>Any thoughts on big jump in AFF yesterday? I heard it
>will announce full year profits in two two weeks.
>Comments please from some in know!
>
>Cheers
>Kausa
>
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I don't know if you saw this article from the Herald, but perhaps this will explain some of the rise, or...perhaps none of it at all?
Cheers
Richard
Between the lines: Affco is meeting China's challenge
08.05.2000 - By PHILIPPA STEVENSON
They are brewing our beer in China and from today the official Chinese seal will be set on New Zealand beef processing technology, too.
China produces and consumes more pork than any other country, but New Zealand meat processor Affco has put its faith in what it knows best - cattle.
Today, company heads are taking part in the official opening of a $20 million beef plant - the second largest New Zealand-China joint venture operation after the Lion brewery in Suzhou.
Affco, which returned to modest profit last year after a $72.8 million loss in 1997-98, has a 30 per cent share in the business alongside two local shareholders. The investment can only be described as canny. Affco's contribution has been a mix of redundant equipment from its closed plants in Waitara and Taumarunui, expertise and some cash.
Despite the overwhelming consumption of pork in China, Affco is confident it will find a ready market for meat from local cattle.
From a New Zealand perspective, a unique aspect of the 200 head-per-day plant is that it will have no accompanying rendering facility. In a country hungry for every bit of an animal, boiling down parts which have no sale value is unknown.
Its joint venture partners have access to about 8000 restaurants and hotels, and the company also hopes to export high value cuts to other Asian markets. As well, Affco sees an opportunity to market New Zealand-sourced product alongside the locally processed and Affco-branded range.
The company hails the venture as a move toward its "internationalisation," creating the ability to supply customers year-round by sourcing and processing product from around the world.
That ambition matches similar plans by others in the New Zealand primary sector, including kiwifruit marketer Zespri, apple exporter Enza, and the Dairy Board.
Affco's move also comes at a time when China's entry into the World Trading Organisation looks increasingly likely to occur this year, or early next.
The trade negotiation process, which began with a bilateral agreement with New Zealand, has lasted 13 years, passed a major hurdle in November last year with an agreement between the US and China, and is continuing with the European Union.
China's entry into the WTO, accompanied by domestic reform, is expected to lower its trade barriers for a range of agricultural products, provide greater discipline over its notoriously difficult trade policies and should lead to an increase in world trade.
Despite being short of cash, Affco looks to have used good old Kiwi know-how to find a niche in a China where promise of trade opportunities has never looked better.
See IRG research reports
