Survey due back by Monday

Jeanette Maxwell.
Jeanette Maxwell.
Federated Farmers members have less than a week left to complete a survey regarding reform options for New Zealand's red meat industry.

Last month, the rural lobby organisation's meat and fibre executive produced a discussion paper to help stimulate informed debate in the industry.

Members were asked to complete a survey by January 13 so the executive could write its strategy, where reform would be central, chairwoman Jeanette Maxwell said.

The paper's executive summary said the industry faced an uncertain future, through a lack of long-term profitability at both the production and processing levels.

The industry was fragmented, the structure and behaviour of participants had allowed for competition throughout the supply chain and a lack of investment along the value chain, while processing over-capacity continued to plague the industry.

While the paper advanced three broad options, the solutions within each were more like a ''pick and mix'', Mrs Maxwell said.

She expected the processor-focused options, which included the merger of Alliance Group and Silver Fern Farms, to generate much discussion.

A possible merger was ''much easier said than done'' and if the thinking was ''just copy Fonterra'', it would not succeed. To work, any merger needed a reassessment of the entire industry but especially its capital structures, she said.

The paper said the points to consider regarding a merger were the variation in supply between sheep and beef and dairy, differences in product firm, the market type targeted (commodity or value added), ownership structure and control, variation in co-operative investment levels and the share structure of the co-operatives.

Tradeable processing rights, which involved the allocation of processing rights based on current market share, was similar in concept to quota management in fisheries.

While it would need legislation and there were some ''fish hooks'', it could help reduce overcapacity, she said.

The option of toll processing, which separated out processing and marketing, was also raised, along with a new concept called total value transparency, which was a way to improve co-ordination, collaboration and in-market behaviour while generating value and demonstrating where that value was being added, she said.

Behaviour-focused options looked at supplier behaviour and the relationships they had with processors and marketing companies. It explored the role stock agents could have in adding value, the impact of variation between the committed and spot market price and how behaviour change could shift focus from procurement to the market.

Marketing-focused options looked at things being discussed in the industry, from the WTO-unfriendly single-desk model to more realistic in-market collaboration by exporters.

Being marketing focused could include multiple marketing companies involving strong producer and customer/consumer relationships. That option depended on toll processing.

A twist on market collaboration was for a transtasman approach, where Australia and New Zealand would unite to achieve greater scale while improving research investment and market development, Mrs Maxwell said.

''Going larger still, we could see an alignment between the northern and southern hemispheres, to match seasonality of supply.''

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