Nicola's Notes

22 Apr 2007: Bloody Kangaroos, Wagyu Beef, Market Prices & Drought

I had another “new” experience here this week which petrified me, and I hope I never have to suffer a re-run! I was happily driving from a meeting at dusk, my radio was blasting and I was travelling at a brisk pace when out of the bushes hopped a 6’ solid bloody Kangaroo, which I smacked head on with an almighty bang!

As I drew the 4x4 to a halt I had this sinking feeling, not because I had destroyed a Kangaroo, it was the damage I had potentially done to Brendon’s car that had me quaking in my shoes! However, on close inspection (in the dark), there wasn’t a scratch! All I can say, after this frightening experience, is that I thanked the dear Lord for my lucky escape and the joy of 4x4 “kangaroo resistant” bull-bars here in Australia!

And for Leigh Vial, Garry and John Woggy.you three all warned me of the dangers of Kangaroos and all I can say is that I responded in a way that would have made you very proud.I decimated the Kangaroo population by 1!

My week has been another enjoyable one with plenty to share. I met representatives of two small but successful branded programs here in South Australia (SA).

Firstly, Mr Scott De Bruin is a producer of the unique Wagyu Beef breed in Millicent SA. And Tim..I KNOW you will really love all the following information..!

“Wagyu” is a Japanese breed of cattle. Japan has meticulously monitored the bloodlines of this breed and has kept them closed to outside blood lines since the 1900’s! Wagyu beef is also famously unique because of its marbling. This large amount of intramuscular fat keeps the beef moist during cooking and gives it an extraordinary eating quality. Whilst the fat content of this breed is high, over 50% of the total fat consists of the unsaturated fats (e.g. the good fat!). Wagyu also has a more ‘beefier’ flavoured taste than your average breed.

You may have heard the term ‘Kobe’ beef associated with Wagyu. The difference is that ‘Kobe beef’ is a title given to Wagyu beef that’s finished in “Kobe” Japan. The name can only be used for beef finished this way. Everything else is simply termed Wagyu in the same way that sparkling wine from Champagne, France is called Champagne and from everywhere else it is called sparking win! Also “Kobe” is fed Japanese beer as part of its diet and cattle are massaged before kill - all pretty unique!

Anyway, I met Scott De Bruin, a producer who brought the second ever live shipment of full-blooded Wagyu Japanese cattle into Australia in 1997. The product is expensive to produce, with a 500 day grain feeding program, compared to 70-90 days for standard cattle. Wagyu cattle are slow to grow, which adds to production expense.

Scott decided to direct-market his Wagyu and built a small feedlot. He started visiting foodservice establishments and offering samples. He gained momentum when he achieved the contract for the Hilton Hotel in Adelaide as this enhanced his profile. The disadvantage was that although he was selling primary cuts at a premium, the secondary cuts were still being sold back to his contract processor and into the commodity market so his overall returns remained low.

Scott’s cattle finish at 30-36 months and reach a liveweight of 800kg. Each animal is fed an intensive 15% protein feed for a whopping 500 days prior to slaughter which enhances the fat thickness and marbling. They are also fed electrolytes and sodium based liquids in the final finishing stages to lighten and pale the meat colour!

In the 10 years since he started breeding, Scott still only slaughters 25 cattle per month from a total stock of 2500 Wagyu cattle at his 5500 acre station in SA. Approximately 500kg of this meat (only) is supplied to SA retail businesses, with 6.5 tonnes per month to SA foodservice. The remaining 2 tonnes is supplied to Asian markets including Singapore and Hong Kong where he demands $150 / kg for striploin (that’s £62.50 per kg!). I must admit that I had a very interesting and educational afternoon!

This week I also met Graham Clothier, a Nuffield Scholar from 2005, (and a very good friend of Neil Perkins of Dinas Island Farm, Pembrokeshire) who is the coordinator of the Limestone Coast Lamb Program, the leading producer program direct-marketing fresh lamb in SA.

Limestone Coast Lamb was registered in May 2002. Their objective is to supply premium quality, traceable, free range, natural, tender lamb to a local market. Producers are “Flockcare” accredited and the lambs are crossbred, the bulk of which have first cross mothers. They focus on genetics and use EBV’s (Estimated Breeding Values) for sires. Most lambs would be White Suffolk, Pole Dorset (my favourite breed!) and Merino crosses.

Fifteen producers in the Limestone Coast region of SA supply the scheme and there are currently about 150 lambs per week being supplied through the program. They use a local slaughterhouse as a “service abattoir”. Graham is responsible for the marketing and sales of the lambs and all lambs are sold as whole carcasses to retail butchers. They have created quality “point of sale” material and it is a good example of a local, traceable program, with producers gaining a small premium.

And I am delighted to give you guys the standard SA red meat market prices which I know will be welcomed and absorbed intensely by Dad, Mansel, Uncle Bernie, Ellis Jones, Tim, Sion, Don, Rob Parker plus my darling brothers Paul & Jonathan!

Over 18kg lambs = $3.35/kg (£1.40/kg)
Under 18kg lambs = $2.50/kg (1.04/kg)
Over 19kg lambs Merino = $3.10/kg (£1.29/kg)
Under 18kg lambs Merino = $2.75/kg (1.15/kg)
Meat Standards Australia Graded Cattle $3.30-3.50 (£1.38-£1.45)

So, for all you farmers up there in the UK, you should be singing and dancing with the prices you receive for lamb and beef! Some time ago, you could have counter-argued that Australian cost-of-production is so much less which makes you even, but with the current drought conditions this is no longer the case. Barley and wheat prices per tonne are now $350 per tonne (£145) and with the massive stock reduction rates, life has never been harder for the Australian farmer. To add to the dire situation, PM John Howard this week announced that for the second year running, it is unlikely that there will be irrigated water allocation for farmers in the Murray-Darling river basin. This area affects up to 55,000 farmers supplying 40% of overall Australian primary production. This news has been met with horror for producers and consumers alike. It is likely that most urban cities will soon be forced into “Stage 4&5” water restrictions which are unprecedented, the cost of fruit, vegetables, milk and meat could rise by 300%, and farmers are looking at a catastrophic few months or even years ahead.

I cannot begin to explain how serious the current situation is. Graham Clothier was telling me that he normally gets 25 inches of rain annually but in 2005, he got 9-10 inches and he is on “non-irrigated” land. I saw his lambs in the fields and they were literally standing on sand - there wasn’t a blade of grass in sight. Graham confirmed that he is feeding them substantial barley three days a week, ad-lib straw 3 days a week, and beans 1 day a week. This feeding system seems unsustainable with current costs and Graham must make the painful decision to reduce his flock further in the next few months. The situation will not improve unless there is substantial rain in the next 6-8 weeks and I just can’t see it happening when here in Keith it is still 25 degrees and blue skies on most days.

15 Apr 2007: Adelaide Appointments & “Dog Sitting”

My second working week has been varied and interesting with two days of meetings in and around the city of Adelaide, the capital city in South Australia and two hours from my home of Akeringa.

Adelaide is a fabulous city and I really like it. It has a population of 1.3 million and I would describe it as extravagant, vibrant and friendly, with a pleasure seeking spirit. It is known as the “Festival Epicentre of Australia” and I counted 16 major international annual festivals listed in the tourist guide! And this is not including all the smaller regional ones that are continually advertised and promoted!

As well as fun-loving, Adelaide has a seriousness about it which is not to be ignored. As the state capital, the Government buildings are grand, orderly and architecturally “Old-English” and there are an array of museums and art galleries. The central point is “Victoria Square”, the main thoroughfare is “King William Street” and the whole city is mapped out in an orderly grid with wide roads and open parkland. And speaking of parkland, I should point out that Adelaide also boasts more parkland and gardens than any other city in Australia (probably in the world with all that I saw!).

Last Tuesday my first meeting was with Stephen Edwards from Meat & Livestock Australia (SA), whose parents are originally from Bangor, North Wales! I met Stephen to gather information on South Australian meat trends at foodservice and retail, market share in each sector, export trends and carcass utilisation, red meat manufacturing and convenience meal trends and also the processing facilities that exist in South Australia and Victoria.

Gathering data on Independent retail butchers is also critical as they still have a larger retail market share for red meat than in the UK. There are 2900 Independent Butchers in Australia with 280 of these in South Australia, but most are renowned as price sensitive rather than quality and premium driven.

My meeting with Stephen was also useful as he gave me contacts for MLA managers in their Head Office in Sydney and I need to plan a day there to assess funding options, understand current national marketing and promotional campaigns and production development initiatives.

My second meeting was with Tony Buckley from “My Butcher”, a wholesale meat business supplying top-class foodservice establishments across Adelaide. He focuses on premium branded products and he also sits on a Development Board for South Australia which has a strategy for innovation, product development and increased local primary sourcing. Tony is passionate about what he is trying to achieve (unity through the supply chain) and is frustrated by the “commodity mindset” with price being the sole factor driving the supply chain from consumer all the way through the retailer or foodservice operator, processor and then farmer. Listening to him was truly no different to sitting in a similar meeting in the UK with all the same concerns and frustrations!

I also met Jeff Harvey, a friend of Brendon’s who is now retired but Jeff was owner of the largest service processing facility/abattoir in South Australia until he sold the business in 2004. He is a butcher by trade and he bought this business in 1982 to slaughter his own beef and lamb for his retail shops. He grew the business by offering additional businesses “contract slaughtering and processing” and realising the benefits of this, he eventually sold his retail shops and became a “Service Only” operation.

The largest Supermarket in Australia, “Woolworths” (who currently has a retail market share in excess of 33%!) soon became their biggest customer and they were processing up to 400 cattle and 3000 lambs daily just for this supermarket! Woolworths employ their own livestock buyers who deal face to face with 99% of their producers and pay them direct for livestock. Following slaughter, processing and boning to primal, Woolworths then transfer all meat to their central distribution units across Australia for portion control prior to delivery to store. Much of the secondary cuts are sent for export with the USA being a major customer.

Jeff still maintains his business successes and highlights were due to the good relationship between him and Woolworths and that the strength of understanding and communication enabled his business to develop and profiteer in the supply chain.

For obvious reasons, Jeff does not see “branding” as an integral element of marketing and he states that at retail level, price competitiveness is critical. He sees regional premium branded programs having two major barriers to entry. These include low population numbers in South Australia and huge distances to markets, both internally and externally. I enjoyed our meeting as his viewpoint was essential to my research.

I also had a meeting with Bruce Hancock, Prime Lamb Development Officer for Roseworthy Agricultural College, who also represents the Government of South Australia as a researcher. He focuses on the development of genetics, commercial production and cutting costs of production for the benefit of primary producers. He has dealt extensively through the supply chain with livestock agents, transporters, and at retail level with branded products. He was able to give me a history of all the premium lamb branded programs that have existed in this state and it was all very interesting! Many have failed as a result of gaps in the supply chain, a lack of loyalty, strong price sensitivity but most importantly, the inability to market their product range successfully to the end consumer (there is a real pattern emerging here!)

Finally, on Wednesday afternoon I met Richard Gunner, a very sharp primary producer of Certified Angus Beef with the traceable “Paddock to Plate” philosophy. He set up his “Coorong Angus Beef” company and brand name in 2002 and since then, has purchased four retail shops around Adelaide marketing his beef direct. He produces sausage and burger products but is forced to sell a large proportion of his secondary meat on the commodity market because a lack of demand. He owns his processing facility and has a weekly contract slaughter at a small, regional abattoir. His branded program would be the closest to Celtic Pride Premium Welsh Beef that I have seen in South Australia thus far.

Finally, I headed back to Akeringa on Wednesday evening, tired but pleased with the information I had gathered and I spent Thursday and Friday wading through my findings. I have also had a good look at the lamb industry and have noted the following facts provided to me by the MLA.

Australia is the world’s largest exporter of mutton and the second largest exporter of lamb behind New Zealand! Australia produces approximately 381,839 tonnes of lamb and 243,789 tonnes of mutton annually (2005-6). There are 101.3 million sheep in Australia (A few more than in Wales!) with 12.5 million of these in South Australia. New South Wales is the single biggest producer state with 34.3 million sheep. The gross value of Australian sheep and lamb production is estimated at $2.1 billion.

Domestic consumer expenditure on lamb is estimated at $1.8 billion and consumers eat 10.2kg of lamb per capita annually - this is amongst the highest consumption in the world! Fresh lamb consumption across Australia is approximately 25.6 million servings per week and lamb has a 19% fresh meat market share at domestic retail.

Australia is the world’s largest LIVE exporter of lamb with 29% shipped to Saudi Arabia and 23% headed to Kuwait. In 2005-6 Australia exported 45% of total lamb production and 76% of total mutton production. 143,296 tonnes of fresh lamb was exported in 2005-6 with 27% going to the USA, and 21% going to North Asia.

Finally, Australia produces 7% of the world’s lamb and mutton supply which puts them in 3rd place as a producing country. China is the top producing country of lamb and mutton in the world, with the EU in second place and New Zealand 4th.

After all this data gathering and general analysing, by Friday night I was exhausted but I was given a huge responsibility over my weekend!!! The farm had just completed Lucerne seed harvesting and everyone was having the weekend off to relax including Brendon and Robyn who were headed to Adelaide.

As I was staying at home, I was left in charge of their two Jack Russell dogs, Maggie and Taz! Now, anyone who remotely knows me knows only too well that I am not exactly capable of being responsible for myself, let alone two dogs!!! Dogs and Children “sitting” are equally scary concepts for me and I was filled with dread over this huge responsibility! However, I can confirm that the weekend has been without any major drama and I have enjoyed their company immensely! Taking Maggie and Taz for walks across the farmland has been both fruitful and hilarious as I have laughed and laughed when they chased rabbits across the scrub at a tremendous pace!

I am also lucky that Damien and Jess obviously enjoy films as they possess an array of DVDs of every description. Therefore I have also enjoyed a weekend of good films in my leisurely environment. Hope everyone is well,

PS - Do you think Prince William is a likely contender as my boyfriend now that he is a free man?

PPS - If anyone didn’t see Jeremy Clarkson’s column on “Conference Calls” in the Sunday Times this week, you simply must have a look, it is absolutely hilarious!!!!!!!! See:

www.timesonline.co.uk/tol/comment/columnists/jeremy_clarkson

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9 April 2007: “Thelma & Louise” Easter Weekend!

Last Monday morning I literally jumped out of bed for the challenge that I faced as a new employee of Brendon Smart, an 8000 acre farmer on a mixed enterprise of Barley, Oats, Beans, Alfalfa and Finished Beef and Merino Sheep. He also farms 200 acres of vineyard at Victor Harbour, South of Adelaide under the branding of “Peeralilla Hill” and having tried it, I can confirm its very good stuff!

I am now living at the home of Brendon’s second son Damien and his fiancée Jess. This farmhouse is called “Akeringa” and I am here because Damien is currently touring the world doing his own Australian Nuffield Scholarship and Jess has joined him for 10 weeks. Brendon has two other sons. Justin is the oldest and is based in northern NSW with his own business although he retains his position as a Board Member of the Smart Business. Ryan is the youngest and manages and controls the winery at Victor Harbour and is also on the Board.

My task for the next few months is to do extensive market research to determine whether there is scope for the “Smart” business to add-value to their lamb and beef. I will be researching consumer trends, export markets, processing and slaughtering capacity, producer protocols and general supply and demand of red meat both here in the state of South Australia and the rest of the country. My market focus will be predominantly foodservice and independent retail businesses and I will be assessing other regional branded meat programs in existence to determine how they supply the market at a premium price. Hopefully, this research will determine whether there is viability for us to create a new branded program and value-add.

So, following an excellent induction type meeting last Monday with Brendon, his sons Justin and Ryan, and a couple of representatives from industry, I was given the green light to proceed with research. So I have set a strategy, created a supply chain model, and started the big task of researching “the plate to gate” formula. All this work so far has been done from my office at Akeringa and it is already proving very interesting!

For example, did you know that as of June 2006, there were 27.78 million cattle in Australia with 1.4 million of these in the state of South Australia? 71% of cattle production is sourced from the states of Queensland and New South Wales? And that each year Australia produces approximately 2 million tonnes of beef? Some other facts include the gross production of cattle and calves, which sits at approximately $7.4 billion (that figure includes live cattle exports). There are 74,000 properties / farms with beef cattle in Australia.

Domestic expenditure on beef is $7.4 billion and Australians consume 35-36kg beef per capita annually. (In the UK this is 18kg and in Argentina it is a whopping 63kg!)

In 2006, Australia exported 65% of its total beef production and the value of this was $4.5 billion. Australia produces 4% of the total world supply of beef and is the second largest exporter of beef in the world, after Brazil. So, as I continue to tell SO many people “I am getting an education and I have only just begun”!

By Thursday afternoon, my laptop was shut-down and a big weekend “road trippin” was about to begin as Cousin Jenny and I were spending Easter together travelling the Great Ocean Road in “Thelma and Louise” style!!

Jenny flew to Melbourne from Sydney and I met her there in my faithful 4x4 by 10am on Good Friday morning as it is over 500km to Melbourne from Akeringa! After a hearty reunion, we set off, firstly to the home of Jim and Helen Gelch. (A reminder for some = Jim is CEO of Nuffield Australia and a true friend and superb mentor of mine). We arrived for lunch and met Neil, their 3rd son of 4, and Helen’s mum Anne. The six of us had a fabulous afternoon sitting in their garden by a lake in the sunshine, eating delicious food, drinking excellent wine and enjoying good conversation!

Jim and Helen were delighted to meet Jenny as they are established friends of my Uncle Mansel and Aunty Ros. Jim and Mansel did their Worshippal Company of Farmers “Agricultural Management” course together in Wye College, Kent in the late 1980s when Jim was awarded his Nuffield Scholarship. And because this Wye course encourages annual reunions with the farmers, Jim and Helen and Mansel and Ros have met on numerous occasions and are good friends as a result.

So after a tour of their district including the towns of Moana and Echuca on the banks of the Murray River, we enjoyed more food and chat during Good Friday evening. It was a most enjoyable stay and I want to publicly thank both Jim and Helen for looking after us so well and being such wonderful friends.

By Saturday we were headed south to the Great Ocean Road, a breathtaking route from the towns of Torquay to Warrnambool in Victoria, and renowned as one of the world’s most spectacular coastal drives. To give you all a clearer picture in your head, Jenny and I cruised the highways with the radio on loudly, singing, talking and laughing most of the way! We also ate grapes, rice cakes and wine gums and drank water and diet coke (with my fellow passenger even consuming sparkling wine on more than one occasion!) as the countryside and coast flew by!

On Saturday evening, after numerous stops for photographs and short walks at famous rocks such as the 12 Apostles and the Loch Ard Gorge, we arrived at the tiny coastal town of Port Campbell. This town was established as a trading port in the 1870s but is now renowned for tourism and fishing. The town was huge! - a grand population of 200!!! But as it was Easter weekend, it was busy and reminded me of Solva in the height of summer. We were lucky to get a motel room and had planned to go to the pub to enjoy some social atmosphere and eye up the local talent, but when we looked out of our window from the motel to the sole pub in town at 10pm, it had closed so that was the end of that idea!!!! As a result, I had an unusually quiet night “indoors” sipping wine, chatting and watching AFL and it was a truly perfect evening!

On Sunday morning we were up early, walking the coast path and enjoying the morning sunshine and by 10.30am we were in Port Campbell Baptist Church for their Easter Communion Service which was very enjoyable and fulfilling. Back on the road by lunchtime, we completed the Ocean Road after stopping at “London Bridge” and the “Bay of Islands” rocks. We then stopped at the town of Mount Gambier and walked the 5km around the famous Blue and Valley lakes (which I did two weeks ago) and it was great to get some exercise after being cooped up in a car for two days! Finally, we headed north to my new farmhouse.

It’s now Monday lunchtime and both Jenny and I are sitting on a bench on the veranda in my garden, and I am completing this report whilst she writes up her journal. Last night on our return, Jenny cooked me dinner and we enjoyed copious glasses of wine in celebration of our Great Ocean Road completion! We also put the music on loudly, danced outrageously and played pool (I forgot to mention that I have a swimming pool and tennis court I also have a pool table!) and Jenny beat me easily! I also think we kept the local wildlife awake with our antics until the early hours!

This afternoon I am driving us to Adelaide which is 200km and 2 hours away, and we will spend the night there. Jenny is flying back to Sydney tomorrow and I have an array of work meetings in the city over the next two days. I am really looking forward to spending the next few of weeks working hard and enjoying “country living” again.

It has been a superb and memorable Easter weekend and I hope that each and every one of you enjoyed your Easter break and have many lovely memories to cherish as I certainly do. I would love stories from all of you on your activities!

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