An agreement that links China's second-biggest beef processor with a Canterbury cattle breeder and an Auckland meat packer and distributor is being hailed as a milestone in China-New Zealand trade relations.
Under the deal, to be signed in Beijing today in the presence of Prime Minister John Key, the Inner Mongolia-based Kerchin Cattle Industry Co will buy the rights to use New Zealand technology.
Angus beef breeder Te Mania Livestock, which has 2500 registered cows in North Canterbury and at Colac, in Victoria, Australia, will supply bull semen to Kerchin's 50,000 hectares of farms that fatten 12,000 cattle a year.
Penrose-based FoodCap, which has developed specialised handling systems for fresh chilled meat and supplies all Woolworths, Foodtown and Countdown supermarkets in the North Island, has a promise from Kerchin to adopt its technology and has hopes of establishing distribution plants in key Chinese cities.
As well as a huge farming operation, Kerchin has also built a big German-designed meatworks that slaughters 100,000 cattle and produces 20,000 tonnes of meat a year.
It was the official supplier of beef to the Beijing Olympics in 2008. In what it terms "food morality", it has instituted strict hygiene standards.
The deal, described by the parties as a strategic co-operation agreement, is the first agriculture deal under the China-New Zealand free trade agreement.
FoodCap co-founder Alan Mayne could not put a value on the open-ended deal yesterday, saying it was scheduled to progress through three stages.
"One will be the purchase of the use of the technology, then there's the commissioning of the technology and then the revenue stream for the use of that technology under licence.
"How big it could be is a matter of what optimistic model you apply."
Kerchin had told him it wanted to make FoodCap's systems the standard for food safety and food security in China. As Kerchin developed the use of the technology, that would open up opportunities for New Zealand companies such as Te Mania to be part of the export of primal beef cuts to China in the Inner Mongolia off-season.
Kerchin intended to extend that to other species – "whether that will be lamb, sheep or deer is a matter for the future".
Mr Mayne said FoodCap staff would get to work immediately the agreement was signed. "We will stay on and look at the logistics of shifting meat from Mongolia to wherever it is sold. There's a lot of logistics we're not familiar with that have to be worked through."
Ad Feedback
The company, founded by Mr Mayne and Roger Palmer in the early 90s, takes meat from a works boning room through stages where it is aged, cut into kitchen-ready pieces, packed and delivered to supermarkets. The meat is kept in "capsules", containers that guarantee hygiene and traceability and rule out the need for changes in packaging, such as carton or plastic bags, and multiple handling.
Te Mania general manager John Harrington said the initial deal was to supply straws of bull semen to Kerchin's farms, but embryos and live animals may follow. The deal was still in its early stages but "could be significant".
Te Mania is Australasia's biggest angus breeder and holds the biggest sale of any breed in New Zealand each year. The latest sale, last month, returned a record average for the 112 bulls of $7406, with the top bull selling for $36,000.
Mr Mayne said the deal was the result of years of building friendships in China.
It began with a foray by Te Mania into northeast China in 1998 to set up an angus breeding programme.
Other Articles of Interest:
China film deal: The great fast forward >>
Kiwi medicine joins forces with Korean tech know-how >>
Aussie changes to company tax rates good for NZ >>
Article Source: www.stuff.co.nz
Article By: Jon Morgan
