Federated Farmers members have less than a week left to
complete a survey regarding reform options for New Zealand's
red meat industry.
Last month, the rural lobby organisation's meat and fibre
executive produced a discussion paper to help stimulate
informed debate in the industry.
Members were asked to complete a survey by January 13 so the
executive could write its strategy, where reform would be
central, chairwoman Jeanette Maxwell said.
The paper's executive summary said the industry faced an
uncertain future, through a lack of long-term profitability
at both the production and processing levels.
The industry was fragmented, the structure and behaviour of
participants had allowed for competition throughout the
supply chain and a lack of investment along the value chain,
while processing over-capacity continued to plague the
While the paper advanced three broad options, the solutions
within each were more like a ''pick and mix'', Mrs Maxwell
She expected the processor-focused options, which included
the merger of Alliance Group and Silver Fern Farms, to
generate much discussion.
A possible merger was ''much easier said than done'' and if
the thinking was ''just copy Fonterra'', it would not
succeed. To work, any merger needed a reassessment of the
entire industry but especially its capital structures, she
The paper said the points to consider regarding a merger were
the variation in supply between sheep and beef and dairy,
differences in product firm, the market type targeted
(commodity or value added), ownership structure and control,
variation in co-operative investment levels and the share
structure of the co-operatives.
Tradeable processing rights, which involved the allocation of
processing rights based on current market share, was similar
in concept to quota management in fisheries.
While it would need legislation and there were some ''fish
hooks'', it could help reduce overcapacity, she said.
The option of toll processing, which separated out processing
and marketing, was also raised, along with a new concept
called total value transparency, which was a way to improve
co-ordination, collaboration and in-market behaviour while
generating value and demonstrating where that value was being
added, she said.
Behaviour-focused options looked at supplier behaviour and
the relationships they had with processors and marketing
companies. It explored the role stock agents could have in
adding value, the impact of variation between the committed
and spot market price and how behaviour change could shift
focus from procurement to the market.
Marketing-focused options looked at things being discussed in
the industry, from the WTO-unfriendly single-desk model to
more realistic in-market collaboration by exporters.
Being marketing focused could include multiple marketing
companies involving strong producer and customer/consumer
relationships. That option depended on toll processing.
A twist on market collaboration was for a transtasman
approach, where Australia and New Zealand would unite to
achieve greater scale while improving research investment and
market development, Mrs Maxwell said.
''Going larger still, we could see an alignment between the
northern and southern hemispheres, to match seasonality of