When a politician tells farmers we should 'add more value' to the produce we sell, I get slightly frustrated. It is easy to say "we need to sell our wares to the wealthy" but the reality is significantly more complex.
Recently I was able to compare a typical Kiwi farming approach with that of a Japanese beef farmer. I was fortunate to have the chance attend a seminar on pastural beef production in Japan with Massey University associate professor Rebecca Hickson, as well as visit several beef farms during the week.
The average beef farm was small, with exceptionally high costs of production: most cattle are housed in barns and fed with a large proportion of imported feed.
In the predominant Wagyu breed, females are not reproductively efficient, many with insufficient milk to feed their calves. Wagyu cattle grow relatively well on average quality feed to finishing. Finishing farmers grow them to very heavy weights where they have exceptional condition. The Wagyu type varies in frame size, being quite petite in their legs brisket and hind quarter, but carrying a tremendous amount of weight and condition in their mid-section, back, and in their shoulder.
We also visited the central Tokyo Meat Market, similar in concept to the famous Tokyo Fish Market. About 700 beef cattle are processed each day and auctioned as whole carcasses to meat wholesalers. The carcasses are classed into 15 quality categories and sold yen per kilogram.
Full provenance of the animal and its pedigree accompanies each carcass. A daily competition judges the best carcasses. The top ones fetch significant premiums and are currently valued at about NZ$35-40/kg. For a 550kg carcass, this equates to a value of more than $20,000 per animal.
One Japanese beef farmer we visited with a herd of 120 cows, sold 70 prime steers and heifers annually, generating over $1 million in revenue. About $500,000 of his costs were in feed, making the business very profitable.
New Zealand and Japan have differing philosophies, industry structures and production efficiencies to create two very different beef industries.
Kiwi beef farming is incredibly efficient and productive. We are very good at producing a low-value commodity product of variable quality. Our red-meat production has a good story behind it: it is one of free-range, healthy, pasture-grown animals that are free of hormonal growth promotants and have not been fed antibiotic-enhanced feed or supplement. We are working hard as an industry to strengthen that message.
However, Japanese farmers are customer-focused and production is totally driven by the need to produce a quality product. This is the reason why other undesirable traits and inefficiencies may be tolerated. Who is right and who is wrong?
The Japanese are incredibly hospitable and generous, and I sincerely believe there are massive trade opportunities.
While eating meals with Japanese, the one recurring conversation was: "How often do you eat beef?" The answer varied from once a week, once per month, to 'on special occasions'.
The frequency of beef consumption was directly related to the social status of the consumer. As a result, beef quality in Japan is demanded and the Japanese processing industry rewards the farmer for delivering quality. We can learn plenty from this Japanese philosophy.
How meaningful would it be for a Kiwi farmer to be rewarded for producing a consistent and quality product so we could refine our production systems? New technologies may need to be implemented on to our farms and in our processing facilities: but currently we are a commodity player, our profit margins are tight and stock procurement and meat selling is extremely competitive.
Because of this, our industry is reluctant to invest in technologies to identify and improve the quality of our meat. If we are serious about getting off the commodity producer train, how could we invest in new technologies? If we could guarantee a consistent, quality, beef experience, millions of Japanese would love to share our beef.
Richard Morrison is president of Manawatu/Rangitikei Federated Farmers