Market diversification is essential for the future of New Zealand's meat exports, Alliance Group chief executive Grant Cuff says.
Speaking at a meeting of shareholders and suppliers in Oamaru this month as part of the company's ''roadshow'', Mr Cuff said ''everyone's doing a bit much to China''.
''The traditional markets are still really good. They're getting less product but paying more for it.''
Alliance was ''starting to get premiums'' for its goods, where customers could see there were few steps between the farmer and the end product.
''Customers want shorter supply chains, fewer places where products can get adulterated.''
Reliability of supply and quality outweighed cost savings, he said.
Alliance was working with Quality NZ, a company run by Kiwi cricketers with a high profile in India. They are promoting top-end lamb, fish and fruit there, including getting Alliance products into a chain of six-star hotels.
Mr Cuff addressed misconceptions about lamb prices. Sheep farmers' returns were ''growing at least at the rate of milk solids'', he said.
Many people believed that if everyone in the sheepmeat sector held hands and marketed together, everything would be fixed. But Australia exported more mutton than New Zealand and had ''much cheaper raw material''.
''There are genuine and big competitors in most of the world.''
Markets for lambs were better spread around the world than in the past, Mr Cuff said.
''They will get better as they increase in Brazil and India.''
However, mutton was ''not so good''. China was dominant and would continue to be the single largest market.
With beef, the United States prices would have ''a really, really big effect''. Low herd numbers were driving prices upwards.
''New Zealand will use up all its US beef quota for the first time in 30 years.''
Developments in Inner Mongolia would be felt, too. Local government was building huge, efficient new meat-processing facilities and giving interest-free loans to farmer suppliers. Other abattoirs would close down, leaving just the top new ones.
''They're doing it quickly and in big steps - it does affect us.''
Alliance Group chairman Murray Taggart was confident the company would be able to make a profit rebate.
Processing capacity was ''the elephant in the room''.
''For the industry overall, there's significant overcapacity.''
There were only two ways the industry structure would change: through legislation, which was ''unlikely'', or with cash - the ''commercial solution'', he said.
''That will happen. It will restructure when it makes good commercial sense. Despite all the rhetoric and chest-beatings in the media, no-one has come up with a viable alternative.''
Alliance was making strategic plans for where it wanted to be in 2030, Mr Taggart said. The ''real gains or opportunities'' would be in the marketplace and in research and development.
''There's going to be a slight shift in emphasis. We have been on the low-hanging fruit until now.''
There was greater risk in Alliance's new direction, and it would not pay off quickly, he said.
BY SALLY BROOKER