Justin Marx, chief executive of Seattle-based Marx Foods, said he started importing Silver Fern Farms grass-fed beef well before it was trendy and now one of his biggest challenges is getting enough supply.
“We’ve got an exclusive on their Angus programme for the US market in the food services sector. We actually introduced Silver Fern Farms Angus to the US market a decade ago,” he said.
“We did it a time too when a lot of chefs were turning their noses up at it.”
According to Marx, people were starting to focus on quality, including grass-fed beef. However, outside of Silver Fern Farms, “it was mostly just super small production from well-intentioned people who maybe didn’t know how to raise beef properly”.
They didn’t invest in genetics, and it was very small scale, “so it kind of developed a bad reputation because the quality of a lot of it was really bad”.
So, when Marx Foods brought the NZ grass-fed beef to market early on the most common reaction was “oh, that’s actually good. It was like a real surprise reaction”.
He didn’t provide any specific numbers but said Silver Fern Farms beef was a "very important part of our business, without a doubt”.
For its part, Silver Fern Farms said the US is its second-largest market, and Marx Foods is a "significant customer within that market”.
Marx noted that the US market is huge and “we are grain-fed America, and there is definitely a big part of the market that prefers grain-fed".
"Among people that are interested in animal welfare, sustainability or any of the other things in that kind of feature set, it’s definitely appealing. The story definitely resonates”.
Marx said he often gets asked, “why should I buy beef from somewhere else? This is America. We have our beef”.
According to Marx, “it’s better to buy beef that’s produced the right way, on a beautiful pasture than to get it out of a local feedlot. To me, that’s a pretty easy values’ choice”.
“We handle speciality products; we don’t really handle commodities for the most part. We like to sell products that have a story that we’re proud of, rather than a story that you want to hide.”
NZ beef is also attractive for a bolder, beefier flavour.
Importantly, Dunedin-based Silver Fern Farms produces at scale and can produce grass-fed beef all year round.
A critical issue is the supply thereof.
According to Marx, on the logistics side of things, supply has been fairly steady despite global shipping issues.
“There are definitely hiccups, but it is not as bad as a lot of other people are experiencing.”
However, Silver Fern Farms is struggling to procure enough livestock, he said.
Other meatpackers come in and bid up the prices and “farmers find it irresistible”, he said.
He noted, however, “it is always a flash in the pan” and “it is damaging to brand New Zealand”.
“We’re having a hard time supplying all of our customers right now because we can’t get enough product because someone else is in the market making a bid for market share.”
Marx said it takes a lot of work to get new customers on any programme.
“We have to fight. Sometimes you have to visit customers 10 or 15 times to open a door. You have to work to maintain them.”
Critically, “the easiest way to wreck a relationship in a supplier relationship is not to have products to sell”.
Matt Luxton, Silver Fern Farms’ director of sales US, did not comment on whether there are supply issues but said “NZ’s livestock market is a competitive one with multiple companies vying to get animals with certain attributes”.
He also noted that “as a producer of only grass-fed meat, one of the issues that puts pressure on us and the wider industry is the ‘grass curve’, which creates constraints on supply in winter months”.
Farmers aren’t locked into supplying Silver Fern Farms but have a choice over who they send their livestock to for processing, he said.
However, Silver Fern Farms has worked hard to build long-term relationships with farmers, largely through its beef premium programme.
Farmers who meet the supply attributes and standards that global consumers demand, earn a percentage over the standard beef operating price.
The market-led beef programmes have delivered almost $30 million in additional value to farmer suppliers, it said.
There are around 16,000 farmer suppliers in total and about 3,000 have supplied to the different programmes over the past decade.
Silver Fern Farms’ new baseline beef programme premiums for the 2021-22 season will range from $0.30 to $0.55 per kg depending on the programme, with further premiums available for the 2022 winter supply period and for farmers who meet their contract and specification requirements.
The new season kicks off on Oct 31, he said.
Luxton did not provide the standard beef operating price as he said it was “commercially sensitive” but noted, “farmers clearly see significant value in our beef programmes”.
According to Silver Fern Farms, it is currently on track to process 24% more beef across its programmes in the 2020-21 season than in the prior two years.
The company, which operates 14 processing sites, is jointly owned by the Silver Fern Farms Co-operative and Shanghai Maling Aquarius.