Rural Delivery: US deal gives exporter warm fuzzies

By TONY LEGGETT

You have to admire the dogged determination of many of our Kiwi entrepreneurs.

An example is Phil Taylor, the driving force behind Outlands New Zealand, a tiny beef exporting venture with big plans.

From the small office in the farmhouse on his South Waikato property, Mr Taylor has carved a niche for himself, serving up "natural" New Zealand beef to hamburger-mad United States consumers.

What started as an interest has turned into an obsession for Mr Taylor, who first spent several years perfecting his own system for finishing bull beef before heading overseas with sample packs of his meat in chilly-bins.

Outlands won a major breakthrough late last year when it was issued with the world's first licence from the United States Department of Agriculture (USDA) to supply certified organic beef.

The USDA had just established protocols for importing organic beef and Outlands was first in the queue for a licence.

The company has been successfully marketing small quantities of "natural" New Zealand beef for the past two years, but this new licence opens an exciting market segment for the company.

Mr Taylor has enough experience in the hotly contested US imported beef market to know how attractive, and lucrative, the organic beef market will be. He calls it the "warm fuzzy," warning that having the market is no good without having the supply to meet the demand.

His competitors, too, will soon be seeking their own licences. His window of opportunity is small.

Market surveillance tells him New Zealand's nearest neighbour is also getting serious about the potential of the US organic beef market.

It also has a more supportive Government that is prepared to put up finance for market development. Already, several Outlands customers have received sample packs of Australian "organic" beef.

For Mr Taylor and his fellow Outlands shareholders, the challenge now is to capitalise on the market opportunity the hard-won licence offers. To do that, they need cattle, and lots of them - more than the thousands their current procurement strategy can deliver.

Access to the US beef market is also controlled by quota. Without quota, exporters face major tariffs.

But the more immediate challenge is securing the supply of sufficient numbers of cattle from certified organic farms.

Mr Taylor has two choices when it comes to organic certification standards, Bio-Gro New Zealand and Certenz. Put simply, Bio-Gro sets the cross-bar for organic certification higher than Certenz. Bio-Gro New Zealand certification has been around for longer, but both are recognised internationally.

Only a handful of farms have reached the Bio-Gro standard, but more are signing up to make the three-year transition each day.

Most New Zealand farmers view organic meat production with some scepticism. They are aware of the premiums on offer but fear production and profit will drop if they choose to farm chemical-free.

What is needed is a more attainable organic standard than Bio-Gro sets. A good starting point would be to ask consumers what they want. After all, the customer is usually right.

*Tony Leggett is editor of Country-Wide, a monthly rural newspaper circulating in the lower North Island.