If New Zealand processors continue to shun consolidation, it is inevitable that a multinational processor will step in, warned Meat & Wool New Zealand (MWNZ) director James Parsons.

The more fragmented an industry, the faster innovations are commoditised, he said. At the moment, niche products developed by a processor holding 5% of the market are copied quickly by other processors who try to undercut each other.

Meanwhile, overseas supermarket chains will continue to take the bulk share of returns unless there is consolidation of meat processors in NZ, Parsons added.

He said that in the EU supply chain funnel, the power lies with the big supermarkets.

In the UK, the big four supermarket chains – Tesco, Asda, Sainsbury's and Morrisons – have boosted their market shares and collectively hold about 75% of the market.

Because of their power in the supply chains, these supermarkets are able to pressure suppliers to discount prices, resulting in lower returns for farmers.

This has led to other players, like processors, in the supply chain looking at consolidation.

A good example is the Brazilian beef processor JBS, which started as a small abattoir in Brazil's Midwest, Parsons added.

The operations of its Australian subsidiary Swift Australia, now includes 10 meat processing plants and five feedlots.