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04/04/02 . Business Story . The Dominion . Wellington, New Zealand
Enjoy a Big Mac - courtesy of NZ
In a breakthrough deal akin to selling coals to Newcastle, New Zealand beef exporters have gained their first foothold at the home of hamburgers - McDonald's in the United States.
Facing a shortage of American beef both lean enough and cheap enough for its burgers, McDonald's has joined Burger King, Wendy's and other American fast-food chains in importing New Zealand and Australian beef.
"McDonald's has always been a group that New Zealand exporters have been keen to get on board," Meat New Zealand's North American regional manager Andrew Burtt said from Washington today.
"I'm sure it will be a good customer and a very demanding customer but, as to how much they'll buy, we don't really know."
McDonald's is trying New Zealand and Australian beef at about 400 of its 13,000 US outlets - all in the southeast of the country. It gave no details of the quantities involved.
The US is already a $1 billion-a-year market for New Zealand beef.
But even if the McDonald's trials lead to permanent contracts, New Zealand cannot increase its beef exports to the US because they are restricted by an annual quota of about 213,400 tonnes, which has been filled easily in recent years.
Mr Burtt said the extra demand would help improve prices.
"It's premature to say what the outcome of their testing might be but it's certainly a good opportunity for New Zealand," he said. "It would provide another buyer and another competitor in the market buying New Zealand beef.
"I'm confident the New Zealand product will stack up well - and for all the right reasons, not just because it's cheaper."
Hamburger chains make their patties by mixing lean beef - normally with less than 10 per cent fat - with low-cost fat trimmings from packing plants. The combination is similar in fat content to ground beef typically found in supermarkets.
New Zealand and Australian beef is generally leaner than that of the US, because New Zealand cattle are fed grass rather than the grain fed to US cattle. New Zealand beef generally sells for between US5 cents and US20 cents (NZ$11.5c to NZ45c) per pound (nearly 500 grams) cheaper than US beef.
Despite the change, American hamburger junkies would not know the difference, McDonald's insisted.
"We're running a small test and using some beef that is top quality," a spokesman said.
The good news for New Zealand is that there is no end in sight to the shortage of American lean beef. After several years of strong beef prices, US farmers are rebuilding their herds and keeping some of their female calves for breeding rather than sending them to feedlots to fatten for slaughter.
Fewer than five million cows are expected to be slaughtered in the US this year, down from 7.3 million in 1996.
However, the powerful American farm lobby, which has criticised McDonald's for resorting to
imported beef, will oppose any moves to increase import quotas to ease the tight supply of