Meat board seeks strategy to boost profit

Meat companies and industry board Beef and Lamb New Zealand say they are developing an "overarching strategy'' to improve profitability in the sector.

The concept was championed by Meat and Wool New Zealand - before it lost the farmer mandate for wool levies and re-branded itself as Beef and Lamb - during last year's referendum debate on meat and wool levies, when farmers expressed frustration at volatile and marginal profitability.

Beef and Lamb chairman Mike Petersen said the board, which represents both farmers and companies, was delighted that processors and exporters in the Meat Industry Association (MIA) were prepared to work alongside farmers in identifying opportunities for major improvement.

The bodies have agreed with the Government's Trade and Enterprise arm and the Ministry of Agriculture and Forestry (MAF) on terms of reference and funding for the first phase of a two-stage strategy process.

The overarching study of the issues and opportunities across the $5.8 billion sector from market to farm is expected the throw up a number of "quick-wins'' where gains can be made relatively soon.

MIA chairman Bill Falconer expects this first phase to be complete in the first quarter of next year.

In the second phase "willing industry participants'' will collaborate to adopt and implement initiatives to drive change, and these may include research and innovation, market development or whole-of-supply-chain initiatives.

The development process will be aided by Deloitte accountancy firm partner Alasdair MacLeod.

Agriculture Minister David Carter said a joint strategy was exactly the action needed.

"Greater co-operation is critical for the meat industry to lift its game,'' he said.

"Status quo for the industry is unacceptable, but there has been a frustrating lack of action. This must change.''

New Zealand farmers were getting record high prices for their meat in Britain, yet the industry was struggling, he said.

Separate efforts in the industry aimed at restructuring the export companies sending more than 90 percent of lamb and over 80 percent of beef overseas have so far failed, including those to seek collaboration in exports by Alliance Group and Silver Fern Farms, and for Silver Fern Farms to merge with PGG Wrightson.

Federated Farmers' meat and wool chairman Bruce Wills last year warned that "growth rather than managed decline'' was needed, especially for lamb and mutton.

A Ministry of Agriculture and Forestry (MAF) foresight report, Meat: The Future, last year said meat companies could require a Fonterra-style share structure to boost investment, and overcome constraints on capital.

The report implied structural and seasonal overcapacity could be countered by more industry consolidation, but said there was little appetite for big changes, despite international competition, environmental concerns, lack of marketing focus, and domination by large retailers.