Talk has it that Silver Fern Farms and Alliance Group - the two companies responsible for more than half the New Zealand meat industry - feud like the Hatfields and McCoys.
Not so, according to Dunedin-based Silver Fern its southern competitor.
Sure, there is competition between them for stock at the farm gate but contrary to popular belief, it's not an antagonistic relationship.
"That's a misnomer," Silver Fern Farms chief executive Keith Cooper says. "We have our joint ventures with them and we are on various industry groups together," he says.
"There is no animosity, but there is a perception of animosity because we are two competing co-operatives.
"We have a lot in common and we collaborate from time to time on opportunities as they arise," Cooper says.
Alliance chairman Murray Taggart feels the same way.
"Clearly, we compete pretty intensely at the farm gate with all the other players, but there are a whole lot of other issues where the companies have to cooperate - otherwise you just can't function," he says.
"To suggest that we don't talk to each other or walk to the other side of the street when we see each other coming is absolute nonsense," Taggart says.
"I guess it might sell some farming newspapers but it's not actually the truth."
Cooper, Taggart and their farmer-member suppliers throughout the country have reason to smile these days.
After a grim 2012 and 2013, sheep and beef prices are up and are forecast to stay firm, thanks in no small part to the emergence of China as a major customer.
Meat company profitability is also looking much better.
Silver Fern - the country's biggest meat processor - last year suffered a $28.6 million loss and a $31.1m loss the year earlier due mostly to a collapse in the price of sheepmeat.
Now that prices have turned around, Cooper expects Silver Fern to return to profitability in the current financial year, which ends in September.
Alliance's Taggart also expects a good year. Alliance reported an operating profit of $10.9 million for the September year, after suffering a $57 million loss the previous year.
At the smaller end, Invercargill-based Blue Sky Meats has returned to profit - $1.94m in the March year - compared with a loss of $3.88 million in the previous financial year.
There are 16 companies with 36 plants processing lamb and adult sheep and the standard argument holds that there are too many companies and too many plants competing for declining levels of stock.
Overcapitalisation, stock procurement wars, land use competition from dairying and often fragmented marketing attempts abroad still hamper the sector.
It's an industry with many moving parts and one that does not compare easily with dairy, but two sectors are nevertheless held side-by-side when it comes to performance, particularly when Fonterra does well.
Calls for reform are often at their loudest when dairy and meat lose their historical price relativity and the gap between them widens, as happened last year with Fonterra's record farmgate milk price. Now that dairy prices have fallen sharply and meat prices have risen, the sectors are more in sync and the debate has gone quiet.
Meat processors face a high level of investment in fixed assets and have a lot of people working in their plants. That means it can cost a company more to close a plant than it to keep in running, so companies, particularly if they are strapped for cash, will opt for the latter course of action.
Meat Industry Excellence (MIE), a group formed to improve the performance of the meat industry, was successful it getting representation on the Alliance and Silver Fern boards last year.
Beef and Lamb New Zealand is working with MIE on a project plan and early this year, farmers supported a remit from MIE seeking funding from Beef and Lamb its work.
But Federated Farmers meat and fibre chairman Rick Powdrell says that, in the public domain at least, it would appear that calls for industry reform have fallen quiet.
"Farmers are more optimistic but it's not a reason to stand back and do nothing with the structure of the industry," he says.
The emergence of China as New Zealand's biggest market for meat has brought profound change but industry participants fear the good prices and strong demand from the PRC could serve to paper over the cracks over what has long been a dysfunctional industry.
"The positivity and the price increases that we have seen have not been of our doing," says Cooper.
"They have been market forces' doing, so I think that it still exposes the soft underbelly of the industry that we have not addressed," he says.
The fundamental issue is that there are a large number of players competing for livestock and who merely take product to market as opposed to creating value in that market.
"We still have the same meat industry conundrum. We are doing the same old thing. This year we had a good outcome but equally, in another year we could have a negative outcome because we are doing it the same way under the same structure," he says.
Over the last five years, there has been a huge swing in the global meat trade from west to east.
Taggart, who is just back from a Meat Industry Association trip to China, says the impact Chinese have made has been enormous. "And it hasn't finished yet," he says.
"Those traditional markets have not been carrying the day like they used to, and we have seen this huge swing from the west to the east in terms of where the focus is and where the opportunities lie," Taggart says.
With China also lies a problem that all other Nee Zealand food exporters face: How much is too much?
"As company, we are putting lot of emphasis on trying to develop other emerging markets, particularly in Brazil, India and Russia," Taggart says.
"The Middle East is still very strong for us and we need to nurture those markets to ensure that we are not hung out to dry by a glitch in China.
"You only have to have a food safety type issue and you could be very vulnerable if too much production goes to one market," he says.
More broadly, Cooper says higher prices given confidence in the whole sector a big boost but that the shine has been taken off it by a still strong New Zealand dollar.
But he says an unfortunate byproduct of the latest upsurge has been been the will for industry reform has dimmed somewhat.
In the big picture, the issues of overcapacity and competition for stock still overhang the industry and nobody has yet to come up with a solution.
"There is no pan-industry thinking and there does not seem to be any pan-industry resolve that there is a problem to be fixed," Cooper says.
"Nothing has changed - strategically or structurally - in the last 12 months.
"We've got better prices, and that's the function of market demand forcing prices up, not because New Zealand has done anything value-creating," Cooper says.
"Notwithstanding the currency, we have seen significant improvements in the market value for lamb and beef product values which has flowed through to farmers, particularly for sheepmeat," Cooper says.
"It's a China-centric story. It does raise the issue of what happens in China if China doesn't buy - well then we are back to those traditional commodity-style priced markets," Cooper says.
"As an industry, we still haven't done anything about creating stability of value in the market for our products."
- By Jamie Gray, APNZ business reporter
