Drumming Up Discussion
An idea to help alleviate New Zealand’s honey supply and demand imbalance has been met with a wide range of reaction, from optimism and support to words of caution and disagreement. Numerous stakeholders of the honey industry have weighed in with their thoughts on an idea floated by honey exporter John Hartnell in Apiarist’s Advocate’s pages last month. We explore that feedback, from those wanting to move their honey stocks, to others with vast experience in marketing honey, New Zealand’s previous honey co-op and international trade.
“One word … Nice” was Canterbury beekeeper James Corson’s initial thoughts upon reading the concept floated by Hartnell last month.
After three years of honey backlogs at his Gowanleagold business, Corson has only recently managed to move his stockpile of full drums in what he considers a “bargain basement deal” for the buyer of his clover, kamahi, rata and honey dew honey.
“I think it is a great idea,” says Don Tweeddale, owner of Tweeddale’s Honey and with decades of experience selling honey within New Zealand.
“We have a large surplus of honey in the country and every man and his dog is out there trying to market it. It is becoming a bit dysfunctional. If you could supply a large market like that, even with, not necessarily 5000 tonnes but even 2000 or 3000, it would be an enormous help, providing the price was reasonable.”
That might just be the biggest sticking point of many raised, could any export venture between suppliers command a honey price that will be high enough to bring beekeepers – many of whom rode the crest of the manuka honey boom’s wave for years – together?
Phil Caskey knows the ins and outs of the New Zealand honey industry and export markets just about as well as anyone, having been a pioneer of manuka honey and wound dressings in the 1990s and thus helping build an industry now worth hundreds of millions of dollars to New Zealand. In more recent times, he co-founded the New Zealand Manuka Group and spent three years living in the UK in a bid to build markets and even established a UK-based packing plant in 2017.
In Collective Constraint Needed to Reduce Risk Caskey explains that any arrangement with an offshore packer could be risky to the manuka honey industry.
Many European packers do not have the knowledge or skill to pack a high quality manuka honey, with uniformity and product quality being a real problem in his experience. Couple that with the risk of honey adulteration, or just the confusing honey labelling to the consumer, plus a lack of control of quality and Caskey thinks there is real risk of devaluing the manuka honey market by a large supply arrangement with an offshore packer.
Any honey supplied should stand on its own feet in the market place, whether it be a multifloral manuka or any other New Zealand honey. This will help protect the value of manuka honey and build a more sustainable market for other New Zealand honeys, he believes.
With New Zealand seen in a good light in many countries due to our Covid response and there being many fine attributes of New Zealand honey to market, it is as good a time as any to strike out and establish fresh markets for New Zealand honey – it just shouldn’t be at the cost of manuka honey or in one large drop, Caskey warns.
“If we were to guarantee a market say 3000 tonnes, that still needs to be at a value that it will move off the shelf when competing with all the other honeys. If we have a glut and drop it all at once we are no longer just competing with those honeys, but undermining them due to an oversupply. Consumers don’t eat 3000 tonnes more honey unless it is price competitive.”
One expert in the field of international trade, and Europe in particular, suggests there are some major risks of any large joint venture with an offshore packer.
Until recently Ian Fletcher has advised the Manuka Honey Appellation Society, and prior to that he held top level roles in the European Commission and the UK Patent Office. He believes that the concept floated by Hartnell raises some interesting ideas, but ranks behind the industry’s initial goal to secure for manuka honey a “GI” (geographical indication) such as Champagne has and, secondly, the certification trademark route the Manuka Charitable Trust is currently undertaking in key markets.
"If you have given up on those first two, then John’s idea would come in as a third best: if you can’t organise yourself, get someone overseas to do it,” Fletcher says.
That sort of model works for businesses such as Coca-Cola or McDonalds who have well defined franchise rules about their product set in place and the structures to implement them. However, for manuka honey Fletcher could see a franchise style model of overseas packers creating some serious risks for the manuka honey industry, in much the same way Caskey has concerns.
“For Coca-Cola type products the franchise model is a pretty good model – everyone wins. We don’t have a clear definition of the product though. So, we would be leaving that to foreign franchisees who would be given a local monopoly, which could be quite big, to run the business for us. That raises some questions about how much of the value they insist on keeping, how much effort they put into marketing and how much would come back to us at the end of the day,” Fletcher says.
Therefore, such a concept would rely on the honey industry coming together to promote one set of criteria for identifying and rating manuka honey, which will also help prevent the new market being exploited by foreign producers, according to Fletcher.
“It only works if, firstly, all New Zealand’s honey industry is prepared to work together. History tells us that might not be as easy to do as it is to say. Secondly, it will only work if Australia leaves us alone to do it. Again, history tells us that may not happen.”
There would also need to be serious consideration given to the legalities, under World Trade Organisation rules and European Union competition law, of supplying one packer in a market with a monopoly of honey if that was the route taken, Fletcher warns.
While Caskey and Fletcher can see considerable risk to the long-term future of the manuka honey market if any bulk-export/offshore-packer agreement is not done right, Logan Bowyer questions the philosophy behind the concept. The Manuka Orchard owner has his finger on the pulse of honey trading in New Zealand through his honey storage and processing facility in Paengaroa, Bay of Plenty, and says that a concept such as has been floated would be a “knee jerk reaction to a present-day problem”.
“Often those reactions are really bad long term. They are rushed in thinking to serve a certain purpose for that moment in time. Before you know it, you have lost your handle on added value,” Bowyer says.
The supply and demand imbalance will work itself out over time if beekeepers strive to better understand what the markets require, Bowyer believes. For this reason, Manuka Orchard is having those conversations all along the supply chain. From what Bowyer can see, a combination of lower prices, a lower production season, beekeepers taking less honey off the hives and markets taking more, is gradually moving supply and demand closer to a balance.
However, should an offshore packing venture be undertaken, if the New Zealand honey suppliers do not own their own processing and packing plant and facilitates, then Bowyer believes the risk is high.
“It is easy to sit here in New Zealand and think everyone is above board as we are, but if you are dealing with a packer overseas then you have no idea how that plant is going to be run when your back is turned.”
From the conversations he has with beekeepers, Bowyer believes many would share his scepticism of any idea which does not promote Kiwi honey, be it manuka or otherwise, as a premium product.
His advice to beekeepers is to be cautionary and, contrary to the opinion of others in the industry who advise a “meeting the market price” philosophy, Bowyer thinks New Zealand honey marketers should be targeting the very top end of buyers internationally, for all our varieties, and/or the under-tapped domestic market. Any off-shore packing model would likely not fit that approach and thus patience should be observed, Bowyer believes.
“Hold fire for another year or two. Perhaps investigate it, without spending too much money on it, but see what the natural course of supply constraint is and if the world is going to want more of our product in the next few years.”
Setting up any business that would bring a large collection of beekeepers together has more challenges than just financials, Russell Marsh knows that. The former chartered accountant and third-generation Otago beekeeper’s family business, Marsh’s Honey, supplied New Zealand Honey Producers Co-operative from go to whoa, 1981 to 2014.
While it is early stages in the concept floated by Hartnell, Marsh believes it prudent for beekeepers, as potential suppliers, to understand the dynamics that would likely come into play should a “collective”, as he terms it, eventuate. He has detailed six key considerations in Exploring the Dynamics of a Honey Co-op.
“We need to do something, so all initiatives should be put up on the table and all the gory details, how you get around them or work with them, discussed. Then the beekeepers can decide after that whether they are in or out,” Marsh says.
The main points for consideration for a collective, according to Marsh, would firstly be the collective dynamics such as the amount, quality and fit of the honey supplied by individuals and how that fits with the overall longer term strategy of the collective. Then the capital commitment required of members would need to be established, because many beekeepers might not have the ability to fund what is required to get a business off the ground or for that matter provide funding to ensure it keeps running. Supply commitment comes next, with ensuring continuity of supply essential, as fluctuating quantities and qualities of honey supply limited the previous co-op. Also critical to success is firmly establishing how long and short term capital initiatives will be funded and how and when those putting up funds and taking on risk will be rewarded.
The issue of governance is perhaps the most important thing to get right, Marsh believes. How a board is structured and what types of people are on it will set a collective’s strategic direction and ultimately have a bearing on successful outcomes for all participants.
Lastly, forecasting net returns to be delivered into the beekeepers’ pockets after the remainder of the value chain (sales/marketing/packing/distribution/administration/governance) have taken their cut, and also identifying who along that supply chain bears the cost of any inefficiencies. Otherwise, Marsh warns, collectively beekeepers could be on the hook for setbacks that may be outside of their individual control.
Answers Require Enterprise
All in all, there have been mixed reactions to John Hartnell’s idea, but all have commended the established exporter for putting forward a concept for discussion. Among them, is packer and exporter James Annabell, chief executive of Egmont Honey, who believes the idea may help boost the profile of manuka honey if it helps push the product to more consumers. So, he is not against beekeepers pursuing it, but does have a warning for them.
“It is complicated and we need to hold on to hope, but I hope beekeepers don’t get overly excited about this possibility, which is probably not quite as easy as it looks. The range of requirements in some of these markets is a real challenge, such as C4s and diastase, then there are more challenges around hitting the correct pollen counts and manuka definitions,” Annabell warns.
Yes, the hurdles to bringing together any large collective of honey suppliers are numerous if it is to be on sure footing, but they are not insurmountable and Hartnell got the idea rolling by pointing out, “surely an entrepreneurial country with a strong primary sector base like New Zealand can get this right?”
That’s a thought echoed by at least some beekeepers, including one in the hills of Whitecliffs, Canterbury.
“We are an export driven nation and have a vast amount of experience and knowledge and I am sure that within the export industry there are people who would take on a honey portfolio and slot it into their existing line of connection, pathways and trade,” Corson says, before looking further ahead.
“The challenge is to bring a team of suppliers together to build something that will stand the test of time. An entity that will give my young boys the confidence to enter a vibrant industry where there are rewards for the hard work that it is.”
Would you get behind a honey collective? Could an agreement between Kiwi honey producers and an offshore packer(s) be good for the NZ honey industry? Send us your thoughts, email@example.com, and keep the conversation going.