Meat Sector Strategy Under Way

I went to Wellington on Wednesday to attend the launch of MAF’s meat industry study Meat: The Future which provided an interesting couple of hours of entertainment. After an introduction from MAF’s Deputy Director General Paul Stocks, there were addresses from Tim Ritchie, CEO of the Meat Industry Association, Mike Petersen, Chairman of Meat & Wool NZ, and Bruce Wills, Meat & Fibre Chairman Federated Farmers.

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Meat industry strategy must wait for referendum

Business theory says strategy comes before structure, but as with so many things in the meat industry, normal theory doesn’t necessarily apply. Meat & Wool NZ is the logical party to lead the strategy development exercise, but can’t really get into this until it knows whether it will exist after the referendum vote is announced on 4 September or how much money it can devote to its programme. So in this case strategy must await confirmation of the structure.

AFFCO strengthens balance sheet with good half year

For several years the ugly duckling of the meat industry, AFFCO has put together another solid performance for its latest half year, posting a 52.6% improvement on its previous half year profit before tax. This is on the back of a $93 million increase in revenue which, for a company known more for its beef business than lamb, is an impressive performance in a year when lamb price rises outstripped beef.

Market share changes produce little progress

Since 2003 quota allocation statistics indicate some significant changes to meat company market shares, but overall there’s been remarkably little progress towards a consolidated industry structure. I have argued in the past farmers have sufficient choice between different types of processor to send their stock to, while suggesting progress towards consolidation depends on commercial realities in an imperfect market.