Meat industry not broken, but collaboration essential

There’s plenty of publicity around concerning the broken state of the meat industry, but it seems to be coming from a comparatively small number of people wanting to convince everybody else disaster is imminent. On the other hand there also seems to be an air of quiet optimism among some farmers and processors which is hard to reconcile with the doomsday scenario, although nobody denies the critical need for improvement.

The basic premise of the Silver Fern Farms led From Plate to Pasture (FPP) value chain integration project is the industry model can only be put back together again by developing a product consumers are willing to pay farmers enough money to produce. It sounds convincing and the analysis underpinning the programme suggests it is the only way to get the industry out of the swamp critics are sure it’s stuck in. But analysis of the work being performed across the sector and the commercial nature of the industry’s structure make me think FPP is only one, but not the only, way forward.

Chris Kelly, Landcorp CEO, told me his dairy background convinced him the dairy model was the way to make progress, and he’s not alone in this opinion by any means, hence Landcorp joining the FPP programme. But the meat industry’s structure makes this impossible to achieve. Unless farmers have sufficient capital and all the meat companies’ shareholders are willing sellers, the Fonterra model remains a pipedream. Neither pre-requisite is likely nor is this model necessarily the answer.

Instead of claiming the meat industry is broken, it makes more sense to encourage all research initiatives to move in the same direction with proper extension from research and development into implementation. This is how the whole industry and individual farmers will be able to take full advantage of the outcomes of all research projects, rather than seeing FPP or any other initiatives as a magic answer. They should all be seen as complementary, not competitive.

For example Alliance has been working on its strategic vision, “Securing the future,” since 1997, investing $1 million over three years to compare optimal ram breeding values via Central Progeny Testing, since handed over to Beef & Lamb NZ which invests ca.$350k a year in the programme through SIL. More than 75% of stud rams used by the industry are on the SIL register, enabling ram performance to be measured across different flocks using the central evaluation programme, SILACE. Clearly FPP has a much wider reach than this, both across beef and venison as well as sheep and in the scope of the different work streams, but it should recognise the work already done.

There are several examples from the market end of the chain: the collection of consumer response data by the Meat Board since the mid 1980s, the formation of Producer Clubs to supply UK retailers with the right specification of chilled lamb leading to today’s highly successful chilled trade throughout the EU, niche markets for heavyweight lamb on the USA’s West Coast, industry collaboration in the NZ Lamb Company in Canada and the USA, and ANZCO’s development of a prime beef programme for supply to Japan of a product which meets the very sophisticated taste and presentation requirements of the Japanese consumer.

Automation in meat processing, particularly on the slaughter chain, remains the holy grail, but carcase variation makes this difficult with the result the industry’s robotics project needs more investment from participants, before it achieves its desired outcome. But there are other parts of the processing chain where automation is already being used successfully.

All these examples underline innovation has been a constant feature of the meat industry, but it hasn’t delivered guaranteed profitable returns to farmers which suggests these aren’t easy to achieve. Sheep, cattle and deer are not homogeneous species with few processing options – they all differ within and between species – unlike chicken and dairy, so each animal must be broken down into its various components and processing decisions based on the market demand for each component. Unfortunately what is profitable today may not add value tomorrow and those decisions can only be made by specialists, not by a central marketing operation.

The conclusion is all well-directed research is good, but it mustn’t duplicate what has already been done. There will be no silver bullet to create the nirvana of constant profitability, but collaboration where it makes sense will help progress towards that goal. Above all the industry must make sure the research results can be implemented.

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Tags: Meat industry, PGP fund, research, Sector strategy, Silver Fern Farms