Allan Barber shows why the differences between the processors and B&LNZ are more apparent than real. Is he right?

By Allan Barber

In spite of recent disagreements - most notably between Keith Cooper of Silver Fern Farms, and Beef and Lamb NZ - there doesn’t appear to be too much wrong with relationships between meat companies and the industry-good organisation representing sheep and beef farmers

Cooper has listed several bones of contention which pushed him to the point of resigning from the B&LNZ board - the proposal for PGP funding had several aspects which cut across FarmIQ, the launch of the Suretrim industry trim standard went ahead without getting full commitment from the processors, and, in his own words, the straw that broke the camel’s back was an article in the Christchurch Press in late January quoting B&LNZ chairman Mike Petersen on the sustainability of lamb prices.

There will always be an element of disagreement about which party should provide information to enable farmers to gain an understanding of what’s happening in the market.

Meat exporters will claim to be the only ones with accurate knowledge of the international market factors affecting returns, but can’t really expect farmers to trust them without any reservations; while B&LNZ has a fundamental need to be seen to deliver value and knowledge to its constituents.

Otherwise why would farmers vote for a continuation of its existence at the next Commodity Levies Act referendum?

In late January the North Island schedule was at $7.30 which already looked too high (it’s now down below $5.70), but Petersen was claiming it needed to stay at the higher level and there was no reason for it to fall because product shortage would underpin the price.

Meat companies, he said, would always try to justify lower prices due to market conditions, but farmers expected them to find alternative markets to sustain prices.

Unfortunately for Cooper’s blood pressure, the Press correspondent omitted to obtain any input from the meat industry which might have given the article greater balance.

The word from the exporters was already out well before Christmas suggesting an inevitable reduction in market demand and prices.

Petersen should also have taken care not to claim there were other untapped markets prepared to pay prices for New Zealand lamb anything like those already being earned in more traditional markets. It certainly isn’t that easy.

B&LNZ has been consistent in its intention to apply for PGP funding in support of its goal of improving performance behind the farm gate.

Unfortunately a key principle of granting such funding is that successful projects should cover the whole value chain from pasture to plate which would technically invalidate an application focused entirely behind the farm gate. I understand this initially caused the application to be rejected and then resubmitted with more of a market direction.

At this point it started to duplicate FarmIQ in several areas which meant MAF’s Independent Assessment Panel took a scalpel to the project application and approved it, probably in a similar form to the original application which didn’t meet the pasture to plate requirement. However by then the panel must have seen the logic of approving a programme submitted by a farmer representative body with indicative support from other meat exporters which didn’t wish to join FarmIQ.

Collier Isaacs, CEO of FarmIQ, says he is quite happy with the areas covered by B&LNZ’s project ‘Accelerating Best Practice’ which he says will be very complementary to the value chain approach of FarmIQ. He believes the transfer of technology behind the farm gate will benefit the work being done by FarmIQ and can only be good for the industry.

The third area of contention is the meat industry’s trimming standard which Cooper supported strongly at B&LNZ board level, as does Craig Hickson, the other industry nominated director. Suretrim was launched without full meat industry support and has disappeared off the face of the earth; but the Meat Industry Association has set up a working group to develop a set of ovine and bovine carcase trim standards which will encourage farmers to produce livestock for today’s market.

The resulting standards, likely to be completed within the next few weeks, will be voluntary and independently audited by AsureQuality, Ausmeat or another certified auditor, with a published list of processors committed to using the scheme.

Hickson has been quoted as saying this will only work if all processors adopt it, although surely this could be self policing with farmers choosing only to supply those processors on the list.

It does look as if the different sides of the industry are working out how best to work with each other for the overall benefit of farmers.

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Allan Barber is a commentator on agribusiness, especially the meat industry, and lives in the Matakana Wine Country where he run a boutique B&B with his wife. You can contact him by email at allan@barberstrategic.co.nz or through his blog at http://allan.barber.wordpress.com. This story first appeared in Farmers Weekly.