Invercargill meat company Alliance Group will seek a shareholder mandate to initiate the restructuring of the meat industry along similar lines to the dairy sector.
New chairman Owen Poole said if shareholders approve, Alliance would lead discussions to create a $5 billion a year meat super group, locking up the procuring, processing and marketing of 80% of New Zealand's sheepmeat, beef and venison exports.
Mr Poole said such a company would in the short term lift onfarm returns by $400 million a year, or $15 a lamb.
The high-level document is short on detail, but Mr Poole said a mega-meat company would address many of the issues that had created a crisis of confidence among farmers and successive poor financial performances by meat companies.
To succeed, Mr Poole said, the new entity needed to be bigger than what was possible from a merger of the two large cooperatives Alliance and PPCS, a proposal Alliance rejected last September.
The benefits of a super group were similar to those promoted by advocates of the 2001 creation of Fonterra.
He said it required scale to make the entity commercially viable, provide market cohesion, reduce overheads and remove excess processing capacity.
It would also benefit from having a secure and focused marketing platform, improved product mix, ability to invest in market research, branding and consumer awareness, better yields and adoption of best practice, consolidation of ancillary operations, improved buying power, and as well, co-ordinated research and development.
The release of the vision was a change in attitude by Alliance which, as late as last November, was saying the company was addressing many of the industry's problems by itself.
Chief executive Grant Cuff said in an interview Alliance had not had a change in attitude, but the vision had been developed over many years and that its time had come.
‘‘Finally, in the last couple of months we believe for a whole lot of reasons, that the timing for the proposal is right.''
The reasons for not merging with PPCS remained, he said, including the Dunedin company's debt loading and the small size of the merge identity. The timing was right to promote a super group.
Affco and PPCS both recorded significant losses in the past financial year and Alliance posted a sharply reduced profit, while sheep farmers were leaving the industry in droves, with 360 sheep and beef farms nationally converting to dairying by 2010.
Farmers were looking for fresh thinking and innovative ideas to address the perilous state of their industry to improve the viability of producing prime lamb and address concerns about the way NZ lamb was marketed.
The industry was also grappling with excess processing capacity, falling sheep numbers - with the number of in-lamb ewes in the coming year expected to fall 3.6% to 25.6 million - and rising costs.
Mr Cuff said if shareholders gave their approval, Alliance would then speak to other companies, banks and the Government about any legislation assistance. The creation of Fonterra required special law because the merger did not meet Commerce Commission criteria.
Mr Poole intends meeting shareholders from next week.