000ha of productive farmland and is considered a trailblazer in the development of integrated food operations - maintaining control over quality from pasture to plate.
Since its establishment in 2003, in-depth understanding of processing operations and supply chain to the market, combined with the fostering of excellent customer relationships, have seen IFL develop an enviable market position both domestically and internationally.
On the farm in New Zealand, IFL employs 40 people and raises 150,000 stock units.
The processing division (Fresh Meats NZ) employs 90 people and processes around 250,000 lambs a year.
Mangatu focus on sustainable asset growth for shareholders
Mangatu manages ancestral lands on behalf of its 5670-and-growing shareholders in a way that ensures sustainable growth of shareholder assets.
Over the years its activities have evolved to take full advantage of the natural resources of this region, establishing interests in the agribusiness and forestry sectors.
As a result Mangatu now manages 16,000ha of productive farm land here, 4500ha of exotic forest and 15,000ha of indigenous forest.
Mangatu Blocks has a long and eventful history, beginning with its formation in the late 1800s and legal ownership in 1947 through to its continuing evolution today.
Despite difficulties and disputes, forebears managed the 45,000ha in collective possession and stewardship with devotion and diligence.
The land has gone from fragmented control and leasehold farm management to a level of unified, prosperous and profitable corporate control, which today is respected and envied.
Records of the incorporation reveal a history of people caring for people, of a people whose land was always a means of maintaining their roots and their identity, as well as a source of food and funds for their tribal good.
Mangatu businesses are thriving. Its commitment to the sustainable management of shareholder assets has seen Mangatu become a key player in the economic outcomes of the Gisborne region - contributing to the prosperity of its people, without compromising its roots and identity.
