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Thomas Clow

Honey Producers Co-op Meetings Update

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Adam has some very good points to make about getting this Co-op of the ground, the trouble with beeks who cant sell their honey at the moment, they are thinking like beeks who cant sell their honey at the moment. They/We all need to change that thinking to that of a marketer,packer,seller ( the other side to all our businesses) who knows the world markets so they can see what needs to be done. It wont happen over night nor will it it be cheap and we have to realize that it wont be a fix for this season, and next season starts next month.

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There is no problem selling honey at the moment.  There is a problem with the price. 

 

Before the manuka bubble, the one where people were selling all honey as manuka and frantically stockpilling (removing from the market) honey to increase its activity,  New Zealand produced a surplus to the local market which consumed about 1.3 kilos per person per year.  Since the export market was the only outlet for this surplus honey, it set the price.  Why?  Because who would choose to sell on the export market when the local market was better, but in order to get a share of that, one had to....... reduce the price..... and the incumbents on the local market would reduce their price to match.... so a sprial down until..... the export market was a viable alternative.  Ergo, the export market sets the price.

 

A review of the export statistics shows that over 90% of the honey leaving the country is sold as manuka.  Less than 10% is non manuka.  We used to have export markets for things like clover and honeydew and occasionally other named sources that would maximise the opportunites available.  These would return 20-30% above generic prices on the World market and specific honeys such as Clover and Honeydew would return prices similar to competing countries with similar honeys such as Canada, Argentina and Turkey.    However now we have 3 times the number of hives, an annual surplus of production over markets of 100,000+ tonnes, a current surplus of somewhere between 30 and 40,000 tonnes of honey that has been produced hoping it is (once "was") manuka with the result it is a multitude of blended honeys with no traditional export market.

 

So we can sell this surplus.  But the price is not good.   Ukraine produced approx 70,000 tonnes last year, as of January had 45,000 tonnes in stock and has reduced this to 10,000 tonnes with the new crop about to start.  The price?  1,800 Euros delivered to Europe with duty (17.3% into the EU) to be paid, and US$1,900  CIF USA destinations.   This is around NZ$3.00  and NZ $2.85 respectively.    Canada is selling at US$2,800 delivered US destinations (drive it across the border) or NZ$ 4.20 landed there.  Turkey is selling into EU destinations at NZ$4.45 delivered.

Usually these transacations have a few percent commission along the way, plus freight and you lose your drums.  Take around 50c off these prices.

 

Until we have a shortage of supply in the country, there will be no change to this outcome where the World price sets the price paid to producers.  If a new entrant were to come into the market, and focused on the local market (usually because it's easier than exporting and marketing overseas), this would simply ensure that the price locally collapsed to the World level more quickly as the incumbents locally defended the attack on their markets, and the $4.00-$5.00 per kilo plus prices being paid would reduce closer to the World market. 

 

The only way out of our present situation (one that we have always dealt with except during the manuka bubble) is to sell at higher prices on the export market.  Around 20 new packing plants (with 100 tonnes or more capacity, some with 1,000+ tonnes) have gone into NZ in the last 15 years.  All of these have been trying to create export markets for their products and most have considerable expertise in doing this.

 

A History Lesson

 

In 1982 the New Zealand Honey Marketing Authority (a producer board) had total right of export for all honey from New Zealand (except for honeydew and comb honey).  They had the market leader (Hollands) on the local market plus numerous other brands.  Because government was no longer prepared to fund their activities (they had close to $1 million of reserve bank funds at 1% interest), a proposal was put forward to create a cooperative.   This cooperative was sold all the assets of the HMA  including 3 factories and all their stocks at a significant undervaluing, and then $600,000 (2.4 million in today's value) of the sale monies were lent back to them, 300,000 at 9% and 300,000 at 3% (interest rates at the time were over 15%).  The model included beekeepers additioanlly buying $1 shares (for each kilo of supply) and then having retentions (20% and sometimes 30% or their "sales" to the Coop) held back for 5 years - at 15% interest rates your money halves in value in 5 years.  After 5 years they were asked to turn those into "Capital" i.e. pay for more shares.

So they had the factories, the brands, the suppliers, the infrastructure, the NZ market leading products on the domestic market and the entire history of export markets from NZ.  There were many capable people employed by the coop along the way and on the board.  Some went on to have extremely successful businesses of their own.  Laid out like this, one would think there was no way they could fail.

 

After 30 years they were sold to Comvita for pretty much the value of their honey stocks.  Comvita attempted to sell Hollands honey on the local market, and even after rebranding and applying their marketing expertise, finally withdrew from the domestic market.

 

It is tough out there.

Sorry, typo that I missed.  "an annual surplus of production over markets of 100,000+ tonnes"  should read 10,000 tonnes.

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@Emissary imagine the carnage in the industry if honey wasnt a locally protected industry and imported honey was allowed into the country .

Do you think any local honey producers would survive .? 

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Posted (edited)

Hi All,

 

I have observed this discussion in full over many weeks and thought it might be a good time to add some of what I know and the views of a different packer/marketer.

 

Manuka multifloral as per the MPI definition is a reasonable seller for us as a company. We also sell a large amount of Mono Manuka as well because we we sit at the premium end of the market in Europe and duty free.

 

I am quite happy in this space because we have kept a large number of our bee keepers in business being happy to buy full packages and not pick the eyes our of stock or leaving them with a shed full of honey.  Importantly the Honey is good quality and consumer demand is strong and has not been effected by adding the word "multiflora" to the pack.

 

While there is much debate around the multi vs mono Manuka a lot of which is agenda driven (which is fine) I personally met with MPI Deputy Director General and head of Science last week in Wellington. The current definitions are here to stay and both were more than happy for me to let the industry know this once again.

 

Despite some of the scare mongering, they reported that there has been absolutely no indication at govt to govt level that any overseas regulator does not accept the definition or will deny access in the future.  Some have called me out in the past for supporting the multi definition but we are quite happy to say that a number of bee keepers who would otherwise be in a fair bit of trouble have manged through these tough times with our ability to shift their honey. We clearly label the product as per the regulations and we have not seen any push back from retailers or consumers. There is a consumer demand for this type of honey as not everyone wants to pay $100 ++ for a single jar.

 

It also pains me to see some preach a monofloral only approach as it supports their brand stories while still packing multi flora Manuka for private label clients and tendering for new work in this space with Supermarket. As an industry we should accept the MPI definition, work with it and show a united front to the rest of the world. Market our own products and brands on their merits and not run down the direction that competing brands choose to take because that ends up effecting the entire industry.

 

My overall observation of the industry without any agenda other than to sell plenty of ALL NZ HONEY is that consumer demand is there across all grades but a correction in price is here to stay for the immediate future. NZ clover was once very prevalent in a number of markets but priced itself out as we all know. We have recently obtained a new listing into 900 supermarkets overseas for 2 x clover honey products. The price we we have to pay bee keepers is pretty lean but current suppliers have been pretty understanding and see the bigger picture and happy to play the longer game while we do our best to put NZ clover back on the map. We are realistic and don't want only 0-9m clover when we are buying.

 

It is not my intention to get into any endless debate on this page but I will be at conference next week if anyone wants to have a chat.

 

If you want to sign up to our database you can do so by emailing procurement@egmonthoney.co.nz  (if this is not allowed under Forum rules, my apologies)

 

Hope this info is useful to some.

 

James Annabell

Egmont honey.

 

 

Edited by Manukamole02
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1 hour ago, Manukamole02 said:

Hi All,

 

I have observed this discussion in full over many weeks and thought it might be a good time to add some of what I know and the views of a different packer/marketer.

 

Manuka multifloral as per the MPI definition is a reasonable seller for us as a company. We also sell a large amount of Mono Manuka as well because we we sit at the premium end of the market in Europe and duty free.

 

I am quite happy in this space because we have kept a large number of our bee keepers in business being happy to buy full packages and not pick the eyes our of stock or leaving them with a shed full of honey.  Importantly the Honey is good quality and consumer demand is strong and has not been effected by adding the word "multiflora" to the pack.

 

While there is much debate around the multi vs mono Manuka a lot of which is agenda driven (which is fine) I personally met with MPI Deputy Director General and head of Science last week in Wellington. The current definitions are here to stay and both were more than happy for me to let the industry know this once again.

 

Despite some of the scare mongering, they reported that there has been absolutely no indication at govt to govt level that any overseas regulator does not accept the definition or will deny access in the future.  Some have called me out in the past for supporting the multi definition but we are quite happy to say that a number of bee keepers who would otherwise be in a fair bit of trouble have manged through these tough times with our ability to shift their honey. We clearly label the product as per the regulations and we have not seen any push back from retailers or consumers. There is a consumer demand for this type of honey as not everyone wants to pay $100 ++ for a single jar.

 

It also pains me to see some preach a monofloral only approach as it supports their brand stories while still packing multi flora Manuka for private label clients and tendering for new work in this space with Supermarket. As an industry we should accept the MPI definition, work with it and show a united front to the rest of the world. Market our own products and brands on their merits and not run down the direction that competing brands choose to take because that ends up effecting the entire industry.

 

My overall observation of the industry without any agenda other than to sell plenty of ALL NZ HONEY is that consumer demand is there across all grades but a correction in price is here to stay for the immediate future. NZ clover was once very prevalent in a number of markets but priced itself out as we all know. We have recently obtained a new listing into 900 supermarkets overseas for 2 x clover honey products. The price we we have to pay bee keepers is pretty lean but current suppliers have been pretty understanding and see the bigger picture and happy to play the longer game while we do our best to put NZ clover back on the map. We are realistic and don't want only 0-9m clover when we are buying.

 

It is not my intention to get into any endless debate on this page but I will be at conference next week if anyone wants to have a chat.

 

If you want to sign up to our database you can do so by emailing procurement@egmonthoney.co.nz  (if this is not allowed under Forum rules, my apologies)

 

Hope this info is useful to some.

 

James Annabell

Egmont honey.

 

 

Thanks for that James!!  It’s a pity more packers/exporters aren’t coming forward as you have done and offered some insight into the current situation and assurance that all is not lost!!  The message I believe beekeepers need to take out of this is that there is a market for non Manuka and multi Manuka honey but it will be at a price far below what they have become accustomed to - and much closer to pre Manuka boom pricing.  The sad reality is some beekeepers current cost of production will be significantly higher than the value of their products so those operators have some tough decisions to make and very soon.  All primary producers are at the mercy of the markets and face the risk of a downturn every season - it just happens to be our turn at the moment.  In my opinion investing money they don’t have in a potential co-op in the vain hope that it is going to magically turn things around for them is going to be financial suicide.

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Posted (edited)

OK Team ..... things are very differerent these days that's for sure. Four years ago I'd cruise up  north to check out our investments on an expense account, wining and dining and sleeping every night in clean sheets and pulling on sweet smelling duds in the morning.

This year is different. Very different. I 'aint showered for four days and am sleeping in the back of the truck on the beach most nights . Mind you , I'm not complaining ..... I enjoy it. It keeps one grounded as to the reality of life.

The problem is this...... the world is full of bad news, and whether you like it or not, the world likes bad news.

And I hope Bruce will forgive me for airing my opinion .....  but tomorrow is the deadline for raising a seed fund for the CoOp. Many people have been fast to shoot the idea down. It's real easy to pull the trigger and shoot  rather than dig the gorse out a ya pockets and float a dream.

Those that want to shoot the the idea down have  vested interest in selling honey. No wonder they are vocal at saying why the coop won't float.

Don't let that  put you off securing a future for your crop. Those nay sayers are not in the market to buy your honey. They are in the sweet spot with comfort and things ticking along nicely. They will never buy you honey.

So guys, if we want to float a dream to secure a future for over 50% of the New Zealand beekeepers ..... we gotta dig deeper, and get prickled fingers in the bottom of our pockets.

 

Which is why I'm snug as a bug in my sleeping bag on the beach, hooked into a hot spot ..... travelin' north to release a little bit of capital to secure a future for my family, my children, and my children's children.

Now how's that for a big thought. 

 

So guys .... lets get the gorse out of our pockets and float the dream.

 

 

And sometimes one just has to be philosophical  about the course of history

4DFB1349-5BF8-4777-9A1E-E4D686139687.jpeg

Edited by jamesc
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So................ where are we at with the proposed co-op??

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Posted (edited)

It's probably rude to post tumbleweed gifs here.  There aren't any tumbleweeds in NZ anyway so I'll just use my imagination 

Edited by Paul Beer
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11 hours ago, Paul Beer said:

It's probably rude to post tumbleweed gifs here.  There aren't any tumbleweeds in NZ anyway so I'll just use my imagination 

We do  have one......Spinifex, a coastal dune native burnt off by farmers and replaced with Marram. Now being reinstated in many areas as part of Coast Care.

The seed heads are a like a sparse pincushion and blow along the beach....

Spinifex.jpg.25a4754f7e59190d907389e80605aa67.jpg

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1 hour ago, yesbut said:

We do  have one......Spinifex, a coastal dune native burnt off by farmers and replaced with Marram. Now being reinstated in many areas as part of Coast Care.

The seed heads are a like a sparse pincushion and blow along the beach....

Spinifex.jpg.25a4754f7e59190d907389e80605aa67.jpg

 

That's the stuff of my beach time childhood 🙂

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Ah yes! Childhood beach memories of Northland

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Posted (edited)

Thought for the day.

 

I was reading some of the farming papers this morning.  Despite sharing the bed with the missus and the dog, I was as cold as heck , mainly because the dog had got between me and the missus and commandered the duvet, so I  fell out and  put a brew of coffee on , stoked the fire and did some reading......   about Westland milk coop selling out to the Chinese, and an article about Silver fern farms accessing chinese capital to grow ...... and I got to thinking about our new honey co op , and how if one of our major markets is indeed China, then we need a Chinaman with a sackload of money to come to the party and take out a 49% shareholding .... the China man will know another million Chinapeople who like honey ...... and the ball is rolling for sure Murphy.

 

Edited by jamesc
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56 minutes ago, jamesc said:

Thought for the day.

 

I was reading some of the farming papers this morning.  Despite sharing the bed with the missus and the dog, I was as cold as heck , mainly because the dog had got between me and the missus and commandered the duvet, so I  fell out and  put a brew of coffee on , stoked the fire and did some reading......   about Westland milk coop selling out to the Chinese, and an article about Silver fern farms accessing chinese capital to grow ...... and I got to thinking about our new honey co op , and how if one of our major markets is indeed China, then we need a Chinaman with a sackload of money to come to the party and take out a 49% shareholding .... the China man will know another million Chinapeople who like honey ...... and the ball is rolling for sure Murphy.

 

Wont be the first chinaman to partial own NZ honey companies

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1 hour ago, jamesc said:

Thought for the day.

 

I was reading some of the farming papers this morning.  Despite sharing the bed with the missus and the dog, I was as cold as heck , mainly because the dog had got between me and the missus and commandered the duvet, so I  fell out and  put a brew of coffee on , stoked the fire and did some reading......   about Westland milk coop selling out to the Chinese, and an article about Silver fern farms accessing chinese capital to grow ...... and I got to thinking about our new honey co op , and how if one of our major markets is indeed China, then we need a Chinaman with a sackload of money to come to the party and take out a 49% shareholding .... the China man will know another million Chinapeople who like honey ...... and the ball is rolling for sure Murphy.

 

You are probably not wrong .

Chinese money is very appealing to Kiwis and gets things humming nicely, for a very short period. 

These big kiwi co ops/ corporate businesses are structured in a way that command lots of money to run, but they do not like giving 'owners' money back when the 'owner/investor' wants out. There is some legislation that can make getting your money back close to impossible .

That's where the Chinese investor' likes to step in . Grab themselves a bargain to ensure a good food supply for the very long future ahead. 

 

It looks inevitable that much of what we produce will go to China for the next 100 to 1000 years.

 

Perhaps @jamesc, your morning thought was bang on 

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Well, the big C is a big bit Chinese owned.....look at them now.....

Fonterra (Fon Terror?)....Chinese deals....look them now........

China hitting production lows...massive unemployment....civil unrest.....

Me thinks we should be careful what we wish for.

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they will only buy a small portion of our honey and blend with there so called honey made from corn  and sugar mixes and what ever else they can find to put in it and sell back to us when they can

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4 hours ago, kevin moore said:

they will only buy a small portion of our honey and blend with there so called honey made from corn  and sugar mixes and what ever else they can find to put in it and sell back to us when they can

Reading posts on fb beekeeping page ,shows alot of people worldwide who are still very sceptical about buying honey because of the possibility it is fake,even from ur local beek down the rd..according to one person.And yes,the manuka name is being bandied around in all this gossip.

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21 hours ago, Ali said:

Well, the big C is a big bit Chinese owned.....look at them now.....

Fonterra (Fon Terror?)....Chinese deals....look them now........

China hitting production lows...massive unemployment....civil unrest.....

Me thinks we should be careful what we wish for.

Me thinks these guys are too smart ..... they forget where their bread and butter comes from and build complicated marketing systems that are so finely tuned that  the ordinary people can't work  them ..... and when a hiccup

 occurs ..... the domino's fall.

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3 hours ago, jamesc said:

Me thinks these guys are too smart ..... they forget where their bread and butter comes from and build complicated marketing systems that are so finely tuned that  the ordinary people can't work  them ..... and when a hiccup

 occurs ..... the domino's fall.

Too smart for there own good I reckon. All in the name of big takes at the top end at the expense of basic producers (sounds similar to the honey industry?) and the avoidance of paying tax by extraordinary accounting when it suits.

Disclosed profit way down, share prices (and dividends next) down, tax paid way down, executive class earnings still way way up......and climbing? The club at the top doing just great and beggar the rest.....

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11 minutes ago, frazzledfozzle said:

Comvita shares down to $2.87 

Steady Girl ..... not time to buy in yet.

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On 15 August 2019 at 8:49 PM, Ali said:

Well, the big C is a big bit Chinese owned.....look at them now.....

Fonterra (Fon Terror?)....Chinese deals....look them now........

China hitting production lows...massive unemployment....civil unrest.....

Me thinks we should be careful what we wish for.

Its not only the Big C that has chinese fingers in its operation a few smaller "family owned" ones do as well.

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Not much left really after the last 15 years of selling out to anyone who will bring money to our shores. We (as a people) begin to reap the benefits now don't we..........oh your not in that top 15%? 

Less acidly, it works well for some but all too often it doesn't pan out well. Access to markets and possibly finance at times are all well and good if there are profits coming back to the grass roots. Not currently it seems.

The big C has taken another well deserved dip (how much did the director shareholders pay themselves out??) but it is not only them of course, share markets here and mostly all are continuing to tumble.

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3 hours ago, Ali said:

share markets here and mostly all are continuing to tumble.

 

My kiwisaver balance is certainly taking a hammering :( 

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