It’s tough enough maintaining a reliable domestic food supply chain during the coronavirus pandemic. Imagine, then, the challenge of managing one that stretches nearly 8,000 miles.
Silver Fern Farms is New Zealand’s largest processor and marketer of livestock and red meat. Jointly owned by a cooperative of 16,000 local farmers and China’s Shanghai Maling Aquarius Co. Ltd., the company exports $1.6 billion of grass-fed beef, lamb and venison each year.
With roots extending nearly 100 years, Silver Fern is well-versed in the complexities of exporting to some 70 countries around the world. But the COVID-19 posed a new and unprecedented challenge.
Key markets disappeared overnight, but U.S. country manager Matt Luxton says the company was able to maintain a measure of export sales around the world because the virus hit different countries at different times. In the U.S., it has benefited from the ability to shift its sales and marketing focus in line with changing industry trends. The food service business “has almost fallen off the cliff,” Luxton notes, “so pivoting into the retail space has been hugely important.”
Silver Fern does a substantial business in both frozen and chilled red meat. In the case of the latter, a 120-day shelf life makes it possible to sell product in the U.S. despite the distance it has to travel.
A steady supply of transportation and distribution infrastructure is, of course, always a concern. Luxton says the company leans on long-standing relationships with international and U.S. carriers to maintain a reliable flow of product, both directly to retailers and to three processing plants in North America.
Many Asian exporters to the U.S. have been subject to sudden vessel cancellations in trans-Pacific services. That was especially the case for Silver Fern in the early months of the pandemic, Luxton says, but the disruption “was relatively short, and we were able to manage our way through.” Over the last three to five years, ocean carriers have placed bigger ships into service out of New Zealand, boosting capacity for an exporter that can marshal large amounts of cargo on behalf of its many owners.
In an age of shifting markets, the key to success for an agricultural producer like Silver Fern is getting closer to the end customer. Few can afford to bypass the e-commerce channel, for all the additional complexities that it presents. Currently, online activity accounts for just 10% of all grocery sales, Luxton notes, and meat is a small percentage of that.
Nevertheless, he sees growing opportunities in a channel that is attracting huge numbers of new shoppers in a time of lockdowns and sheltering in place. Many consumers that wouldn’t have dreamed of buying their groceries online are rapidly becoming accustomed to the practice, and a good number of them are likely to stick with the online option even after the pandemic subsides. Responding to what looks to be an unstoppable trend, Silver Ferns now has a fledgling e-commerce site, offering a select variety of product.
One could imagine Silver Ferns jumping into the business of selling meal kits and subscription services with its uniquely branded product. In partnership with Marx Foods, its American distribution partner, the company has created online sampler boxes of fresh meat. Such options are becoming an increasingly popular means of getting product in front of the consumer, Luxton notes, adding that Silver Fern has done extensive research into its potential competition.
“The consumer is looking for high-quality meats and a connection to the producer,” he says. “And their numbers are growing.”
The environmental impact of a lengthy food supply chain cuts both ways. On one hand, it requires the use of ships, planes and trucks that spew significant amounts of carbon. “We don’t have too much influence over what happens on the boat or in the U.S.,” Luxton says. So Silver Fern is focusing its environmental efforts at the source, working with farmers to encourage carbon sequestration in everyday operations, and eventually achieve the goal of carbon-neutral production.
“It’s an expensive and time-consuming process to investigate farms and their carbon footprint,” Luxton acknowledges, addressing the challenge of “regenerative” farming. Yet he views the effort as both environmentally responsible and, ultimately, good for business. “Conscious consumers are looking for products that aren’t going to destroy the environment,” he says.
In the months ahead, Silver Farms will be forced to navigate a radically altered landscape, with restaurants failing in droves, grocery stores struggling to keep product in stock, environmental concerns coming to the fore, and online commerce accounting for a progressively larger share of sales.
Luxton can only look to the positive side. “Consumers today are looking for a certain type of 100-percent grass-fed meat,” he says. “It’s a case of the stars aligning.”
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