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Rural business update with Riley Kennedy on Ryan Bridge Today · The SME Stream

• 0:00
  Speaker 1: Time for a rural roundup with Business Desk senior journalist
• 0:03
  Speaker 1: Riley Kennedy. Riley, good morning, very good morning, year, Happy
• 0:06
  Speaker 1: new year, Good to see you.
• 0:07
  Speaker 2: Let's start with you've got to.
• 0:08
  Speaker 1: Piece out on supply of beef in the US and
• 0:12
  Speaker 1: the market.
• 0:13
  Speaker 2: A few things happening in the market there. What's the story.
• 0:15
  Speaker 3: Yeah, there's sort of like an age old conversation in
• 0:18
  Speaker 3: New Zealand that goes on, we've got too many process
• 0:20
  Speaker 3: in plants. Don't really a matter of time until another
• 0:23
  Speaker 3: plant in New Zealand closes down, the last one that
• 0:25
  Speaker 3: closed to Smithfield and Timaru and probably coming up eighteen
• 0:28
  Speaker 3: months ago. And what happens is stock passes go up.
• 0:33
  Speaker 3: The process has got to procure it at a high price,
• 0:36
  Speaker 3: they've got to kill it in officially, and they've got
• 0:37
  Speaker 3: to sell it at a high price. But it seems that
• 0:39
  Speaker 3: is now the case. In the US. Tyson Foods, which
• 0:42
  Speaker 3: is the biggest second biggest meat processor in the world,
• 0:45
  Speaker 3: closed down a start in Nebraska which killed five thousand
• 0:49
  Speaker 3: cattle a day, which is about five percent of the
• 0:51
  Speaker 3: US's daily kettle killed. For context, it's like some plants
• 0:57
  Speaker 3: would be lucky to do five hundred a week in
• 0:58
  Speaker 3: New Zealand. So they're talking to really really big scale
• 1:01
  Speaker 3: and it shows just how short the US are on cattle,
• 1:05
  Speaker 3: which we're benefiting from because we're sending a whole lot
• 1:08
  Speaker 3: of lean cut the US which the can get mixed
• 1:11
  Speaker 3: into hamburgers and stuff. But the Tyson Foods too, they
• 1:15
  Speaker 3: just couldn't run this plant efficiently. They were losing one
• 1:18
  Speaker 3: point one billion dollars a year on their beef business.
• 1:21
  Speaker 3: You put them into context, it's like two billion dollars
• 1:23
  Speaker 3: New Zealand. What the revenue of one of our meat
• 1:26
  Speaker 3: processes there?
• 1:27
  Speaker 2: Why are they all struggling so much?
• 1:29
  Speaker 1: I mean, as you said, the price is high, so
• 1:31
  Speaker 1: they have to buy the you know, their product at
• 1:34
  Speaker 1: a more expense.
• 1:34
  Speaker 2: But then they can sell it higher too, so what gives.
• 1:37
  Speaker 3: Yeah, there's no point in having a plant there if
• 1:41
  Speaker 3: you can't fill it. So you've got to compete. You know,
• 1:43
  Speaker 3: if we're a meat process that we've got to compete
• 1:45
  Speaker 3: for that stuff. You might say, well i'll take that
• 1:47
  Speaker 3: for that price, and you go high and then it
• 1:48
  Speaker 3: bids up. It just becomes incredibly inefficient. And if you
• 1:52
  Speaker 3: can't get supply, and the supply goes to you, then
• 1:55
  Speaker 3: I'm then unefficient. Yeah right, it goes south pretty quickly. Okay,
• 2:00
  Speaker 3: plays out here in New Zealand all the time.
• 2:01
  Speaker 1: Speaking of consolidation, we've got some of that happening in
• 2:04
  Speaker 1: the wool industry.
• 2:05
  Speaker 3: Yeah, there's the wool industry, as we know, struggled for
• 2:09
  Speaker 3: quite a long time. There's quite a bit of optimism
• 2:11
  Speaker 3: actually in the industry at the moment. Strong Wall prusts
• 2:13
  Speaker 3: are over five dollars at the moment. That's sort of
• 2:16
  Speaker 3: tight to buy, and various other things that are going
• 2:19
  Speaker 3: on there. But PGD Rights and Walls did run an
• 2:22
  Speaker 3: option and nape care in christ Chute. They're going to
• 2:25
  Speaker 3: console out that down to christ Chute just have a
• 2:27
  Speaker 3: single national option. They say that a sensible decision to make,
• 2:32
  Speaker 3: which and then everyone in the industry thinks it is sensible.
• 2:35
  Speaker 3: No one's going to lose their job from this. And
• 2:39
  Speaker 3: then it sort of comes after Walls in New Zealand
• 2:41
  Speaker 3: and Pedged Rights and has worked together to sort of
• 2:43
  Speaker 3: find a way to be a bit more efficient, and
• 2:46
  Speaker 3: now Walls of New Zealand have said late last night,
• 2:48
  Speaker 3: actually they're going to go down to a single national
• 2:50
  Speaker 3: option as well. But the single national acture is going
• 2:53
  Speaker 3: to happen in christ Chute, which sort of makes sense
• 2:55
  Speaker 3: because there's an international airport there efficient to get them
• 2:58
  Speaker 3: in and out of the country, the buyers and in
• 2:59
  Speaker 3: our the country Napeier, you sort of kind of transit
• 3:02
  Speaker 3: through all the list those are up through Wellington, so
• 3:05
  Speaker 3: it's just a more efficient place to do.
• 3:06
  Speaker 2: It logistically makes sense.
• 3:08
  Speaker 1: Now it looks like the mainland Fontira deal looks like
• 3:11
  Speaker 1: it might be going to happen sooner than we've thought.
• 3:13
  Speaker 3: Yeah, the official line out of Frontier basically the last
• 3:17
  Speaker 3: year was it what happened in the first half of
• 3:18
  Speaker 3: this year. It's understood that later least put quite a
• 3:22
  Speaker 3: bit of pressure on Fontira to get the deal done,
• 3:25
  Speaker 3: to the point where the boss told Miles Parrell over
• 3:28
  Speaker 3: dinner in Paris that because he ruined the European summer
• 3:31
  Speaker 3: negotiating the deal, he was going to ruin his summer
• 3:34
  Speaker 3: in New Zealand to get the deal done. So now
• 3:37
  Speaker 3: they're saying the May good progress on it and it's
• 3:39
  Speaker 3: probably going to be the first quarter of this year
• 3:41
  Speaker 3: that could happen.
• 3:42
  Speaker 2: Essentially, why the rush, why do they want us to
• 3:44
  Speaker 2: be done? So quickly.
• 3:45
  Speaker 3: I guess when you're buying four point two billion dollars
• 3:47
  Speaker 3: for something you don't want.
• 3:48
  Speaker 2: That don't want to wait.
• 3:51
  Speaker 1: Fair enough, all right, Riley, Nice information is always Thank you,
• 3:54
  Speaker 1: Riley Kennedy, whose business desk senior journalists a time