Alliance Group has on occasion reduced operating hours at its Smithfield and Pukeuri plants in the South Island and Silver Fern Farms (SFF) has on three instances reduced processing capacity at one of its plants as they manage logistical issues.
The shipping logistic problem affects all species, but coincides with a record prime beef kill.
AgriHQ analysts report 637,700 prime steers and heifers have been killed in the year to March 27, 92,000, or 17%, more than the previous record kill, which was last year.
Despite logistical challenges, companies are selling record volumes with 55,700 tonnes of beef shipped in March, a month-on-month increase of 4500t, and 10,000t more than the five-year average.
Demand is primarily being driven by China, which took 20,600t in March, 300t more than February, and the US, which took 18,800t, 2300t more than February.
South Korea and Japan also increased purchases of beef in March.
This demand is helped by Australian farmers rebuilding their herd, which has seen 200,000 fewer cattle killed in the eastern states in the six weeks to April 12.
AgriHQ senior analyst Mel Croad says this demand is not flowing through to the farm gate where prime cattle prices are 20 cents to 40c/kg below the five-year average, due to a combination of higher slaughter rates this season and reduced foodservice demand globally, which is impacting high-value cuts.
It is worse for farmers in the South Island, with AgriHQ saying they are receiving 50c/kg less than those in the North Island.
There has been an oversupply of cattle in the South Island leading to processing backlogs, whereas in the North Island, competition has increased for a reduced number of prime cattle.
Croad says South Island prices are only marginally higher than a year ago, at the height of the covid pandemic and when Chinese ports were closed to shipping.
The increased kill follows a herd build up over the last three to four years, which was buoyed by strong returns at the time.
Croad says that level of demand and volumes exported is despite shipping issues and a record kill, which reflects global demand.
The high value of the NZ dollar is eroding prices and limiting the chances for improved farm gate prices.
Alliance Group chief executive David Surveyor says it has been a testing season for all species.
“Changes to shipping schedules and routes, borders opening and closing and escalating global demand for goods have resulted in congestion at ports around the world and a shortage of containers in NZ,” Surveyor said.
He says the co-operative has leveraged the scale and flexibility of its network to maintain processing.
“We have been able to move stock throughout our North and South Island plants to manage potential backlogs and maximise capacity,” he said.
“As a result of our efforts to date, the only change in operating hours across the network has been a reduction in ovine and cervine processing capacity at Pukeuri (Oamaru) and Smithfield, and importantly, farmers have essentially not been impacted.”
SFF’s supply chain manager Dan Boulton says global supply chain disruption means it cannot fully maximise its daily overtime and/or Saturday capacity options.
“We have only had three separate instances to date where the supply chain challenges have directly impacted the daily processing capacity at an individual plant,” Boulton said.
It has also been utilising its national network to move livestock, but a shortage of skilled staff in some areas has hindered processing.
“We recognise that most of the country is extremely dry and we’re working hard to prioritise animals from the areas hardest hit,” he said.
Boulton says most NZ cold stores are at capacity and if containers and/or vessels are not moving, it quickly impacts plants.
Fonterra global supply chain manager Gordon Carlyle says the co-op is coming to the end of its peak export period and while it is experiencing some disruption, it has been able to keep product moving.
An ANZCO spokesperson says all its sites are currently operating as normal.
