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PPCS CEO Keith Cooper A clear signal that farmer supply commitment is needed

The company?s chief executive Keith Cooper addressed Deer Industry New Zealand?s formal general meeting, held in May as part of the deer industry conference in Hamilton. PPCS currently processes about 58% of NZ farmed venison, in seven dedicated venison plants.

Cooper attributes a brighter venison situation to a ?combination of events ? both PPCS and industry?. In particular, he says there?s been positive economic growth in key markets, Germany, Belgium and France. And the seasonal European venison consumption has been extended, with some chilled sales ?extending to and beyond Easter?.
Allegations against a German venison trader of contaminated meat early last year have led to more emphasis on ?hygiene, quality and traceability? of venison products, he says, creating an enhanced perception of farmed venison.
Commentators have called for clearer communication by exporters, to help farmers with their on-farm decision-making and avoid tipping off another boom-bust cycle. Cooper certainly made PPCS? position clear.
Now that market prices have gone up, partly because of diminishing supply from New Zealand, more meat companies are seeking venison supply. The number of deer processed in 2009, he points out, is forecast to drop as low as 500,000: 270,000 fewer than 2005. Taking into account zero stock carryovers and increased chilled supplies, Cooper predicts that will translate to half the volume of frozen venison in 2009 compared to 2005 ? with possibly double the number of exporters.

?That means our share of the frozen venison market could drop by 75%. Inevitably, PPCS will have to adjust its business to fit available supply, but you have to feel for the customers who have made significant investment in New Zealand venison at the most difficult times and are likely to be rewarded with a much smaller share of the business.?
Farmers need to support the companies that have stuck with them, if they want to help build long-term stability, says Cooper. ?Deer farmers may not like the message, but the reality is that more operators fighting over smaller volumes will fragment both procurement and marketing, and drive up costs.?

Cooper reminded delegates that when things got tough in recent years, with burgeoning supply and deflated prices, there were four meat companies who stuck with the industry (PPCS, Alliance Group, Mountain River and Duncan and Co). ?We were the four left standing with DINZ,? he says. ?[We] took a collective and responsible approach to managing a very difficult problem. We held and increased prices in spite of massive increases in production and a strong New Zealand dollar... It was a very positive outcome for everybody.?

He advised farmers that they should look at who is investing in their industry. For example, PPCS has spent $15 million on its deer plants over the past five years, along with ?product development, quality research and in-market investment?. PPCS is the only venison company that has stands every year promoting New Zealand venison at the main food trade events, SIAL in Paris and ANUGA in Cologne.
PPCS also seeks investment by the people it deals with overseas, he says, citing three such companies: Josef Maier in southern Germany, Citti in northern Germany and Migros in Switzerland. PPCS looks for companies with infrastructure, storage facilities, delivery capacity and in-market staff, he explains. In total, PPCS has 50 customers in 30 countries.

?Having sound relationships with selected customers means we can develop strategy and plan ahead with certainty in both weak and strong markets to improve our processing efficiencies and our stock management,? says Cooper.
The company is seeking clear signals from farmers that they can be relied on for supply and in turn undertakes to recognise loyalty. This will help the company secure its supply base and manage its finances.
There?s a wider implication too, he says. Stability helps the industry ?to work together at the political level and to take on competitors for land use?.
It?s about taking a long-term view says Cooper. ?Will farmers forget recent history for 10 cents a kg more on the day??

Earlier this month PPCS announced it is putting in place a guaranteed space allocation system with a locked-in price if there are delays; forward supply agreements ? initially for lamb and prime beef; and a volume premium on quality supply for all species. In doing so, PPCS has promised full transparency. This will help mollify smaller producers who understand that premiums are rational but would prefer to know about them and maybe be able to access them through acting collectively.

PPCS is also making a policy of only using its own field staff network and established rural services companies? to avoid distortions, says Cooper.
The PPCS message is that the future of venison is in farmers? hands. ?It?s your call.?

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