The numbers tell the story – New Zealand’s sheep population is falling. Twenty years ago we had around 60 million sheep, now ther are fewer than 40 million so it wasn’t surprising that the Meatworkers Union was supportive, at least in principle, of the Alliance proposal for a mega-merger.
The combination of drought and conversion to dairy or dairy support has led to a dramatic decrease in sheep numbers. That in turn means there is an over supply of killing capacity and the unions wisely decided an orderly process of reorganisation would be preferable to a disorderly one.
However, PPCS turned down the mega-merger proposal which would have resulted in a new company combining the two big players, Alliance and PPCS, and some smaller companies to control 80% of the country’s sheep meat trade.
Today’s announcement that PP is closing its Oringi processing plant near Danneverke is sudden but not surprising. It will be a blow for the workers and will have an economic and social impact on the community. It will add to uncertainty at other works too because it is very unlikely this will be the last freezing works to close in the near future.
The outlook for sheep farming is looking up, but numbers are still going down. Just this week a record price of $32.5 million was paid for a 3,139 hectare Waipa Valley farm. It has been used to finish sheep and beef but the new owners plan to use it for dairy grazing.
This illustrates the gap between incomes for dairying and sheep farming and indicates there is not going to be a sudden recovery in sheep numbers.