Meat industry rationalisation should be based on the most efficient use of meatworks, rather than different factions in the sector "ripping into one another" Federated Farmers says."We need to learn from the dairy industry and combine force
Meat industry rationalisation should be based on the most efficient use of meatworks, rather than different factions in the sector "ripping into one another" Federated Farmers says.
"We need to learn from the dairy industry and combine forces, rather than ripping into one another," said meat and fibre chairman Bruce Wills, who said the industry was "broken".
"Industry rationalisation should be based on optimisation of plant, than on economic necessity driven by declining stock numbers."
The Meat Industry Association -- made up of processors and exporters -- and the sector's industry board, Beef and Lamb New Zealand, yesterday announced a fresh attempt to develop a strategy for the sector.
Initial attempts several years ago when meat company mergers were being debated were abandoned after the merger talks collapsed.
But Beef and Lamb chairman Mike Petersen said yesterday that an overarching strategy for the sector was a key first step towards improving profitability, and once a strategy was complete, structural changes could be looked at separately.
Mr Wills said there was "a hell of a lot hinging on the meat industry strategy" for meat farmers, who had been seeing record prices paid in-market for New Zealand lamb, but were not benefiting from those prices.
"The meat companies tell me they could sell double the lambs we currently produce and at these record prices too, but that's where a massive disconnect ... kicks in.
"We've now got a consensus among farmers and the processors that the industry is broken.
"We need this strategy to unlock the returns we know overseas markets can easily sustain."
On-farm, sheep farmers were exiting the industry because there was little or no profitability, and it was necessary to solve the industry conundrum of record in-market prices but poor farmgate returns.
Recently, Beef and Lamb NZ economists had revised down their forecast for the current season's crop of lambs to 21.5 million head: "That's a massive two million lambs less than the forecast released last December," said Mr Wills.
"We've spoken about tipping points before but this is it. Productivity improvements can no longer make up for numbers."
