Not one, but two players mooted

A meat industry leader is advocating the creation of two dominant processing and marketing companies that would compete in New Zealand but co-operate in selected markets.

• Optimism about price of lamb 

Anzco Foods chairman Graeme Harrison told a recent New Zealand Institute of Primary Industry Management conference in Queenstown that he would like to see the industry dominated by two large players, one publicly listed and the other a farmer-owned co-operative.

He said the two companies would have the scale to globalise their business but go head-to-head in competition for stock and market share.

They would also co-operate in supplying selected markets but leave room for small niche operators.

Mr Harrison's alternative suggestion comes after a failed proposal to merge 80% of the processing and marketing industry into one entity, the so-called meat mega merger.

He said his proposal would give choice to farmers, allowing them to invest in either a publicly listed or co-operative company.

It would not require legislation to get around the Commerce Act or the Meat Board administered sheep meat and beef allocation quota system, he said.

The two models would reduce reliance on a single board and management team, as would have been the case with a mega merger.

Mr Harrison said the legislative changes required for the proposed merger had been significant, and he believed the European Commission would have had serious concerns about the loss the competition, an issue he said was not given enough consideration during the merger debate.

Companies could not "gouge" their customers to drive up the price, as some farmers seemed to think could happen.

Lamb was an expensive product and had to fight for shelf space and exporters had to work with their customers.

He believed lamb prices would improve in the coming seasons.

One area in particular where Mr Harrison would like to see the industry unite was inresearch and development, where more work and investment were needed but the cost was beyond many companies.

Blue Sky Meats director Graeme Cooney told the conference there had been too much discussion and debate about industry structure and not enough about strategy.

"All discussion should be about strategy. If that requires a change in structure, then that is a secondary step."

Blue Sky let farmers, within reason, choose the grade of lamb, dates of supply and specifications they could supply which suited the farm and its climate.

The company handles between 900,000 and one million lambs a year, with three people handling procurement.

Mr Cooney said the industry could take steps to improve viability, such as plants processing stock for each other to reduce stock transport costs.

It was vital New Zealand's lamb industry remained focused on producing naturally reared animals, he said.