Changes to sheep industry up to farmers

17/02/2010

Late last year an email circulated seeking signatures for a letter to the Minister of Agriculture, David Carter,  asking for his assistance in arranging a merger of the meat companies Alliance and Silver Fern Farms.

The email was confidential so I’m not going to copy or quote from it. But its contents have been discussed in the media as has the response of the Minister.

He correctly said any changes in the meat industry are up to farmers and a merger is up to the co-operative’s shareholders.

Now there are suggestions Landcorp should use its muscle as a catalyst for change in the industry.

A State Owned Enterprise should not interfere in this way and fortunately Landcorp’s influence on the meat companies is limited because shareholdings in both companies are capped. 

Recent attempts by the Meat Industry Taskforce and then Alliance to sort out the meat industry failed at least in part because Silver Fern Farms wasn’t interested. The reason for the company’s reluctance to co-operate became clear when the merger between PGG Wrightson and SFF was announced. Now that’s fallen through SFF may be more willing to look at other options but it’s too late.

A merger between Alliance and SFF by themselves wouldn’t solve the problems of low returns to farmers because the new entity wouldn’t be big enough to exert enough influence on international markets.

Besides, returns from meat are only part of the problem, low prices for wool and other by-products are also responsible for the gloomy outlook for the sheep industry.

The Wool Taskforce has completed its report  The taskforce was established by the Minister and he says:

“The report asks the right questions and identifies strategies to restore profitability to a sector that has been in decline for decades,” says Mr Carter.

“Everyone knows that the only way to raise price is to raise demand. Rather than generically marketing New Zealand wool, the report says the industry needs to work across the supply chain to boost demand for clothing, carpets and other wool products.

“The Taskforce makes it clear that this will only come about through unity and leadership, essentially having one voice for the sector.  I’m encouraged to hear this challenge from a group formed from within the industry.”

As a result of their recommendations he is to appoint an independent expert to work on forming a single body for the wool industry.

Improving returns for wool will play an important part in restoring confidence and profitability to the sheep industry. Whether anything happens in the meat industry as well is in farmers’ hands.

They choose who they supply their stock to and they hold the shares in the co-operatives. If there is to be any change in the industry it can only come from them.


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