Money being put back into meat sector

Red meat is regaining a starring role. Photo by Stephen Jaquiery.
Red meat is regaining a starring role. Photo by Stephen Jaquiery.
The red-meat sector is showing signs of putting decades of low profits and lack of reinvestment behind it and regaining a starring role in the New Zealand economy.

The ANZ Privately-Owned Business Barometer surveyed 779 farmers, including red-meat farmers and discussion groups, and found most participants were planning investment in their farms to increase productivity and take advantage of rising global demand for protein.

ANZ commercial and agribusiness managing director Graham Turley said over the past two decades, red-meat farmers had not enjoyed the same stellar gains as dairy farmers due to decreasing real prices, rising costs, lack of reinvestment and industry structure that did not encourage collaboration or economies of scale.

''The survey found the sector was confident conditions were right to regain some of the lost momentum and play a bigger role in the New Zealand economy.''

Farmers spoken to had active strategies in place to take advantage of rising global demand for protein and advances in agronomy and genetics to increase production, he said.

Structural issues within the industry remained unresolved, but many farmers had an expectation solutions were emerging that would lead to better integrated supply chains.

Looking ahead, it was likely red meat would see faster productivity gains than dairy, Mr Turley said.

Many operations were already achieving outstanding results in excess of averages. The top 20% of farmers were achieving productivity of about four times more than the average, irrespective of land class and location.

''They rightly have the confidence to reinvest profits to lift productivity and generate long-term wealth.''

At a glance

Sixty-five percent of red-meat farmers plan to increase production in next three to five years. Of those:
• 84% plan to invest in pasture.
• 69% plan to invest in animal genetics.
• 53% see benefit in getting expert help in improving farm productivity.
• 63% say succession is about passing the farm to family or whanau.
• 34% say purchaser ability to finance a deal is the key barrier to succession.

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