This was a think-piece which underpins the Listener column of December 11, 2010..
Keywords: Growth & Innovation; Political Economy & History;
This note is a chain of reasoning, rather than an essay or chapter with a conclusion. Although it may shed light on some contemporary issues discussed in the final paragraphs, the paper arose out of my work on the nineteenth and early twentieth century dairy industry.
THE THESIS
This scholarly interest in cheese began with the observation that we use multiple providers to export wine rather than the single dominant exporter as with dairy products. That seemed to make sense, because of the enormous variety of wines and the heavy branding that goes with them. On the other hand there are not a lot of varieties of butter (e.g. salted and unsalted, and ghee). I recalled De Gaulle’s remark that it was impossible to govern a country with 246 types of cheese, and quipped that more centralised New Zealand just made cheddar. That led me to wonder why historically New Zealand cheeses were dominated by cheddar varieties.
The first dairy production was on farms, mainly worked by Brits, as were the first dairy factories (even Chew Chong had a cheese-maker). So the tendency would have been to make the hard cheeses the British specialised in, of which cheddar is the most common. Initially the farmers would have made them in the style of the locality they came from. Apparently farm-made cheeses showed this diversity into the 1930s, when the practice fell away. W.T. Doig’s survey of dairy farmers in 1939 finds that none made cheese, although a few made on-farm butter.
How exactly cheddar began to dominate is unclear. Instructively Brett’s Colonialist’s Guide and Cyclopedia of Useful Knowledge devotes ten pages to cheese making on farm and in factory, focusing on the ‘cheddar system’. The book was published in 1883, so it is about the pre-refrigeration era.
There is an active scholarly interest in cookbooks, which reveals some trends in domestic use. Aside from a few standards such as McCheese – once somewhat more elaborate that today’s ‘Mother’s staple’ – and savoury cheese, there are very few references to cheese among the older recipes books. The impression is that cheese means cheddar, and as a rule it goes with bread.
Helen Leach writes that ‘in the second half of the 19th century it was fashionable to have a cheese course right at the end of the meal. Today this survives as cheese and biscuits but in Victorian times it could take the form of macaroni cheese, cheese soufflé, cheese straws, cheese rarebit and other hot dishes. This practice was replicated in formal NZ dinners through to the First World War at least.’
It would be wrong then, to assume that it was simply a matter of plain-old, same-old cheddar. I have a a 1927 report of the prize list for cheese at the National Dairy Show. whose categories include coloured, white, ‘full matured, any colour’, ‘made from non-pasteurised milk’, rimless and ‘four loaf . Clearly there quality differences in what was being produced too.
Exports seem to have been almost entirely cheddar, in part because it was very capable of travel and storage. That it was auctioned in Tooley St, London, required a standard commodity. Perhaps soft cheeses were not of interest because they do not last as long; in any case the milk-fat was being used for butter. Almost certainly though, the British heritage limited the interest in soft cheeses.
With the exception of ‘processed cheese’ – not only Chesdale but some cheese factories made it for local use – New Zealanders ate only cheddar up to the 1950s. A demand for other sorts of cheeses began to arise then, probably coming from soldiers returning after the war, immigrants (the Dutch are frequently mentioned), and the increasing numbers of New Zealanders who travelled overseas, all of whom would have met a wider range of cheese off-shore.
While various local cheese factories experimented, the supply-side seems to have started at the N.Z. Co-op Rennet factory in Eltham, which was founded in 1916. It was said to have New Zealand’s largest, best-equipped and most up-to- date commercial laboratories, and supplied ‘processed’ cheese to the American forces during the Second World War. I have not found documentation of exactly what happened but it developed ‘New Zealand Blue Vein’ based on the Danish blue cheese, and experimented with others.
Hugh Rennie tells of his father going to a meeting in Eltham in the late 1950s, returning to Whanganui with a tray of various New Zealand made cheeses. (He thinks it included blue vein, smoked, different cheddar styles, processed and something like gouda.) His mother, an above average home cook including judging cooking in the A&P shows of the region, found the range so novel she was not sure what to do with them. Till then cheese was cheese was cheddar.
The story of a Dutch immigrant, Peter Assink, illustrates how shallow the market was. He persuaded the Opouriao Dairy Company (near Whakatane), where he worked, to make passable camembert, brie and gruyere but, according to Gordon McLauchlan, sales were negligible even in Auckland in 1963, and when the company was merged the following year the project was abandoned (and Assink was laid off). Mercer Cheeses started in 1983 was again led by a Dutch couple (Alfred and Ineke Alfrink). It remains in production.
To stimulate the market, Renco (i.e. the co-operative rennet factory) published a cook book in 1963 entitled Junket Desserts and Fine Cheese Recipes. (Cooking ingredient suppliers – such as Edmonds ‘Sure to Rise’ – had long published cookbooks to promote their products; another significant publishing source was voluntary groups for fund raising.) Its preface states ‘[t]he cheese recipes contained in this booklet are presented with the object that you may become familiar with the Eltham Galaxy of Fine Cheeses, use them more often, and by trial and experiment quickly decide upon your favourite dishes.’ On p.26 it provides a time-line of the companies involvement with new cheeses: 1952 N.Z. Blue Vein; 1959 N.Z. Gruyere; 1960 N.Z. Havarti; 1960 N.Z. Danbo; 1961 N.Z. Fetta; 1962 N.Z. Samsoe; 1962 N.Z. Grana. (Not mentioned in the list, but among the recipes was Nuzano – possibly like a Parmesan.) The book also mentions other NZ co-operatives and proprietary companies working on Continental cheeses: Gouda and Leidanz – Kaipara Dairy Co; Camembert, Brie & Gruyere – Opouriao Dairy Co (mentioned above); Kominji Kaas – distributed by Van Raalte Chemicals Ltd., Dunedin; Liptauer – [no produced named]; various cottage and cream cheeses; various processed cheeses [several producers named].
In the late 1960s there was a deliberate decision to remove controls on imports of speciality cheeses, partly as a part of our free trade stance, but also to generate a domestic market for such cheeses, which ultimately locals would supply. (Pasteurised only; non-pasteurised were first allowed in in 2010.) By the 1970s, you could go to certain kinds of stores (I recall Hays, a department store, in Christchurch) which had a gourmet bar which included imported specialty cheeses. As the domestic demand for them rose, local suppliers moved into the market, and now supermarkets have their cheese bars – there may not be 246 types, but there are a lot; I counted over 100 in mine. There are also specialist delicatessens which stock specialist (often imported) cheeses.
Perhaps the key local supplier was Kapiti Cheese. Ross McCallum had grown up in the Taranaki, graduated with a Diploma in Dairy Technology from Massey University, and worked for Kiwi Dairy in South Taranaki, which produced bulk cheese for export. A 12-week fellowship to the United States and Europe exposed him to boutique cheese operations, and in 1980 he jointly founded Kapiti Cheeses, choosing to be based at Lindale because it was on a tourist route, and close to Wellington which was considered to have a more sophisticated palate because there were so many inhabitants with overseas experience. Today Kapiti produces over fifty specialist cheeses, many with distinctively New Zealand/Maori names. (McCallum sold his interests in 2003; it is now owned by Fonterra. He remains involved in cheese making through the Kaimai Cheeses venture.)
The purchase of Kapiti Cheeses by a much larger company (initially it was by Foodstuffs) is a typical pattern of successful start-up companies being limited for further expansion (often by financing requirements) and becoming subsidiaries of better placed large companies.
I have appended a note from Fonterra about their activities. The obvious markets of Europe and America are restricted by quotas, as the result of strongly protectionist sentiments. A consequential strategy, which Fonterra follow, is to sell ‘ingredient cheeses’, that which is allowed to manufacturers, who politically counter the local protectionists. Apparently the protection regimes are very specific in what is covered by a quota.
In any case, were a New Zealand producer of specialist cheeses to develop a market with a quota it would be at the expense of existing markets. Cheese appears to provide a nice example of the detriment of quota regimes.
New Zealand has open access to Australia, but it seems they have gone through a parallel development to New Zealand, and have their own boutique cheese suppliers. The specialty cheese trade seems to be two-way across the Tasman. (No bad thing.)
We can and do sell specialty cheeses in Asia, but it is a hard slog (it always is). There are markets for specialty cheeses among the affluent and expatriates in such countries, but New Zealand cheeses probably get squeezed by European and American suppliers with reputations we have yet to acquire (and find it difficult to, because of the quotas in the rich economies where reputations are made).
There are numerous other boutique cheese makers. Over 30 belong to the New Zealand Specialist Cheese Association. (I have little information on cheeses made on sheep, goat or buffalo milk. The only New Zealand manufacturer on Mozzarella like cheeses from buffalo milk may be the Clevedon Valley Buffalo Company near Auckland.)
Nevertheless we may wonder whether there is a the potential for, say, a billion dollars a year in speciality cheese exports, just as we already have in wine. The Fonterra note says, very correctly, ‘the closer we can get to the consumer the more value we create (for consumers and farmers alike)’.
Wider Issues
A longstanding complaint has been that too many of New Zealand exports are bulk, and not enough are niche high value products. That may be inevitable for butter, but what about cheese? Why dont we export more varieties, just as we export a variety of styles and brands of wines? Is it just the international quota arrangements; does the hard slog defeat potential specialist suppliers? Something else?
There is an interesting debate beginning to appear in New Zealand economic development policy. Nobody has articulated it well yet, so here goes (observing that while it is presented as a dichotomy, the answer is ‘both’).
One view is that in order to grow we need to imitate other rich countries, with their emphasis on industries based on science and innovation in urban centres (or, in our case, perhaps just Auckland). The critical notion is that our routine manufacturing and tradeable services cannot compete with poorer countries, so the rich countries have to look for more technologically advanced manufacturing options (often involving high quality standards). Behind this thesis is that we want urban growth – to be a more cosmopolitan country (although rural areas may not be as populated by the bumpkins they were seen to be half a century ago). There is also a need to review and elaborate the concern that a dependence upon natural resource (or commodity) exports leaves us exposed to the vagaries of the world economy that we experienced in the twentieth century.
(These arguments are very 1960s. While I dont know of any writings of Bill Sutch on cheese, I was delighted to learn from Helen Sutch that he welcomed New Zealand Blue Vein as an example of his development strategy of diversification and manufacturing in depth. Blue cheese became a standard item of fare in the Sutch-Smith household. Famously, in 1962 Sutch argued that the history of the New Zealand economy could be described by tracing the fish industry – sadly the lecture is recalled and is not available in hard-copy. The Maori dimension aside, there might be a similar story for cheese. (http://www.eastonbh.ac.nz/?p=191) )
The alternative strategy is around that the likelihood that the world demand for natural resources (of particular interest to New Zealand is food resources) is going to rise as industrial activity shifts to poorer countries who cannot supply the resources for themselves in adequate quantities. So the New Zealand economy should go back towards a specialisation in natural resources (recalling that while in the nineteenth century some countries lifted their economies by intensive manufacturing, others – New Zealand among them – attained similar standards of living by providing natural resources.
However, even if the terms of trade become more favourable, there are number of problems with this strategy, two of which are that bulk products (commodities) can be subject to volatile market prices and are subject to protection with – as far as foodstuffs are concerned – export markets undercut by dumping. So the question becomes whether we can develop natural-resource-based products which are niche rather than bulk to avoid these weaknesses; Fonterra’s desire to get closer to consumers to add value for them and for their producers is so true. In effect we use the resource base favoured by the second strategy, to produce products favoured by the first. Hence this meditation on (wine and) cheese.
Finally, if de Gaulle argued that France’s ungovernability was illustrated by its variety of cheeses, does the increasing diversification of cheeses mean that New Zealand is becoming ungovernable? De Gaulle was talking about a regional heterogeneity, which does not so much apply to New Zealand. While we produce many specialist cheeses. the styles are not regionally based (also true for wine although regions try to brand themselves). One might however ponder whether the post-war diversification of life styles, which diversifying tastes for cheese (and wine) illustrate, suggests a rising social heterogeneity which MMP reflects and which is making the traditional form of centralised government in New Zealand increasingly difficult.
Among those to whom I am grateful for help in preparing this note are Elizabeth Caffin, Rick Christie, Patricia Fraser, Duncan Galletly, Diane and Ian Grant, Helen Leach, Ross McCallum, Gordon McLauchlan, Hugh Rennie, Nick Stride of Fonterra, Helen Sutch, and Dave Veart.
A note supplied by Fonterra
Historically, Fonterra has sold the majority of its quota cheese into these protected markets as ingredient cheese which is typically bound for the processing kettle. Technology advances are moving us closer to alternative product lines that will expand the application set that we can target, but overall the limitation towards ‘ingredient use’ as opposed to direct to retail will remain true.
The quota regimes are very prescriptive in what they will (and more importantly will not) allow. For example the Europeans operate one type of quota that is distinctly ‘Cheese for Processing’; this limits entirely the application set that Fonterra (and others) can sell our products into and therefore the returns we are able to achieve for those sales. However, in some markets such as the UK there is still good demand for the traditional table cheeses with retail Cheddar continuing to attract strong demand. Unfortunately access to this market is also limited and with strong competition from domestic (UK) and Irish producers total sales into the region remain static.
Developing markets such as China, the Middle East and parts of South East Asia continue to grow but application sets are once again weighted towards the processing end of the spectrum, with natural cheese typically used as ingredients in ‘White Cheese’ or ‘Jar Cheese’ due in part to the complexities of managing a chilled distribution network in these regions. Outside of the developing nations and traditional quota markets Fonterra’s focus has been on the Asia/Pacific and North Asia regions where we are able to add value to our products by tailoring a cheese to specific customer need or by moving our products closer to the end consumer. This is important as the closer we can get to the consumer the more value we create (for consumers and farmers alike) and the more carbon-efficient our products become.