1. InShort
AGRIBUSINESSMarket Watch
All Ordinaries
Market Watch
Trade Weighted Index
Mar 11 17 24 31 Apr7 14
Mar 11 17 24 31 Apr7 14
Aussie Dollar (US cents)
Mar 11 17 24 31 Apr7 14
4800
4950
5100
5250
5400
Close: 5428.6*
65.0
67.5
70.0
72.5
75.0
85
87
89
91
93
95
Close: 93.75*
Close: 71.7*
* As at 5pm
* As at 5pm
* As at 5pm
By MIRANDA KENNY
I
N the past seven years, Elders
Fine Foods has grown to five
times its size, distributing
about 50 tonnes of Australian
red meat a month – predomi-
nately beef – throughout China.
South Australian prod-
ucts such as Thomas Foods
International’s Clare Valley
Certified Australian Angus and
Murraylands Lamb brands; and
Bultarra Saltbush Lamb, Port
Augusta, have helped drive that
growth.
EFF general manager Craig
Aldous, who spoke to wool-
growers recently as part of the
2014 Elders China Wool Tour,
said that from a turnover of
$2 million, the company had
boosted profits to $12m, and
were forecasting year-on-year
growth of 20 per cent to 25pc in
the next three years.
“I think we can double busi-
ness in the next three to four
years,” Mr Aldous said.
“We’re a $20m turnover busi-
ness in food service and back
home in Australia that is quite
a significant business
“It’s a significant business
here too in the niche section
that we operate in at the top
end of the market.”
Mr Aldous said that despite
the ban on chilled meat imports
last year – which made up most
of what they offered – they had
continued to grow by exporting
frozen shipments.
“We try and stick to brands
where we can get exclusivity
as we’re focused on high-end
channels,” he said.
“We need exclusivity around
brands because we can’t have a
local wholesaler coming in with
the same product ¥2-a-kilogram
cheaper.
“We have a portfolio of exclu-
sive brands – TFI; Greenham,
Tas, with their Cape Grim Beef
and Robbins Island Wagyu;
Strandbroke’s, Grantham,
Qld, Diamantina Wagyu and
Diamantina Platinum Grainfed
and Northern Rivers Veal,
Casino, NSW.”
Meat used to produce burg-
ers come from Swift, Teys or
TFI, depending on price.
“Processing sausages and pat-
ties, cutting into portion sizes
or leaving as whole-piece pri-
mals and distributing to hotels,
restaurants and supermarkets
all around China is 90pc of our
business,” Mr Aldous said.
He said Australia’s clean and
green image had been a posi-
tive for business.
“Most Chinese people want
to know where product comes
from, where it is packed and
how it is labelled,” he said.
“Children are revered here
– because they generally
only have one (this recently
increased to two) – and the
fallout from the melamine milk
powder scandal was massive.
“The Chinese want to know
what they and their children
are eating is safe.”
While in the past EFF had
also sold olive oil, dairy, sea-
food, beer and wine – including
several SA labels such as K1 by
Geoff Hardy and Pertaringa –
these sections would soon be
closed so the business could
focus on its core strength, red
meat.
Mr Aldous said while a free
trade agreement between
China and Australia could pro-
vide benefits, his biggest con-
cern was the large quantities of
beef being smuggled in across
the borders into China.
These products had a 29pc
price advantage compared to
EFF goods, which had to pay a
12pc tariff and 17pc value-add-
ed tax on any product import-
ed to China.
“We need to set up the right
protocols to benefit from an
FTA,” Mr Aldous said.
“There’s an opportunity
there for the live export trade
as well.
“The size of the Chinese herd
is decreasing even though
demand is increasing.
“China is a net importer
of beef, which reflects that
demand is outstripping sup-
ply.”
EFF’s head office is in
Shanghai, and the company
has offices and warehouses in
Beijing and Guangzhou.
Sales are split – with 60pc
of the product sold to eastern
China, 20pc to the north, 15pc
south and 5pc west.
“The split is about 45pc to
hotels, 35pc restaurants, 15pc
retail-supermarkets and 5pc
wholesale,” Mr Aldous said.
“We deliberately don’t try
to sell to wholesalers in China
– our business model is very
much a direct model.
“We buy direct from
Australian abattoirs and sell
directly to hotels and restau-
rants here because we want to
maintain our brand integrity.
“Chefs in the market here
know that when they buy from
Elders it’s real product at a
real price, which means we’re
not always going to be the
cheapest price, but quality,
consistent and there are no
shortcuts.”
EFF has invested in the logis-
tics sector in China and will
soon outsource its warehous-
ing.
“These facilities are six-sto-
reys high, machine-operated,
with everything barcoded and
computerised,” Mr Aldous
said.
“We can be sitting in our
office, jump on the computer
and get 100pc accurate inven-
tory figures.”
Imported lamb consisted of
lamb racks.
“We do lamb but about 90pc
of our imports are beef in our
meat category,” Mr Aldous
said.
“Here lamb is considered
more popular in the manufac-
turing sector, with lamb breast
and flap used in the hot pot
market (a popular Chinese
dish), rather than the premium
sector.”
“A 100-day grainfed beef
product would be the core of
our program,” Mr Aldous said.
•Details: Miranda Kenny travelled to
China courtesy of Elders, as part of
the 2014 Elders China Wool Tour. Visit
stockjournal.com.au for more stories
from her trip.
Elders glows
in China gaze
CHINA’S wool processing sector remains a vital part of the
supply chain for Australian woolgrowers. On a wool tour to the
country, Stock Journal’s MIRANDA KENNY discovers how its
economics have influenced Australian product sales.
HAPPY DAYS: Elders Fine Foods general manager Craig Aldous says the company
has boosted profits to $12m, from a turnover of $2m, and were forecasting a
20-25pc growth in the next three years.
■ Growth forecast at 20-25pc a year
■ To focus on red meat trade
■ Clean image positive for business
KeyPoints
BURGER PRESS: Elders Fine Foods
burgers are popular in China. This
burger press is operated by two Chinese
workers who press and pack about
30t of hamburger mince a month.
Processing workers are paid the
equivalent of about $450 a month.
To view the pictures or
watch the video visit
stockjournal.com.au
Survey debt: Banks are deliberately
stonewalling farm sector efforts to release up-to-
date figures on Australia’s rural debt problem for
fear the flood of red ink surrounding many of their
clients could badly erode lenders’ own balance
sheets, says Qld Senator Barry O’Sullivan. The
Liberal National Party senator wants the federal
government to initiate a national survey into rural
debt because the banking sector is refusing to
divulge state-specific or regional breakdowns.
He said an organisation, such as the ABARES,
needed to examine regions or sub-sectors of
the farm economy so public policy and business
strategies could properly understand and plan
around such financial trouble spots. He believed
lenders already had the information at their finger
tips, but with some debt problems now blowing
out equating to almost the entire value of rural
properties – particularly in parts of Qld – it was
not in the finance industry’s commercial interest to
spell out how bad the problem had grown.
Sen O’Sullivan said banks were understandably
worried information about debt levels in specific
areas could further erode land values as potential
buyers stepped back to wait for sellers in
distressed areas to accept property deals at fire-
sale prices.
STEVE RADESKI
0421 618 371
State Agribusiness
Manager SA/NT
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