July 21, 2010

 

New Zealand meat bodies join effort to boost profitability

Meat companies and industry board Beef and Lamb New Zealand say they are developing an "overarching strategy" to improve profitability in the sector.

 

The concept was championed by Meat and Lamb New Zealand during last year's referendum debate on meat and wool levies, when farmers expressed frustration at volatile and marginal profitability.

 

Beef and Lamb chairman Mike Petersen said the board, which represents both farmers and companies, was delighted that processors and exporters in the Meat Industry Association (MIA) were prepared to work alongside farmers in identifying opportunities for major improvement.

 

The bodies have agreed with the Government's Trade and Enterprise arm and the Ministry of Agriculture and Forestry (MAF) on terms of reference and funding for the first phase of a two-stage strategy process.

 

The overarching study of the issues and opportunities across the NZ$5.8-billion (US$4.15-billion) sector from market to farm is expected the throw up a number of "quick-wins" where gains can be made relatively soon.

 

MIA chairman Bill Falconer expects this first phase to be complete in the first quarter of next year.

 

In the second phase "willing industry participants" will collaborate to adopt and implement initiatives to drive change, and these may include research and innovation, market development or whole-of-supply-chain initiatives.

 

Agriculture Minister David Carter said a joint strategy was exactly the action needed. New Zealand farmers were getting record high prices for their meat in Britain, yet the industry was struggling, he added.

 

Separate efforts in the industry aimed at restructuring the export companies sending more than 90% of lamb and over 80% of beef overseas have so far failed, including those to seek collaboration in exports by Alliance Group and Silver Fern Farms, and for Silver Fern Farms to merge with PGG Wrightson.

 

A Ministry of Agriculture and Forestry (MAF) foresight report said meat companies could require a Fonterra-style share structure to boost investment, and overcome constraints on capital.

 

The report implied structural and seasonal overcapacity could be countered by more industry consolidation, but said there was little appetite for big changes, despite international competition, environmental concerns, lack of marketing focus, and domination by large retailers.