At last some leadership within the Meat Industry, but whether it is enough to slow the exodus to dairy, only time will tell.
Sixty five processing plants and far too many companies competing for too few sheep and cattle, at the farmers expense, is a core issue that has yet to be addressed.
And the sad bit is, a large amount of this internal competition is between two farmer co-ops, both trying to maximise profits for its stakeholders.Their lack of success illustrated by the swing to dairy and poor pre tax incomes by farmers, shows there has to be a better strategy.
The NZ Meat industry focus should be unified internally but collectively competitive in our exports markets, against other sellers of meat products.
Sheep and beef farmers and meat companies are to join forces to search for a strategy to revive the flagging meat industry. The move by Beef + Lamb NZ and the Meat Industry Association comes as sheep and beef farmers have struggled to cope with high costs, high exchange rates and years of drought. Lamb returns in the valuable British and European markets have been at their highest in recent months, but Beef + Lamb economists pick the average sheep and beef farm pre-tax income to be only $40,000 this year.
With wool no longer a viable income-earner, farmers expressed their frustration at their falling fortunes last year by voting to end a levy to pay for wool research and development and shearing training. The Meat Industry Association, which turned down an offer to merge with Beef + Lamb earlier in the year but is represented on its board, is a lobby group for companies that run 65 processing plants across the country. Agriculture Minister David Carter said swift action was needed to capture the top end of the market and "the world's most discerning customers".
Beef + Lamb chairman Mike Petersen and the Meat Industry Association chairman Bill Falconer said they had agreed on terms of reference and funding for the first stage of a two-stage process. This was a study of the issues and opportunities across the sector from market to farm, to be completed early next year. They expected the strategy to have a five to 10-year outlook, but were optimistic several "quick wins" would be identified. In stage two, "willing industry participants" would work together on these initiatives, which might include research and innovation, market development or whole-of-supply-chain initiatives.
4 Comments
I am assuming that Pederson is talking about what might come out of the Deloittes Red Meat Sector Strategy. What are the quick wins and is this going to tie in with the recent PGP
funding to Landcorp,SSF and Rissington. Where is the funding going to come from?
With marketing development are we going to see a meat marketing board as opposed to the traders that we have selling our meat now?
Banks have made it quite clear that financial support is being withdrawn from sheep and beef farming (Grahams comments 2 weeks ago), so anyone that can will be considering conversion. Pretty soon we won't have to worry about over capacity there won't be an industry.
Janette, whilst we are all dealing with the aftermath of several years of poor returns(excludeing 08) and in some cases drought situations we need to keep looking forward. Vast tracts of NZ are completely unsuited to other land uses so the industry will of course survive.
The Deloittes survey will tell us what we already know, namely that we would be far better off if we worked more collectively, intergrated supply chains etc etc. That we will ignore that and continue to take the extra 10c/kg short term gain where we can get it is also pretty much a given.
Fortunately, good old supply and demand is well in our favour, combined with a general surge in commodities which will allow us muddle through at improved profitability. SFF will be forced to take out more capacity and hopefully somewhere in there a new equilibrium is reached.
Mike Peterson could have saved millions if he'd just consulted the "experts" on this site!
sheep shagger the way costs are for remote hill country blocks even without debt its going to be pretty hard to keep these blocks going. For my place fert bill maintance $100,000 . Transport costs $32 a head for cattle to get to nearest sale yards. What they need to do and I have put it too Pederson. SFF is too create pods in districts where you have the breeder and finishers within a reasonable distance from each other and create a value chain. Work on each farms strengths not weaknesses. Get seed companies to invest and fert companies also to establish lucerne for eg in dry areas to fatten, maybe only 10 or so farms in a pod.Have everyone on the same page and have a pool payment, The only way some farmers make money is determined by what price stock is bought in at and that usually means someone has been screwed. In my district the lack of fert the last 4 years is really staring to show and it is predominately hill country.
Just read a BNZ report on future 2011 meat exports to Uk and Europe maybe only an increase between 1.6% and 2.5% over the next 2 years, so we will probably be standing still because cost of production wiil gobble up any increased sale and returns. I see alot of hills going into trees. Banks are not supporting remote hill country.I don't like being pessimistic but I know that is the harsh reality.
Farmers have been conditioned to think that if you pay levies etc then those revenue gatherer organisations are the experts.Some of us think that the processing companies should amalgamate etc and millions of dollars are being thrown at strategies but the facts are despite the returns there isn't enough profitability for farmers and maybe the leadership has to come from farmers, if farmers can't work together then how can we expect the so called industry leaders to work together in a meaningful manner.
Janette, I agree with your sentiments re farmers working together which is why I personally support co operatives and co operative principles. I suspect I am disadvantaged by not shopping my produce around but believe in the greater good that should come from working together. However I dispear that we are a disperate group looking for any short term win at the expense of a long term vision.
I hope the Deliottes report can show a path forward but unfortunately the best money in farming has always come at someone elses expense, as you point out. The pods that SFF are proposeing are good in theory if everyone can win along the way but that takes a change of mindset from everyone down the chain. We live in hope!
I havent read the BNZ report but would point out that whilst the UK and Europe are our main markets in sheepmeat, its the emergence of China and re emergence of the US and the Middle East that is helping push prices. China is doing a great job creating demand for the lower end cuts, offals and skins adding to the overall value. Murray Brown from Alliance was quoted in the ODT this week as saying they were only able to supply about 1/3 of their potential orders so we genuinely have the whip hand for once.
On the cost side I realise there is insidious rises in rates, fuel, freight etc but the big ticket items of Interest rates and super are actually comparitively low as are the likes of generic glyphosphate,tordon and drench which is also positive.
As always the weather is the real biggy and I hope we can get a decent growing season through autumn to fully capitalise a better season and get sheep farming back on the front foot.
Best wishes.
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