November 4, 2019
New Zealand's Tegel sees losses of millions with suspension of Australia-bound exports
Tegel, one of New Zealand's largest chicken suppliers, is losing up to $5.8 million a month after a poultry virus saw its Australian exports stopped.
In September, Type 1 bursal disease virus (IBDV type 1) was confirmed on two Otago hen farms owned by Mainland, a discovery that saw New Zealand's Ministry for Primary Industries to stop certifying all New Zealand poultry products as IBDV-1 free.
As a result, MPI stopped issuing export certificates to countries which required IBDV-1 free certification, meaning Tegel can no longer send product to Australia - its biggest export market.
And while Tegel, which operates three plants around the country including one in Taranaki, has no connection to the two South Island farms, with every day the ban continues, it loses large sums of money.
Production at Tegel Foods, Bell Block, has been affected by the discovery of a poultry virus in the South Island, which has forced chicken exports to Australia to be cancelled.
A Tegel spokesperson said depending on how long the ban remained in place the estimated loss would be between $60 to $70 million annually - $5 to $5.83 million a month.
"Australia has been a growth market for Tegel so the impact on the company's revenue has been significant."
Tegel's annual report for the year ending April 2018 showed it made $615.4 million in revenue with its export market, including Australia, the Pacific Islands, Hong Kong, the United Arab Emirates and the Philippines contributing $89.6 million.
The spokesperson said Tegel was using both the domestic market and other unaffected export markets to manage the volumes of chicken meat previously destined for Australia but the ban would impact its suppliers.
"We are working with our contract growers to reduce volumes across the country so it will have an impact on them and all of our supply chain.
"The longer the ban is in place, the longer our suppliers will have to manage with reduced volumes."
Poultry Industry Association New Zealand executive director Michael Brooks wouldn't comment about any potential impact on Tegel's suppliers.
"If they've made comments it's impacting, then clearly it is," Brooks said.
"The individual circumstances of the contracts, what is happening there, is a matter I don't have the information on and I wouldn't want to speculate."
Brooks said since the virus was confirmed every flock in the entire country had been tested and it was positive the disease had not spread.
"That will make a difference in terms of the discussion with Australia but even then it will be a complex process."
MPI has previously said it was working closely with Tegel, the wider industry, and Australian authorities to reopen the important export market as soon as possible, but there were no set timeframes and it could take a significant amount of time.
However, Tegel remained confident once MPI confirmed it could re-certify products to Australia the good relationships it had formed with customers over the years would be of benefit when the market reopened, its spokesperson said.