Posts Tagged ‘meat processors’

Come on John, give them a break!

February 18, 2015

The last time I dared to question MIE’s desired reform of the meat industry, John McCarthy accused me of bias and warned me to watch out, if we are unlucky enough to run into each other. So this column will almost certainly result in another attack on my character and more threats to my personal safety! (more…)

Farmers in favour of meat industry restructuring

October 4, 2014

Preliminary results of research conducted by Meat Industry Excellence group (MIE) have shown, not surprisingly, that farmers are strongly in favour of industry reform around a cooperative model. This is the first part of the new industry plan being prepared with the assistance of funds advanced by B+LNZ.

 

The research showed farmers believe overwhelmingly that the cooperative model has the potential to deliver more control of the total value chain and a greater share of revenue back to farmers, while at the same time preserving the industry in New Zealand ownership. Chairman John McCarthy is certain farmers would be willing to invest their own money to help fund a restructure, possibly via a per capita fee on stock processed.

 

The results are based on 491 responses from an initial sample of 800 sheep and beef farmers selected from across the country in geographically representative numbers. While the findings appear to be convincing, it is a comparatively small response base in answer to a set of pretty leading questions.

 

The heads up press release issued late last week claims to have more than 80% farmer backing for industry reform as outlined which should prove to the Minister for Primary Industries that consensus does exist among stakeholders; this being a prerequisite for the government to get involved.

 

Unfortunately agreement from one side of the industry does not constitute a consensus. It’s hard to imagine the near 50% of the processing side of the industry in corporate ownership being in agreement to move towards a greater degree of cooperative ownership. That is without even beginning to convince the coops they would like to combine, although that would be a start.

 

McCarthy offered the tempting notion that minimum savings of $400-450 million would be achievable from restructuring processing and procurement which would of course have to be funded in order to get things happening. That probably doesn’t include the cost of buying out those companies in corporate ownership that don’t necessarily want to exit the industry. I can think of at least four medium to large sized processors which would not be willingly up for grabs except at a very advantageous price.

 

Everybody has a fairly good idea of what needs to happen to reform the meat industry, but how to do it remains the problem. Key things that need to be addressed are capacity rationalisation to cope with reduced livestock numbers and regional land use changes, livestock procurement methods, supply contracts, competition between exporters in the market place and volatility of market returns.

 

I hope MIE’s industry plan, when finalised, can point to a constructive way of solving all these issues, as well as achieving the type of industry ownership farmers say they want. I am sceptical whether the envisaged benefits of greater farmer ownership and control of the value chain will actually be achievable. I am also suspicious of the projected savings from the restructure of processing and procurement.

 

In an ideal world both are possible, but the world is not ideal, especially without a substantial amount of new capital and full bank support. For me the jury is out, at least until I see some compelling financial analysis and, more important, evidence that major players are willing to consider a proposed solution.

 

There is a lot of water yet to pass under this particular bridge.

Schedule setting process as much art as science

March 27, 2012

The weekly schedule setting process is a hallowed meat industry tradition which determines what farmers will receive for their livestock during the week beginning with the Sunday evening phone calls from buyers. (more…)

Cooper’s sudden resignation from Beef & Lamb board not so surprising

February 20, 2012

Silver Fern Farms CEO Keith Cooper’s decision to resign his directorship of Beef & Lamb New Zealand has obviously come out of the blue, if Chairman Mike Petersen’s reaction is anything to go by. But it seems Cooper has been questioning the relationship between processors and the farmer elected body, (more…)

Traders are screwing the scrum

May 3, 2011

As one livestock manager said to me, “nothing has changed except the faces” and even some of those are still the same, except older than they were when I was working in the meat industry. (more…)