Boost for ailing meat industry

Promoters of a new business model for the ailing meat industry say it will transform the sector and boost the New Zealand economy by $521 million in the next seven years.

Meat company Silver Fern Farms, rural servicing company PGG Wrightson and state-owned enterprise farmer Landcorp yesterday announced a $151 million seven-year plate-to-pasture project they say will shift the meat industry from being production-led to market-led.

The project pools the skills and knowledge of Silver Fern Farms in meat processing and marketing, PGG Wrightson in farm technology and Landcorp in farm management, as well as data bases of animal genetics.

The sheep industry is in turmoil, and shrinking, with the Government promising to help with restructuring, should it be presented with a credible plan, as reported in the Otago Daily Times on Monday.

Silver Fern Farms (SFF) chief executive Keith Cooper said, at the launch of the new business model in Wellington yesterday, that the present industry model was centred around New Zealand, and designed to grow more meat for which a market would later be found.

The new plate-to-pasture proposal would fund research to first determine what meat consumers in various markets wanted, when and in what form; and the farmers and partners would then develop systems to deliver it.

This is market pull-through as opposed to production-push.

An economic analysis estimated the plan would grow the red-meat sector by $352 million by 2017.

Farmers will be paid more for supplying product for which consumers have said they will pay premium prices.

All the information gathered about consumer preference, processing, animal genetics, farm management, crops and pasture would be collated and made available to other farmers through field days and access to technology.

It will be managed by a new independent commercial company, FARM-IQ Systems, which will oversee seven main and 18 sub projects.

A third of sheep, beef and deer farmers will be involved in the programme within seven years, it is estimated.

Mr Cooper said other meat companies could also join the partnership, and one had already expressed an interest.

The basic ideas had come from the dairy industry, which pooled genetics, information and farm management systems for the benefit of all farmers, he said.

SFF chairman Eoin Garden described the project, which has received $60 million from the Government's Primary Growth Partnership, as potentially the biggest boost to farm incomes for sheep meat, beef and deer in many years.

He said the present red-meat industry model was broken and had only paid lip service to being market-led.

Mr Garden said on current trends the export value of red meat was projected to fall from $4 billion to $3.5 billion by 2025, but the new plate-to-pasture model was forecast to develop it to $6.3 billion over the same period.

Landcorp chief executive Chris Kelly said 90% of the company's revenue came from meat 15 years ago, but this year it would be 50%, despite a doubling in the number of animals farmed.

"I really think this [new] project is all about saving our dry stock industry," he said.

The director-general of the Ministry of Agriculture and Forestry, Murray Sherwin, said the industry was clearly struggling.

"This [new project] is pointing towards the sort of revolution we think is absolutely necessary," he said.

SFF integrated category manager Grant Howie said the plate-to-pasture programme should earn farms an extra $2.8 billion by 2025 compared with business as usual.

He estimated a third of those benefits would come from market gains, 13% from processing and over half from production benefits such as genetics, systems and farm improvements.

SFF will invest $68 million over seven years.

PGG Wrightson and Landcorp will share in the remaining $24 million contribution along with skills and advisory.

Asked for comment, Weston sheep and beef farmer Bob Allan wanted to know who would get the benefit and where was "Joe Bloggs producer" going to be better off.

The sheep industry was in "dire straits" and the only way it was going to be rejuvenated was by "dollars and cents" for the producer for his product.

If successful, it was estimated the programme would grow the red-meat sector by 50% by 2025, but Mr Allan said that was too far away.

"We've got to see a big improvement for the value of that lamb there [this season's lambs] for this killing season," Mr Allan, who has been farming for 45 years, said.

"This thing has got to be spelt out very clearly in dollars and cents, to whom, by when."

Millers Flat farmer Gray Pannett believed the move was positive.

While the wheel did not need to be reinvented, innovation and thought put into the process of the whole chain, from the farm gate to the end consumer, was needed.

"We need science. Farmers need science and the support of science," he said.