Lamb suppliers look into Uruguay back-up

The country's two largest meat companies are investigating sourcing lamb from Uruguay to supply their markets outside the New Zealand lamb season.

Silver Fern Farms management visited the South American country about three months ago and Alliance officials were there recently, with company representatives understood to have met Uruguayan farming leaders.

However, it appears the two southern South Island co-operatives were working independently on the project, potentially adding further to meat industry fragmentation and competition.

With New Zealand sheep numbers falling 9.9% and 3.4% respectively in the past two years and markets demanding year-round supply of chilled lamb, companies have had to start looking elsewhere for supplies.

It is understood Silver Fern Farms (SFF) was looking at forming alliances with Uruguayan farmers rather than following the model of New Zealand dairy investor New Zealand Farming Systems Uruguay (NZFSU), which has bought 20 farms and was converting them to New Zealand-style dairy farms.

Neither SFF chief executive Keith Cooper nor Alliance chief executive Grant Cuff were available yesterday, but Alliance has previously commented publicly that it was looking for complementary lamb supply from South America.

Meat and Wool New Zealand chairman Mike Petersen applauded the initiative, saying food-producing companies needed to look globally, as Fonterra and Zespri had.

His two reservations were that SFF and Alliance did not ignore their core New Zealand business, and that systems and structures were in place to ensure the quality of South American lamb was high.

"Any company doing this must make sure there is integrity with the supply chain.

"I'd imagine they'll be looking at different branding so that if an issue did pop up, it did not taint the New Zealand brand or New Zealand's position."

Uruguay's prime lamb production was a fraction of New Zealand's, with media reports that about a million lambs were slaughtered a year, compared with about 20 million in the past New Zealand season.

But, Mr Petersen said, like NZFSU, SFF and Alliance must have seen potential for the Uruguayan lamb industry to grow by utilising suitable land and low cost structures.

Mr Petersen said New Zealand's inability to supply out-of-season meat was also impacting on beef, with some Asian markets wanting it all year but New Zealand companies being unable to supply it.