Bee Informed and Bee in Control of the Industry’s Future

Last month New Zealand Manuka Group published something not seen for many years in the New Zealand honey industry, a honey pricing schedule titled “Bee Up Front”. Now chief executive Phil Caskey expands on his and the company’s philosophy and vision for the industry where the UMF brand is better harnessed to protect the value of mānuka honey.

  APIARIST’S OPINION: PHIL CASKEY 

By Phil Caskey

Recently the new industry group Honey and Bees New Zealand called for submissions to help design the ‘beekeeping industry organisation we all want and need’. For beekeepers to get there though, I believe we need to understand the wider industry position that is influencing our honey markets, and then make informed business decisions to shape the future we collectively want.

Bee Informed – the Markets

Most market prices are holding steady with many large packing companies holding up to two years of stocks purchased at lower prices. The lift in honey prices seen earlier this year have been absorbed into these stock holdings, so are not impacting prices being offered into the market at this stage.

There has been strong new interest for New Zealand mānuka honey from South Korea, India and some European markets and the free trade agreement with India offers real potential, albeit with a quantity cap. Australia and Germany are also vying for the mānuka honey business in India and there is a lot of confusion over all the quality and marker acronyms. Ironically Germany is offering New Zealand mānuka honey to the India market and Middle East from its bulk mānuka imported stocks which are being packed in Germany and reexported.

A lot of the market growth and interest in mānuka honey is for bulk honey being exported in drums as multi-floral mānuka, and being packed overseas away from our own MPI regulations on floral type and labelling. This is now starting to undermine prices and in some cases is ending up in added value products such as skin care and medical devices. This has the potential to weaken the credible reputation of genuine New Zealand monofloral mānuka that we have spent the last 30 years building for our industry.

An Industry in Recovery – Or is It?

There is a fundamental difference between what can be described as a thriving industry and what is an oasis of thriving businesses. Over recent years the New Zealand apiculture industry has suffered from a condition called oligopsony. That is an industry imbalance where a small number of buyers dominate and control the purchasing side of the market, facing a vast number of independent sellers. Consequently, beekeepers are forced into being price takers which over recent years has been at prices that barely, or in some cases don’t, cover operating costs while some large packer and marketing business have thrived. Then, in some cases, sold to overseas investment interests.

With more and more beekeepers being forced to look at exporting their honey in drums at slightly better prices, this honey is being packed overseas without New Zealand’s stringent label restrictions. The double irony is that these products are inevitably putting further downward pressure on credible high-grade monofloral mānuka being packed here. So, seller BeeWare and choose wisely when selling your honey.

With returns back to beekeepers starting to improve, the power is shifting away from the “cash now” buyers, so beekeepers can start to negotiate better returns, hold stock themselves and select genuine buying partners that are supporting the New Zealand beekeeping industry to get better returns, rather than benefiting offshore investors or bulk overseas buyers.

At the end of the day there is no industry without beekeepers and it saddens me to see their life’s work get taken away because of a monopsony or oligopsony power situation that is totally out of their control.

What Can We Do About It?

In order for the industry to thrive it first must move back to being an equitable industry where wealth and stability are shared across all levels and profits are distributed fairly from beekeepers, extractors, processors and marketers.

While exporting bulk honey in drums for a few dollars more than being offered locally has been necessary for some beekeepers to shift inventory surpluses to survive in recent years, the reality of this value-add bleed is that we are forfeiting around $40 million NZD in value-add margins annually.

To help us make “The New Zealand Honey Industry Great Again” we need to look at more ways of adding value here in New Zealand and should support buyers who are adding value locally and offering fair and equitable returns to their suppliers. Currently mānuka honey based value-add products sit across four main primary market sectors: food and beverage, cosmetics and personal care, pharmaceutical and medical wound care, and nutraceuticals and dietary supplements.

Each of these sectors offer significant opportunities for growth and development for value-add mānuka based products. Developing new products across all these sectors will require significant investment and strategic long-term market development commitment.

In order to underwrite and support this development as an industry, we need to work together to guarantee consistent and price-stable supply throughout the year. Strategic supplier/developer/marketer relationships are critical to its success, and this can only work if there is full cooperation right across the industry.

UMF® - Protecting Our IP and Quality Mark Endorsement

By looking to Fonterra and their domestic focused processing where around 15,000 jobs are created and value-added returns shared back to its suppliers, and Zespri and their strong IP protection directly benefiting its suppliers, we can see a pathway to success. The mānuka honey industry has been trying to create IP protection, but it seems the horse has bolted there.

While there is merit in us fully supporting the indigenous heritage ownership approach and branding this accordingly, we should not overlook the fact that the industry already owns the global rights to an internationally respected quality mark and brand, UMF. However, it is only hanging on by a thread because of a lack of full industry support and a deliberate manipulation of its endorsement by some brands. It needs all of our support in order to survive and thrive as a globally recognised consumer product quality endorsement.

A Dual Brand Approach

The export of bulk honey in drums is not only putting downward price pressure on New Zealand-packed mānuka honey in key global markets, but is undermining the credibility of mānuka honey through its use in off-shore created health, wellness and even medical products made to questionable standards says Phil Caskey.

There is a unique opportunity for our industry to take centre stage in our global markets with mānuka honey harvested, processed and packed in New Zealand using a dual brand endorsement approach. With our globally recognised quality mark UMF and the proposed new indigenous heritage mark being championed by Mānuka Charitable Trust (MCT), acknowledging mānuka’s deep rooted connection to its people and the whenua that Manuka grows on, this combination would be totally unique to New Zealand. It could guarantee country of origin heritage status and allow brands to wear a fully endorsed and, hopefully, government supported product quality mark.

This system would allow for control systems to be implemented throughout the whole supply chain from hive to marketing and provide a platform for beekeepers and landowners to also become certified suppliers of premium grade honey. It could be used as a global marketing platform for all certified brands but would only work if both mono and multifloral mānuka honeys came under its management systems.

One of the concerns the writer has with the current structure of these organisations (UMF Honey Association and MCT), is the potential push/pull control limitations creating trust issues. On one hand there is potential for a strong bias toward indigenous benefit and on the other hand there is a strong bias toward packer and marketer benefit or control which, in UMFHA’s case, is conflicted by packer and marketers not necessarily wanting to see the UMFHA having influence over the multifloral market sector. Uncontrolled and non-policed this sector allows them greater market manoeuvrability.

We need to take urgent action before we destroy the goose that laid the golden egg. UMF monofloral mānuka honeys hold global market credibility, but low-MGO honey continues to undermine its credibility, and bulk exports don’t provide us anywhere near the control we need.

It’s your industry and its time to “Bee In Control”, support change for good, choose wisely when selling your honey and help create ‘the industry we all want and need’.

Phil Caskey is the chief executive and together with his wife Sharan, own and operate New Zealand Mānuka Group. They have been involved in the mānuka honey industry since its earliest days in the 1990s, from hive ownership, to honey packing, marketing and quality control.