Meat sector strategy urgent

Returns to sheep farmers seem to be defying the normal rules of supply and demand.

Sheep numbers have dropped and the demand for lamb is high which ought to mean good returns to farmers but although they’re not as bad as they were they’re not as good as they ought, and need, to be.

The relatively high exchange rate and dismal returns from wool, pelts, tallow and other by-products are partly to blame. Other factors include over capacity in the meat industry and changes in eating and cooking trends.

The result is a difference between profits of $600 a hectare from sheep farming and $3,500 to $4,000 for dairying which is encouraging more dairy conversions.

However, not every sheep farm is suitable for conversion and not all farmers who could change to dairy want to. They’ll be hoping that the meat sector strategy delivers.

The initiation of the meat sector strategy is a critical step towards improved profitability within the sector, according to project Co-chairs Meat Industry Association (MIA) Chairman, Bill Falconer and Beef + Lamb New Zealand (B+LNZ) Chairman, Mike Petersen.
 
Mr Petersen says the concept of developing an overarching strategy for the meat sector was championed by the organisation previously known as Meat & Wool New Zealand during last year’s referendum debate, when farmers expressed frustration at volatile and marginal profitability.
 
“We are delighted that through the Meat Industry Association, the processor/exporter part of the sector also sees the need to do this, and is prepared to work alongside farmers in identifying the opportunities for step-change improvement.”
 
B+LNZ, MIA, New Zealand Trade and Enterprise and MAF have agreed terms of reference and funding for Phase one of a two stage strategy process, which entails an overarching ‘umbrella’ study of the issues and opportunities across the sector from market to farm. Mr Petersen and Mr Falconer are optimistic that there will be a number of ‘quick-wins’ identified from that Phase one process.
 
In Phase two, willing industry participants will collaborate to adopt and implement initiatives to drive change. These may include research & innovation, market development or whole of supply-chain initiatives.
 
Mr Falconer expects Phase one to be complete in the first quarter of 2011.

Federated Farmers is backing the strategy:

“There’s a hell of a lot hinging on the meat industry strategy for New Zealand’s meat farmers,” says Bruce Wills, Federated Farmers Meat & Fibre chairperson.

“The really important thing is that farmers and the marketers are both seeing the highest ever in-market prices for Kiwi lamb, but they’re not benefiting from those prices. 

“The meat companies tell me they could sell double the lambs we currently produce and at these record prices too, but that’s where a massive disconnect between ‘there’ and ‘here’ kicks in.

“On-farm, sheep farmers are exiting the industry because there’s little or no profitability.  Sheep farmers are voting with their business plans in order to survive.

“We’ve now got a consensus among farmers and the processors that the industry is broken and it needs shape and form to go forward.

B+LNZ is forecasting a lamb crop of only 21 million – two million fewer than forecast last December.

That’s not only concerning for farmers because the meat industry still plays an important role in the eocnomy:

  • The New Zealand meat industry (lamb, beef, mutton, veal and co-products) is unique in the world with the great majority of production exported to overseas markets (more than 90 per cent of lamb and over 80 per cent of beef exported).
  • The New Zealand meat industry generated $5.8 billion in export revenue in 2009 – 15 per cent of New Zealand’s merchandise exports.
  • In 2009, New Zealand meat products were exported to 119 different countries.
  • Total meat production (on a bone-in basis) was 1.2 million tonnes for year ended 30 September 2009.
  • Total labour employed in the New Zealand meat industry is 72,000, which is 5 per cent of the total labour force (according to New Zealand’s 2006 Census).
  • It’s very unlikely we’ll get back to the days at the height of subsidies when we had 70 million sheep, but if  the strategy succeeds we could look forward to modest improvements in the sheep population. 

    That will  come on the back of better returns for farmers which will in turn help those who service and support them, people involved in processing and the wider economy.

    4 Responses to Meat sector strategy urgent

    1. Adolf Fiinkensein says:

      It was urgent forty years ago and thirty years ago and twenty years ago.

      What has changed, may I ask?

    2. homepaddock says:

      Twenty years ago, yes not so sure it was urgent 30 & 40 years ago. But maybe 20.

      What’s changed? Sheep numbers have nearly halved, killing capacity hasn’t matched that drop; stronger competition from dairying; no subsidies (though that’s good).

    3. JC says:

      Sheep farming has been on the slide since the 50s. In part thats been driven by lower prices for wool.

      In fact, you can’t divorce meat production from wool production as they occur on the same animal, and I doubt that profitability can be restored until we are able to grow the wool that people want.

      .. and maybe its the price of wool?
      I can go into Farmers and buy a good winter jersey for $50, but if I go into a shop specialising in NZ wool I can be hit for $150 for a scratchy woolen jersey; get something in Merino and the price goes North again.

      JC

    4. gravedodger says:

      I find the retail price of lamb/hogget rather off puting when the bone content of most cuts is included and am grateful that my contacts in the industry will barter for increasingly inept help at the coal face.
      Mrs gd’s favourite meat is hogget and I often choose a sheepmeat main to enjoy my past self assessed glory in the industry.
      As to the miracle fiber, all undergarments except daks are wool, merino or merino mink blend (a true miracle fabric), suits are all wool as are a majority of casual tops and casual trousers. I will hopefully never own a synthetic carpet (until the children choose where I wait for god should I live that long). Modern wool fabrics are comfortable, warm in winter cool in summer (as single layers) and the way manufacturers have removed the “itch” factor is up there as a modern product ‘par exelence’.
      I treasure the lifestyle I enjoy courtesy of the ovine species and I will reflect on that tomorrow as I assist with the scanning of around 4000 Saxon merino ewes. The Saxon fibre is a facinating one it is referred to as the fibre of royalty with its unique tangled fibre.
      A salute to sheep, and am facinated as to why Mr HP is back in the industry after an absense of was it 12 years and with 10 000 in lamb ewes to boot. I will watch with interest. Cheers and at least that should be 12 to 14 thousand lambs/sheep in the food chain for the afficianados among us.

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