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.


Farmers may ask why their organisation, assuming it still exists, has to lead the strategy process, when it’s the meat exporters who have the opportunity to exert influence in the market place, where it really counts. But the meat industry must be a partnership between producers and processors; in its most elementary form, but ultimately it must encompass government agencies, trade partners, exporters and customers, as well as shipping lines, distribution companies, value added processors and several others I haven’t mentioned.


The meat industry hasn’t got a hope in hell of developing an achievable and worthwhile strategy, unless at least producers, processors and exporters are involved. The last two have their own association, the MIA, which works closely with MWNZ on many issues, but if the referendum goes against the farmer body, farmers won’t have a voice at the table. This would be absolute madness.


This week MAF releases its meat sector study, Meat: The Future, which I understand covers a lot of history, but doesn’t necessarily come up with firm recommendations. I’m sure it will contribute to the debate, but it won’t replace the strategy development process which must be undertaken by the organisations representing the key players. Although MIA members voted against a proposal last year to merge with MWNZ, there is an increasing level of trust and co-operation between the two most important representative industry bodies. It is important to ensure the benefits of this growing trust aren’t lost.


Various conversations with Mike Petersen, James Parsons and Scott Champion of MWNZ and Tim Ritchie of MIA confirm both parties agree they need to form a strategy which focuses on those issues they can influence and ignore the things they can’t. I reckon there’s been too much energy expended in hoping to influence the retail price and the exchange rate or trying to restructure the processing sector, while much more benefit will come from identifying where the industry can actually achieve change.


There is consensus about keeping it simple, working in partnership to identify the top few areas to address, agreeing who should be responsible for each one, and using the Economic Service’s research capability to provide a firm information base. MWNZ sees its role as providing the glue within the industry and deciding how best to link with the different parties involved.


Having decided who should be involved, the next big question is what topics should be on the agenda and who should be responsible for each. The two groups must sort out the boundaries between industry good and commercial activity and which activities they can share, because for the future credibility of MWNZ it must be able to prove value for every dollar it spends. Its main problem is the farmers see no tangible benefit from its activities, because the meat companies pay all their returns.


MWNZ must address market access, information, on farm R&D and farmer education; MWNZ and MIA must co-operate on market development and animal ID and traceability; and meat companies have sole responsibility for processing innovation and building deeper relationships with their customers in the market place. This is the main area of frustration for farmers who are convinced they are not getting their fair share of the retail price, and which has led to much wasted energy on attempts to restructure the industry.


My greatest wish from this exercise is to see an agreed position between MWNZ and MIA on the key strategic issues, demonstrating a united approach, and no more time wasted on trying to force industry mergers. In my opinion the most important strategic issues are traceability for all livestock for bio-security and farm management purposes, added value customer relationships, improved market access, better use of dairy breeds for beef production, the use of robotics in processing, and getting more trained people into both pastoral farming and meat companies.


I shall be interested to see what MAF has identified as its key issues for the future of the meat industry and whether its list is anything like mine.


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