Some sheep meat processing works are running at 50 per cent capacity. Photo / Whanganui Chronicle
Some sheep meat processing works are running at 50 per cent capacity. Photo / Whanganui Chronicle
The country's meat processing works are working at reduced capacity due to anti-Covid-19 measures but the industry is at least still functioning, unlike many.
Adding to the mix is a drought covering most of the North Island and parts of the South Island, which is putting pressure on the processingas farmers seek to send stock away earlier than usual at what is normally the busiest time of year.
Some sheep meet processing works are running at just 50 per cent of capacity due to hastily introduced social distancing protocols - finalised on Sunday.
Beef and Lamb New Zealand chief executive Sam McIvor said there had been a significant reduction in processing capacity but that the sector was still functioning.
McIvor said the meat companies realised they were in a "privileged position" by being allowed to stay open.
"There are a huge number of businesses in New Zealand who have had to close their doors," he told the Herald.
"We recognise that there is a tremendous responsibility to manage the risks around Covid-19 but also that we have a role to play in really pulling the economy through, because foreign exchange earnings are going to be important in the medium term," McIvor said.
Around the country, most works have had to reconfigure how they operate in order to comply with Covid-19 protocols in the middle of the busiest two months of the year - March and April.
"You have got a lot of finishing lambs that are still coming through to be processed. A lot are processing their cattle right now, and then you have got the cow cull coming out of the dairy industry," he said.
Drought conditions throughout much of the North Island and parts of the South were complicating matters.
NeedToKnow3
Those who may have previously held back lambs or cattle for May or June were now looking to have them processed earlier.
Simon Limmer, chief executive of Dunedin-based Silver Fern Farms, said the company - New Zealand's biggest meat processor and exporter - had put in place a raft of mitigating practices around barriers, masks, greater hygiene and isolating people.
"But there's a flow-on effect because that's impacting the capacity of the plants probably up to somewhere between 30 and 50 per cent. But that's okay," he said in a recent interview with NZME's The Country.
"Slowing the chains down to that degree means that we can create greater separation. We are applying social distancing norms that the country is talking about as a whole," he said.
"Meatworks are pretty clean places also. The degree of hygiene in those places, the regularity of cleaning it is important, but we're increasing that, putting other mitigating practises in place and it's something we'll keep reviewing."
The other big issue facing meat exporters is getting product into China.
Beef and Lamb's McIvor said supply chain issues in that country had eased, with China's ports getting back to more normal operations, but he said dynamics in the marketplace had changed.
Demand for food service products aimed at the restaurant trade and fast food outlets had fallen away quickly because of the restrictions on social gatherings, but sales at the retail, online, and home delivery spaces had taken off.
Aside from the huge disruption caused by Covid-19, McIvor said the demand out of China would continue to be strong, based on the natural demand there for protein.
In other export markets, the United States was seeing the same pattern of sales shifting from food service into retail and home delivery.
It was a similar story for Britain but McIvor said the European market was "difficult".
Overall, he said the situation was challenging.
"That's a combination of market disruption, logistics and processing disruption.
"The exciting thing is that we are still able to operate and the fundamentals globally are still the same; there is a significant imbalance between meat demand and meat supply."
In terms of prices, farmers had a taken a hit relative to last year's record highs, but prices were still firm in a five to 10-year context.
"It will feel uncomfortable at the moment because everybody is under pressure, but fundamentally, prices are good for farmers," he said.
Meat Industry Association (MIA) chief executive Tim Ritchie said demand out of China continued to build after severe Covid-19 related disruption earlier in the year.
"For our biggest market for sheepmeat and beef, by volume and value, that's got to be a good thing."
New Zealand exported sheepmeat and beef worth $921 million in February with the value largely unchanged from a year earlier despite Covid-19, according to MIA data.
The impact of Covid-19 saw the value of exports to China drop by 45 per cent to $175m in February compared with February 2019.
However, this was offset by increases in the value of overall exports to North America, North Asia (Japan and Taiwan) and the UK.
