Meat Sector Strategy Nearly Underway

Meat & Wool NZ (the name change to Beef & Lamb NZ takes effect 1 July) and the MIA are moving quickly to begin the sector strategy development process which was somewhat derailed firstly by the collapse of the single industry good organisation proposal and secondly by the restructuring of MWNZ as a result of the referendum. Although neither party has yet formally agreed the terms of reference, the appointment of a facilitator and formation of a governance group are expected soon.

The identity of the governance group will be interesting, because it will have to be a mix of representatives from the two parties championing the exercise, MWNZ and MIA, and other organisations who must be consulted, such as MAF and Federated Farmers. But it has to be of a manageable size with potential for constructive debate and eventual agreement, not dysfunctional arguing.

This is where the role of facilitator becomes absolutely crucial in ensuring the right information is available and the correct issues are identified.

MWNZ chairman Mike Petersen’s is keen for the programme to be completed by the end of the year at the latest, possibly sooner. He agrees with meat industry CEOs I have spoken to there should be rational debate about the key issues for improving the industry’s performance, supported by substantial analysis. But both parties are adamant industry structure won’t be up for discussion, while meat companies are determined there should be focus along the whole value chain from within the farm gate to market.

Two areas mentioned by Mike Petersen which require a lot of analysis are on farm methods and cost structures and the gap between the farm gate price and the port, while meat companies cite the significant costs incurred in getting the product from plant to market, such as internal freight, port handling, shipping, insurance, customs clearance, distribution and further processing. There are also ever increasing compliance and packaging costs before the product is even ready to leave the plant.

No doubt sheep farmers in particular will be eagerly awaiting an explanation at last of how it is the lamb for which they get less than $100 can retail for such enormous prices on the other side of the world. Unfortunately some studies add nothing to the debate except misinformation like the recent one by KPMG which made the elementary mistake of multiplying the average lamb weight by the retail price for a lamb cut in a UK supermarket.

A breakdown of the values for each component of a lamb at different times of year and a total average value would be a more helpful outcome in providing the producer with details of what to produce and when.

As Mike Petersen told me, the sector strategy process is entirely consistent with what was promised in the referendum and he’s “really excited to get it underway.” Communication of the results of the sector strategy will be the main challenge for MWNZ’s successor Beef & Lamb NZ; otherwise misinformation and dissatisfaction among levy paying farmers will continue to prevail.

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