A long-term perspective on New Zealand's sheep and beef
sector will enable the industry to move beyond survival mode
and focus on maximising its potential - rather than ''looking
jealously over the fence at dairy''.
A report on the red meat sector published in KPMG's latest
edition of Agribusiness Agenda said there should be ''no room
for infighting'' or talking down the industry.
Strong leadership would be critical to establish a new era of
engagement, collaboration and trust-based relationships, to
enable the industry to succeed through a variety of different
routes to market.
While the concept of a ''red meat Fonterra'' met with little
support from industry leaders, the majority involved in the
roundtable discussions recognised the industry needed to
continue to evolve.
Some potential options, if sector participants were prepared
to take a long-term perspective, included consolidating
processing assets to create an open-access processing entity.
That was floated as a way of securing overhead cost
reductions, which were estimated to be between $300 million
and $500 million a year, while enabling the industry to
cement the efficiency benefits of scale.
There were many challenges to implementing consolidation, not
least the cost of rationalising existing capacity.
There appeared to be reasonable consensus about the cost
benefits that could be realised and returned to processing
companies and the farm gate.
Some leaders said the industry was unlikely to progress
without one or more international partners being attracted to
invest in the sector.
The parlous state of the wool sector was a key challenge to
sheep farmers' viability.
With the crash of wool volumes seen over the past six months,
achieving a turnaround became increasingly challenging, as
supply shortages were driving short-term market behaviours.
There had been much talk about red meat sector reform, yet
limited change in the past 12 months, and a key theme was
farmers having lost confidence.
However it was important to avoid generalisations, as there
were many industry participants who were delivering
''exceptional results'' from their businesses.
There was no quick fix to rebuild belief among farmers. It
required a shift in culture that needed to be driven by all
in the industry.
It was noted that some progress was being made to facilitate
cultural change, with initiatives like FarmIQ and the Red
Meat Profit Partnership being identified as ''important steps
in the right direction''.