US beef buyers court New Zealand suppliers

“We buy millions of pounds of beef from New Zealand and our business is growing,” assistant general manager merchandise Bob Huskey told Rural News after a Beef + Lamb NZ facilitated meeting with about 100 farmers in Canterbury.

“We need to make sure we’ve got farms and processors in New Zealand still producing beef.”

Our lean beef, typically 95CL bull beef, and Australia’s, is essential to blend with fattier grain-fed product from the US for many of their lower-priced offerings such as burgers and mince.

Lowest price and highest quality is a core principle of CostCo’s business, but Huskey sought to reassure they want everybody in the supply chain to be making a dollar.

“Our goal is that all stages of the supply chain are able to survive, and not just survive but have an enjoyable lifestyle too. You can’t have a sustainable supply programme if people are losing money.”

During their week-long visit they’d been to Silver Fern Farms’ Te Aroha plant, Greenlea Premier Meats in Hamilton and Affco’s Horotiu plant, also in Waikato.

“But those were just the ones we had time to visit,” Huskey’s colleague Tyson Apperson told Rural News.

“We must buy beef from close to every plant in New Zealand – 25-30 plants.”

Another farmer meeting in Hamilton had been “standing room only.”

Huskey said they want to strengthen links with farmers through their processors. Contracts, or perhaps producer clubs with CostCo’s name incorporated, could be a way to do that, he acknowledged, but no firm plans had been made yet.

The aim is traceability, not so much because CostCo’s customers want to be able to see where product comes from before they buy but because customers trust and expect retailers to have traceability in their supply chain. “[Traceability] is probably more important to the retailer than the customer,” said Huskey.

Of the 200m lb (~91,000t) of beef CostCo buys, 25-35% comes from New Zealand. Country of origin labelling (CoOL) has been mandatory in the US since 2009 so the beef is labelled with a list of possible origins including Australia and New Zealand.

“When CoOL came in a lot of retailers went US-only but our stance was, if it was OK before, it’s OK now, so we stuck with our supply programme.”

Organic beef lines are limited in its warehouses, with only a modest mark-up compared to conventional beef, for example: US$3.79/lb for conventional mince would be US$5/lb for organic. However, online ten of the its 14 beef lines offered last week were organic, and tagged “grass-fed” in their description. Prices ranged from US$260 for a 10-pack of 10oz (284g) rib-eye steaks to US$115 for
a 12-pack of 16oz (454g) mince portions.

Huskey told the meeting that prior to this trip he’d not been particularly impressed with grass-fed beef but what he’d had in Australia and New Zealand had been extremely good.