Food processors, suppliers and retailers need to be part of a quality assurance chain which covers the entire agri food industry according to DARD's Chief Veterinary Officer, Bert Houston.
Speaking after the Northern Ireland Grain Trade Association's annual general meeting, Bert pointed out that the agri supply industry, and farmers here, had all implemented quality assurance schemes. Unless these are extended to the processors and retailers their benefit will not be fully realised.
The horsemeat scandal had been a wake-up call for the retailers and their change of attitude was interesting - public apologies to customers and letters to shoppers expressing their shock and the fact that they had been let down by their suppliers - but never once did they mention a quality assurance scheme!
Bert went on to point out that a quality assurance chain is only as strong as its weakest link and he cited the dioxin incident in 2008 which precipitated a huge recall in the pork industry, This incident was due to one small operator processing a food byproduct for animal feed. He emphasised "There is always a risk when there are suppliers outside the assured chain."
He commended NIGTA's involvement with the Institute of Global Food Security at Queens "We are now in a global market with limited raw materials and a long supply chain. Northern Ireland has to compete with the growing demand from the larger developing countries for raw materials and also with the bio energy sector. Food ingredients appear in many different products in many countries around the world. It is a high risk business and needs stringent quality assurance schemes at every link in the chain. The agri supply industry is tackling this risk but the food processers, suppliers and retailers must play their part."
He especially mentioned former food products for which no one is taking ownership or responsibility.
It is noteworthy that the share price for the major supermarkets did not suffer, thus emphasising the power of the retailers and their publicity machine.
Bert concluded "Lessons for the entire agri food industry have been learned from this crisis."
During the annual general meeting members expressed their appreciation of the work, which President, Owen Brennan had carried out over the past year, and unanimously re-elected him for another term. Alan Johnston was re-elected vice president in order to continue the support that he had given Owen throughout his Presidency. David Malseed and Stephen Burrell will continue in their roles as Honorary Secretary and Honorary Treasurer respectively.
NIGTA AGM 2013
Commenting after meeting the Northern Ireland Grain Trade Association. DUP MEP Diane Dodds has highlighted a range of issues faced by farmers this winter as a result of high input prices, lack of credit and a shortage of winter forage.
Diane Dodds said:
"The stark reality is that this winter will be one of the toughest in living memory for many farmers. As a result of low farm gate prices and one of the wettest summers on record many farmers are facing an unenviable situation. The wet summer impacted upon grass growth and the ability to make silage and indeed silage of good quality. This in turn has meant an increase in compound feed use, with many merchants experiencing winter demand in the month of August. Unfortunately this causes a number of problems; extra production costs, carrying extra credit into the winter all on the back of inadequate farm gate prices.
The price of meal has also spiralled over the last year driving input costs to all time highs. For example between September 2011 and 2012 the cost of hipro soya has increased by 60%, corn distiller 50% and wheat by some 15%. NIGTA equate these increases in feed material costs for a typical ration to have risen by some £60/t since January 2012, an increase of about 30% on most feeds. To put this in context for Northern Ireland on the two million tonnes of feed consumed in the province, that is some £120 million extra cost to Northern Ireland farmers and an extra £25 million extra credit to be carried by the grain trade.
In relation to production costs the effect is even more pronounced with an average increase of 26p/kg deadweight on production costs for pigs, increase of 40p/kg on an intensive beef animal, a 2.5p/litre increase for milk from the average dairy cow and for the poultry sector an increase of 25 - 30p/bird on a boiler chicken and 16p to a dozen of eggs. As we all know this price increase has not been reflected in the market and if the market does not respond quickly it is more than likely farmers will reduce or leave the sector. This is a real possibility; the pig sector has already taken steps to reduce or de-stock, a lot of other sectors will follow suit. The problem is the market will not experience shortage until next year which for many will be too late.
Why has grain prices increased? There are a number of reasons, none of which are new to the sector and have been present over the last number of years but this year the weather has been the main driver especially in the USA. Many speculators have also continued to invest in the safety of feed commodities; there has been extreme volatility in the markets while demand from developing countries continues to rise especially from China and India. The demand for fuel and especially bio fuels has put increased pressure on land use in both the USA and the UK. What is becoming clear is that we are unlikely to see barley and wheat back to prices experienced 10 years ago.
Europe and indeed the world have very little grain in storage and it really is hand to mouth. It is important to note that as consumption continues to grow pressure on the system will only increase. The Commission within their CAP proposals do not recognise this reality and continue to erode Europe's production capacity and intervention stocks."
ANIMAL FEED COMPOUNDERS ARE IN THE ‘HEALTH’ BUSINESS
“You are in the health business” This was the startling comment from Professsor Patrick Wall, University College, Dublin when he addressed a meeting of the UFAS ( Universal Feed Assurance Scheme) approved feed businesses in Northern Ireland. Professor Wall stated that the business of animal feed production was linked to many different aspects of food production. These aspects included animal health, animal nutrition, animal welfare, food safety, human nutrition, human health and the environment. He said “We need advanced animal nutrition, not only for increased efficiency of production from these animals but for better animal welfare, better food safety, better human nutrition and a better environment.
“Such advances in animal nutrition will also help us differentiate ourselves from the competition and increase market share. We have a lot going for our industry and we must capitalise on that. eg. We are often described as the back garden of Europe, the food island etc. Other countries are envious of our reputation.”
He cited the example of Pepsico purchasing the Ukraine’s largest dairy and noted that they will apply the same marketing strategies as they have done to the Pepsi drink in the past. To enable our industry to take advantage of all of the marketing strategies available we must be aware of the complexity of our industry and how it has changed in recent years.
The feed industry is now involved with pharmaceuticals from global companies., minerals and vitamins from China, multi ingredients sourced globally, co-mingling, additives etc. Added to this are official controls, traceability and global threats. The complexity and global aspects of the food chain mean that ingredients from all over the world can often be found in one single food product. However the food chain is only as strong as its weakest link and the feed industry is the first link in that chain and must not be found to be the weakest one.
Added to this is the power of analytical chemists who can now quote contaminants in parts per trillion thus causing more alerts. The news of such alerts spreads rapidly due to social media sources which can hit 900 million users immediately. The news of an alert can spread far and fast and the media is feeding off this news often resulting in food scares. In many instances such scares are unfounded since the level of contaminant, although above the legal limit may pose no threat to either animal or human health and when diluted in premixes and compound feeds may not even be detectable.
How can we protect our industry in Northern Ireland? Co-operation is the name of the game where early warning results are shared and co-operation on sampling and testing can provide a more detailed and accurate system . We need to take account of historical results, emerging threats, the increased number of co-products being used, the out of spec human foods which are in use, the by-products of ethanol production and the geographical risks ie. be aware of the controls in other countries.
IRISH ANIMAL FEED INDUSTRY’s QUALITY ASSURANCE SCHEME COULD BE A WORLD LEADER.
The enhanced quality assurance system being developed in Ireland has the potential to be a world leader if the entire industry is prepared to be involved. This was the message from Professor Chris Elliott, from Queens University when he addressed the meeting of all of the UFAS ( Universal Feed Assurance Scheme) approved feed businesses in Northern Ireland.
Chris pointed out that one of the biggest issues in food safety is feed safety and an early warning system for animal feed is vital for the future of the industry. He outlined the thousands of RASSFs (rapid alerts) which occur regularly throughout the world but pointed out that reacting to these is too late. The industry needs to be aware of emerging risks and be in a position to calculate the likelihood of that risk happening and the impact if it is detected. eg. The dioxin scare in Ireland had the potential to cause a meltdown of our industry if it had spread to other products. In addition to the harm to the industry other aspects which need to be capable of being assessed are the risk to human health, to animal health and the possible transfer of the contaminant to meat , milk, eggs etc.. The risks from particular geographic areas must also be considered.
Queens University is developing a system where they can press a button and find out emerging risks, the potential risks of the various contaminants and the geographic areas where they might occur. Now they need information from the trade in the island of Ireland to enable this system to be the best quality system in the world.
While Chris appealed to the trade to supply this information regarding the sampling they are carrying out and its results, he did acknowledge that it is very sensitive information, which companies wish to protect from competitors. In view of this a system has been set up whereby the information goes direct to Queens along with a confidentiality agreement which states that the information is always the property of the sender and the only people who can see it is the team at Queens involved in this project. Such information will never be given to anyone else but will be used to compile a picture of the sampling being done in Ireland and its results. This picture will allow Queens to see if the sampling could be done more efficiently (eg not everyone doing a certain sample at the same time of the year), and thus more cost effectively. In addition there is the major advantage that if an alert occurs then everyone can be informed immediately. When this information is added to what Queens has already compiled it will allow the industry to have a very valuable and effective quality assurance scheme.
Chris went on to point out that global changes will impact here eg. climate change, water shortages, alternative energy supplies, growing populations and food shortages. These changes will bring further threats. eg a water recycling plant had a minute amount of contaminant but after the water had been recycled many times the contaminant had built up so that a rice crop was found to have over 100 times the amount of arsenic that it should have, as this water was used to water the crop due to a water shortage.
Of course the expertise of the analytical chemist and the fact that a lot more monitoring is being carried out means that we are likely to find more, but that is not a reason for ignoring the facts. Apart from preventing a contamination risk this quality assurance work will also be a marketing advantage. eg. a company which manufactures infant formula milk only sells in China because of the greater profit margin from the higher price paid in China – and the higher price is paid because the company has detailed quality controls and traceability in place.
The very important aspect of this unique quality assurance scheme and the aspect that will determine its eventual success is that everyone must participate. If someone decides to be a passenger not only will there be no access to information for them but the data set will not be so robust and meaningful. Chris therefore appealed to everyone in the feed industry to help make this scheme, which could be a world leader, a unique success.
NIGTA Quality Assurance Roadshow June 2012
Soaring protein prices and unprecedented volatility across a range of the key feed ingredients is presenting a grim outlook for livestock producers at a time of year when we normally expect to see prices easing back in the lead up to a new harvest, according to the Northern Ireland Grain Trade Association
Weakness in the worlds’ financial markets could be expected to produce an easing in commodity prices but instead the fundamental issues of supply and demand are driving the markets to record levels.
Demand for soya is the principal driver – with concerns about a 20 million tonne shortfall in the South American crop leading to a surge in demand for US soya beans. This comes at a time when the soya acreage in the US has lost out to an increase in maize plantings in response to high prices for this crop from the feed and biofuel industries.
The prospects for the coming soya harvest are not good with much of the crop suffering stress from hot, dry weather in the principal growing areas. This puts increased pressure on the stocks of old crop material – giving rise to a record tight soya crop balance sheet.
The impact on other protein materials such as rape meal, distillers grains and corn gluten has been a dramatic increase in prices and an increase in demand leading to technical shortages of material.
In Europe, grain harvests have been delayed by variable weather and the markets have firmed in response to concerns about harvest and the late arrival of new crop material.
As a result the entire commodity basket has been affected by volatility at a time when feed manufacturers are looking to take forward contracts at favourable prices .
In the short term the trade will be inclined to move forward cautiously taking short term cover in the hope that harvest prospects might improve or the economic climate may change.
The implication, for the intensive sector in particular, where there is no alternative to soya as the principal protein source, is for higher priced feed and an urgent need for the food chain to respond to increased cost of production. ?
Supporting NI Grain Trade Association members through a difficult trading environment and lobbying for an improvement in product prices to reflect the increased cost of livestock production are just two of the major items that NIGTA has been working on in 2012.
Speaking at the Association's quarterly meeting the newly appointed Chief Executive, Robin Irvine, told members that he intended to continue this work and his appointment was evidence of NIGTA's commitment to be an effective voice for the industry. Robin welcomed David Caffall, the Chief Executive of Agriculture Industries Confederation (AIC), NIGTA's affiliated organisation, to the meeting, and expressed thanks for the support and lobbying in London and Brussels which gave NIGTA an opportunity to make its voice heard throughout Europe.
Commenting on the ground work which had already been carried out on the financial situation in the farming and agri supply industry through a presentation to the Agriculture Committee of the Assembly and MEPs, "We have had a series of joint meetings with the UFU and the major banks and have now invited the Minister for Agriculture to meet us regarding the very serious situation in our industry."
He emphasised "The aims and objectives of the Food Strategy Board which the Minister appointed will never be met if we do not have a viable production base. Profitable production at farm level is the first link in the food chain which is so vital to the economy of Northern Ireland"
The effects of new legislation such as the IPPC Regulations and GHG proposals on the smaller animal feed businesses is another area which Robin hopes to concentrate on. He said "A severe regulatory approach is only going to crush businesses, large and small. What we need is the industry working together with regulators, to achieve the objectives in a scientific and practical manner."
Robin went on to say that the Association would also like to assist with developing the role of NI Food Chain Certification in assuring the food and feed chain locally.
Robin added "Safeguarding the food chain is a major priority for us - The implementation of a strategic sampling plan for contaminants has already got under way with the dioxin sampling program now well established. However this is just a first step - in conjunction with Queens University and University College Dublin we are developing a statistically based sampling plan to extend this approach to a range of other contaminants. With businesses working together to take a coordinated approach to managing risk we can bring a much greater level of assurance to the Agrifood industry.
NIGTA's role will also encompass the fertiliser industry which is also facing a heavy burden of additional legislation in the months ahead.
Robin added "My final objective is to recruit membership for NIGTA. While we currently represent around 90% of the compound feed trade in the province, when we lobby we want to represent everyone in the trade, both large and small."
NIGTA Christmas Lunch 2012
“The long term strategy of Bank of Ireland is to increase market share in the agri sector” William Thompson, the bank’s Agri Manager in Northern Ireland told a meeting of the NI Grain Trade Associatin.
William stated that a dedicated £50 million investment fund was open to new and existing customers involved in agri related businesses and he noted that since the launch of the bank’s Agri Fund in October 2011 over £20 million in funding to agri businesses has been approved.
Commenting on the agri sector William agreed that all sectors are facing challenging times in the short term, but he was optimistic about the long term view, and emphasised that efficiency is key now more that ever.
Planning ahead is crucial and scale is not always the best option unless the farmer has profit – get better before getting bigger!
William went on to say that the weaker euro will impact farm income, make exports less attractive and imports more attractive. The exchange for the Single Farm Payment is due to be set at end of Sept, with a drop anticipated of 10% on 2011 equating to a 30million reduction, spread across the agri sector !
He added “Bank of Ireland is open for business and will assess each client on an individual basis„ we are committed to growing our presence in the agri sector.”
NIGTA Bank of Ireland Meeting September 2012
Extreme weather in the US has propelled feed prices to record highs in the last days and weeks, and the effects are being felt by livestock producers on this side of the Atlantic according to Sandy Wilson, Import Manager with the International grain traders, Cargill PLC.
He said “Upwards of 50 million metric tonnes have been cut from U.S. Corn, and soyabean production estimates in the last few weeks, as the U.S. ‘corn belt’ has endured some of the worst drought conditions seen in decades.
“Below-normal precipitation and above-normal temperatures have persisted through the critical pollenation stage for corn over the last few weeks. This has caused analysts to revise their yield expectations for U.S. corn sharply lower, and has sent global prices sharply higher.”
Mr. Wilson emphasised “The benchmark No2 US Yellow Corn Futures for December 2012 has risen $220 (over 40% rise) within the last month.”
He went on to say that likewise, the condition of US soyabean crop is already declining and soyabeans are entering their own critical stage of the growing season with no significant relief in the weather forecasts yet.
These supply shocks come at a time when global supplies were already tightened after 20 million tonne of lost soyabean production in Brazil and Argentina earlier this year. The effect has been soyameal prices which have reached historical highs. Soyameal is the primary source of protein for many European animal feed diets and is vital for the intensive pig and poultry sectors.
At a time of reducing supply global demand has continued to increase. This may seem counter-intuitive when, in Europe, we sit squarely in an economic downturn. The driver of the increase in global demand continues to be China. The increasing urbanisation and rising prosperity of China’s growing population have led to a consistent rise in demand for feed ingredients in volumes which dwarf European requirements.
The steep rise in feed ingredient prices presents a huge challenge to the European livestock industry with little or no option to avoid the increases. Other feed ingredients like Rapemeal, Sunflower Meal and Distillers Grains have not been able to offer any relief as they have also risen sharply on the tide.
The animal feed trade throughout Ireland is making enormous strides in developing a unique sampling and testing scheme which will underpin the food industry throughout the island.
Commenting on the scheme at a recent Northern Ireland Grain Trade Association lunch, Professor Patrick Wall , of University College, Dublin who chairs the technical committee responsible for the scheme told NIGTA members “The food industry is now a global market with more opportunity than ever coming from an increasing world population and higher demand for food. The feed industry is the first step in the Food Chain and has become more and more complex with raw materials coming from all over the world. If anything goes wrong in this chain it has wide ranging ramifications for everyone involved in the agri-food industry. It can lead to product recalls which can be both costly and challenging due to the complexity of the food chain. For example, a pizza made in Northern Ireland could be made up of ingredients from 32 countries. Facts like these give an indication of how a product recall on one ingredient could be like looking for ‘a needle in a haystack’”
Pat Wall went on to point out that like the foundation of a house, the feed supply industry supplies the first building blocks of a successful agri-food industry. There needs to be good traceability systems, risk management and a due diligence approach to build consumer confidence. Collaboration with the Regulators, whose role is to monitor and verify that the feed sector has appropriate controls in place, is vital. We are also dependent on controls in other jurisdictions for preventing risks coming into Northern Ireland. There is an increasing risk from co-products, by-products from ethanol production, raw materials coming from outside the EU and potentially criminal activity.
If there is a food scare, the whole industry suffers and it can have wide reaching effects especially when Ireland’s dependance on exports is considered. Risk management has a key part to play and the feed trade North and South are working on several fronts to manage the risk and protect the feed and food industries. Through UFAS (Universal Feed Assurance Scheme) a more strategic approach to analytical testing is being devised so that tests are carried out in a more uniform pattern to ensure even distribution of analysis over the year. The trade is working with Queens University on a project to analyse when companies are carrying out their testing and which tests they are doing to see if this could be better organised to ensure a full 12 months coverage of due diligence testing at no extra cost.
Professor Wall finished by posing the question “What business are you in? Is it the feed business, food business, or food safety business. I would suggest you are in the Human Health business. Consumer confidence in food safety and human health is key to a successful industry for everyone.”
Professor Wall Meeting June 2012
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