Still too much capacity?

January 21, 2015

Meat plants in the South Island and parts of the North Island are running at full stretch to cope with stock coming off farms which are running short of feed.

This  is inconvenient for those wanting to restructure the meat industry who argue that there is over capacity in killing space.

What would happen to the stock that farmers are selling now if there was less capacity?

Holding stock would put its health at risk unless farmers could buy supplementary feed and that could be too expensive for many.

How much killing space is enough?

There are strong arguments on the grounds of animal welfare to ensure that meat works can cope with surges of stock during prolonged dry spells which means there will be surplus capacity when the weather puts less pressure on feed.

 


Rural round-up

November 23, 2014

Meat Trade unrecognisable from 40 years ago – Allan Barber:

It is sometimes tempting to think nothing much has changed with meat exports in recent years when you read all the publicity about the problems in the meat industry. Since the beginning of this century the contrast with the dairy industry has been particularly marked, but suddenly this season the positions have been reversed. Sheep and beef farmers can hold their heads high again and it seems likely this state of affairs may even persist for longer than just this season.

MIE has been waging its campaign for meat industry reform based on the premise the industry is inefficient at procurement, processing and marketing with farmer ownership of the value chain the only solution. There is a degree of truth in the theory of inefficiency in all parts of the chain, but no certainty farmer ownership would cure it.

However that is a topic for another day. The industry’s efficiency has improved by several hundred percent since the Meat Board got out of product acquisition at the end of the 1970s and the processing part of the industry was delicensed in 1981. During the first half of the 1970s the Meat Board controlled all plant licenses and published the lamb and beef schedules. . .

Keen to engage with staff, farmers – Sally Rae:

When Keith Cooper’s surprise resignation as chief executive of Silver Fern Farms was announced last month, his successor’s name was unfamiliar to many. Agribusiness reporter Sally Rae meets Dean Hamilton, the man taking the helm of the billion-dollar business.

Dean Hamilton finds a challenge very appealing.

Having always been very driven and competitive, he acknowledged he enjoyed winning and taking the reins at Silver Fern Farms was an opportunity to ”have a big challenge and to win with that”.

Mr Hamilton joined the company as chief strategy officer in April, following more than 20 years in corporate finance and investment in both New Zealand and Australia. . .

Global commute for Kiwi meat workers – Mathew Dearnaley and Vaimoana Tapaleao:

Commuters stuck in motorway traffic might spare a thought for Anthony Russell’s crew of slaughtermen travelling more than 17,000km to work in Iceland each year.

The nine-member team, mainly from Hawkes Bay, are among about 30 New Zealanders whose skills are highly sought-after at six Icelandic freezing works for a brief sheep and lamb processing season before the long northern winter sets in.

Mr Russell has travelled for eight years from Waipukurau to Iceland’s northwestern coastal town of Blonduos (population – 811), where he runs SAH Products’ single processing chain after hand-picking his workmates for each two-month season. . .

Farmers alerted after tick-carried disease hits West Coast farm:

DairyNZ is alerting all farmers, including graziers, to keep an eye out for signs of a tick-carried disease that causes anaemia in cattle and to actively manage the risks of ticks to their herds.

Theileriosis is a disease caused by a species of Theileria, a blood-borne parasite that only affects cattle and is primarily transmitted by ticks. A new strain of Theileria orientalis called ikeda was first identified in Northland in late 2012. This strain has been associated with anaemia and death in cattle.

The DairyNZ warning comes after the Ministry for Primary Industries (MPI) confirmed that a case of Theileria had hit a South Island West Coast farm this Spring. MPI has concluded that a local population of infected ticks in Canterbury or the West Coast was responsible for transmitting infection to the 188-cow dairy herd. . .

Speech: DairyNZ Board Dinner – Jo Goodhew:

John [Hon John Luxton, Chair Dairy NZ], Tim [Tim Mackle Chief Executive] and members of the Dairy NZ Board for organizing this event.

I would like to acknowledge my Parliamentary colleagues: Hon Damien O’Connor, Ian McKelvie, Barbara Kuriger, and Fletcher Tabuteau.

There are also a large number of CE’s and leaders from business, government and local government here, including Kingi Smiler, Chairman of Miraka and Laurie Margrain, Chairman for Open Country Dairy, and Martyn Dunne, Director General of the Ministry for Primary Industries.

You asked me to speak on key priorities for me in my role as Food Safety Minister and for the Ministry for Primary Industry.

I will therefore concentrate on environment, water, skills and capability, as well as some comments on Food Safety.

This is a valuable time for discussion. There is an appropriate balance between environmental and social goals, and economic growth. Both of these can be achieved, and it requires collaboration between industry and government.

It is 200 years since the first dairy cows were brought to NZ. Over that time dairying has become deeply embedded in the Kiwi culture.

Our dairy products are now exported to over 140 different countries; it’s the major industry that keeps our economy afloat- contributing over $17 billion this year. . .

 

Keinzley Agvet Wairarapa Sheep and Beef Farm Business of the Year Competition:

The annual Keinzley Agvet Wairarapa Sheep and Beef Farm Business of the Year competition is calling for final entries before it closes on Friday 28 November 2014.

The aim of the competition is to promote innovative sheep and beef farming practice by identifying farmers in the area that demonstrate a well-balanced and positive approach to their business. These attributes will be promoted at a public field day which will be held on the winner’s property in early 2015. During the day the winner shares their management policies and farming objectives and answers questions from other farmers. These field days usually attract around 150 farmers and are a valuable opportunity to network and share ideas and knowledge.

The competition is open to any farmer, (lessee or owner), or farm manager in the region, whose farm income is derived mainly from sheep and cattle. Previous entrants of this competition are eligible and encouraged to re-enter. The prize package is approximately in $30,000 in cash and products. . .

NZ Yarn finalises acquisition Christchurch Yarns

NZ Yarn has today announced the acquisition of Christchurch Yarns has been finalised. The business will trade as NZ Yarn Limited effective immediately.

Elders Primary Wool (EPW) has secured a majority shareholding of approximately 58 per cent in the acquiring business NZ Yarn. The remaining 42 per cent shareholding is held by independent investors and growers. . .

 


Labour wants to meddle in meat industry

July 28, 2014

Labour loves to meddle in businesses where it has no business to be and if it gets into government it will be meddling in the meat industry:

Labour will create more jobs and wealth by providing the leadership and funding to help participants reform the meat sector through developing a larger scale sustainable model as part of our Economic Upgrade for the sector, Labour’s Primary Industries spokesperson Damien O’Connor says.

“The meat sector continues to decline and must meet new challenges to maintain a secure and skilled workforce. Like our wider economy it needs an upgrade to compete overseas.

“Labour will do this by encouraging the creation of businesses with real market scale and, if required, we will look to amend the Commerce Act to achieve this aim. We will also work with Iwi and large agricultural companies to consolidate efforts and interests for the long term. . .

The meat industry is dominated by two farmer-owned co-operatives and there are also several smaller players.

What they do and how they do it is primarily the business of these businesses and their shareholders.

Minister for Primary Industries Nathan Guy has repeatedly, and correctly, said he will not intervene unless there sector comes up with a plan supported by the players which requires his assistance.

Anything else would be interference in private enterprise where the government has no right to be.

The industry does have challenges but Guy, and the National Party, understand any change in the meat industry must come from farmers and the processing companies.

Any attempt to impose a solution from the government down would be expensive and have the potential to contravene free trade agreements.


Political meddling won’t help meat industry

April 29, 2014

Labour’s primary sector policy is likely to include meddling with the meat industry:

A capital gains tax on farmland, stringent environmental practices and a revamp of the meat sector are up for consideration as the Labour Party makes a play for the rural vote.

Their policy position is still in development but the party’s primary industries spokesman, Damien O’Connor, was in Hamilton yesterday to gauge reaction on proposals in two days of meetings with sector groups and party faithful in Waikato and Coromandel.

He said farmers would be opposed to a capital gains tax at first but it was necessary to halt “rampant” price increases and to keep land productive.

“People buying farmland should do so on the basis of its productive-return capacity, not on some expectation of a capital gain that effectively makes it more difficult for the next farmer to make a living,” he said. . .

Productive return should govern prices but how will imposing a CGT which increases the price influence that?

It hasn’t worked anywhere else.

In Argentina, for example, it reduces farm sales and increases absentee ownership.

The meat industry was in deep trouble, he said, and needed to be transformed to offer more security to farm workers, businesses and freezing workers. “At the moment there is so much uncertainty, a shrinking base of the number of sheep.. .

The meat industry does have problems but they’re not insurmountable and they won’t be solved by political meddling.

It’s not Labour’s industry, it’s is a collection of private businesses and co-operatives and it’s up to them to sort it out.

Primary Industry Minister Nathan Guy has the right approach:

. . . The best way to put a sector into a downward spiral is to consistently talk doom and gloom. It is not true that the meat industry is on the way out. This industry is capable of truly leading the world in its innovative and profitable approach to selling high quality meat.

I will continue to back this sector and I will continue to acknowledge the great success stories. We need to hear even more pride and passion from everyone involved. . .

My role as Minister is to listen to, to act on behalf of, and to support, this sector.

So I now publicly reiterate statements that I have made in a variety of forums. If a significant portion of the sector, and this means across the whole sector come together with a solution of how they want to better the industry, my door is open. I will listen and I will do what I can to support the sector.

Any substantial change needs to come with a very clear and very broad level of support. I am not prepared to interfere in the structure of a sector without the support of that sector. The Government doesn’t own the industry – you do.

I doubt that anyone in this room wants the heavy hand of government dreaming up bureaucratic solutions that haven’t come from the ground up. . .

The heavy hand of government is what Labour is threatening.

That and the CGT are two very good reasons why they’ll be struggling for the rural vote again.


Meat industry not govt’s business

March 19, 2014

Primary Industry Minister Nathan Guy said solutions to meat industry problems must come from the sector, not government:

. . .My role as Minister is to listen to, to act on behalf of, and to support, this sector.

So I now publicly reiterate statements that I have made in a variety of forums. If a significant portion of the sector, and this means across the whole sector come together with a solution of how they want to better the industry, my door is open. I will listen and I will do what I can to support the sector.

Any substantial change needs to come with a very clear and very broad level of support. I am not prepared to interfere in the structure of a sector without the support of that sector. The Government doesn’t own the industry – you do.

I doubt that anyone in this room wants the heavy hand of government dreaming up bureaucratic solutions that haven’t come from the ground up.

This is an industry where farmers can have a say. For example, the two farmer run cooperatives have over 50% market share in New Zealand.

It seems very clear to me that if an overwhelming majority of people want change, there is the ability to bring it about. . .

There is no consensus in the sector and whatever the problems facing the meat industry, government intervention isn’t the answer.


SFF looking desperate

October 25, 2010

Silver Fern Farms had a half-page advertisement in Saturday’s ODT and Southland Times.

It was an open letter to Alliance Group and SFF shareholders promoting a meger of the two companies:

Dear Shareholder

Notwithstanding the impact the recent weather has had on livestock numbers and the potential further exodus from the sheep and beef sector, Silver Fern Farms remains convinced a strategic direction and supporting structure needs to be advanced for our industry.

Our recent $67m commitment to Farm IQ Systems Limited is evidence of our commitment to make a difference by achieving superior market place returns that are transparently linked back inside the farm gate. We believe that a different ownership structure, and consolidation within the industry, is important to capitalise on a strategy that is market focussed.

It is our view that putting our two co-operatives together as a first stage will create scale and financial strength to under-pin such a strategy. If shareholders of the co-operatives have commitment to support that merged business, then further consolidation can follow.

However, a lead needs to be taken. It should not be a lead about self preservation but a lead about creating a “NZ Inc” strategic approach to the marketing of New Zealand red meat and associated products.

We have exhausted direct attempts to achieve such an objective and now look to the shareholders of our two NZ farmer controlled co-operatives to have a direct say and to give direction as to how they would like their industry and co-operative to advance.

This is not a vote, nor a mandate, but an opportunity for you as shareholders to give your view. It is then over to the respective boards to accept or ignore your view.

It was signed by SFF’s directors.

Shareholders are then asked to tick yes or no to the following proposition:

I support the Alliance Group Limited and Silver Fern Farms Limited to:
  • Appoint an independent facilitator to Chair a joint evaluation committee to:
  • Create a strategic plan for the future of NZ meat products and by products.
  • Agree on the appropriate governance structure to support that strategic plan.
  • Oversee the independent analysis of the financial outcomes of an amalgamation of the two companies
  • Publish a report on these matters to be distributed to shareholders, excluding confidential and commercially sensitive details.

It is only two years since Alliance shareholders turned down an attempt by the Meat Industry Action Group to merge the two co-operatives.

In those two years SFF”s market share has declined and Alliance’s has increased making it even less likely Alliance shareholders would entertain a merger now.

Any chances of shareholders showing any interest in the proposition aren’t helped by the unusual method SFF has chosen to get its message across.

Why use an open letter in newspapers rather than writing directly to shareholders?

Why advertise in newspapers on the Saturday of a long weekend when there’s no mail delivery? Most farmers won’t get the papers until Tuesday and will pay mroe attention to Monday’s and Tuesday’s than the three-day-old one from the weekend.

Why not speak to Alliance directors before writing the open letter?

Why didn’t SFF accompany the advertisements with media releases?

Why wait until after Alliance has finished its road shows for shareholders at which no-one raised the question of a merger?

Why require the form to be returned by November 8 when the company’s annual report isn’t expected out until the middle of the month?

What has SFF to offer Alliance shareholders when SFF hasn’t paid a dividend or pool payout in the last five years and Alliance has paid both every year?

The outlook for the 2010/11 season was for increasing demand and falling supply before the disastrous losses after last month’s snow in Southland and South Otago which means competition for stock will be even greater.

This letter isn’t going to give farmers any reason to choose SFF over other companies with better balance sheets and more confidence in their own future.

It’s designed to show SFF taking the high ground over a strategy for the whole industry but it looks more like a last ditch attempt to ensure its own survival.

This may be only the opening salvo in SFF’s campaign but it looks more like the prelude to surrender than a winning battle plan.


MAF’s meat future

June 24, 2009

There’s a brighter future ahead for the sheep meat and beef industry a report into the sector by the Ministry of Agriculture found.

It drew on the views of people in the sector to look at opportunities and challenges in the next 10 to 15 years and concluded:

Despite the obvious challenges that the sector faces over the next 10 to 15 years, this study has identified a general positive slant to people’s perception of the industry’s future. It is clear though that this rosy outlook will not be achieved through inaction or simply “carrying on as normal”.  New Zealand has a comparative advantage across much of the value chain. Leadership, vision and action are required from the sector to ensure this comparative advantage delivers a successful and sustainable industry into the future.

 

One point everyone who thinks they have a solution for the meat industry overlooks is that it comprises many competing parts.

The processing sector alone includes co-operatives, private companies and public ones. No-one can impose anything on them and too much co-operation between them could risk attracting accusations of collusion.

 Fonterra was held up as a shining example of what the meat industry could aspire to, although I’m not so sure it’s regarded quite so highly now. But milk and meat are very different products.

Dairy farmers have to sign up for a season and their  milk has to be collected every day.

Sheep and beef farmers have more licence and more choice. That gives them a lot of power when there’s a lot of feed but can leave them in trouble in difficult seasons.

There isn’t an easy answer for the sector, especially when a decline in the sheep numbers has led to excess killing capacity.

But those looking for improvements should start by looking back because solutions which didn’t work in the past aren’t likely to work in the future either.

The Bull Pen has a related post on the report.


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