KEY POINTS:
Up to five New Zealand meat processing plants may close in the next few years with the loss of thousands of jobs, as falling sheep and beef numbers force the industry into another round of restructuring.
Sources believe up to three sheep processing plants may have to close
in the South Island and two beef and sheep plants in the North Island. Others speculate more plants may close in the North Island than in the south.
The chairmen of the country's two largest meat co-operatives, PPCS and Alliance Group, agree there will be consolidation as farmers react to low meat returns by changing land use. However they will not be drawn on which plants may close.
They also say it's an industry issue and it should not be left to co-operatives to carry the burden.
"Consolidation will happen eventually. There will be rationalisation and all companies have to be involved," PPCS chairman Reese Hart said.
He said the south of the South Island was "a big worry" because of changing land use from sheep to dairy cows, but said the shift was gradual and nothing would happen for a couple of seasons.
"It eventually will catch up,"
Meat and Wool New Zealand says 300,000 fewer lambs will be available for processing in Otago and Southland this year as against last year.
The Ministry of Agriculture and Fisheries expects 200 sheep and beef farms to convert to dairying in the next two years, with most of those in Southland and Canterbury.
Acting Alliance Group chairman David Mackenzie said drought had decimated sheep numbers on the North Island's East Coast where there was excess processing capacity, but the poor end of year financial results reported by most meat companies could also force them to act.
"I think rationalisation is needed in the North Island," he said.
Last year PPCS closed a lamb skin plant in South Otago and a deer processing plant in the Waikato, but the last sizeable works to close was in Marlborough, also a PPCS plant, about seven years ago.
Both chairmen see more co-ordinated marketing as the quickest way to turn the industry's fortunes around, plus scoping of potential in emerging markets such as China and India.
Mackenzie said while the structure of the industry needed addressing, immediate gains for farmers would come from working co-operatively in markets.
"It's a good plan to start at that end. It is where we can get immediate gains," he said.
Hart added that companies also had to develop new products to remain relevant to younger consumers, such as an alternative to the traditional lamb leg roast.
He would also like to see greater co-operation between companies in research and development, as all companies sought new technology.
VANISHING STOCK
How our sheep flock has shrunk:
1960: Total sheep 50.2 million, including 34.7 million lambs.
1973: Total sheep 56.7m, including 37.3m lambs.
1983: Total sheep 70.2m, including 50m lambs.
1993: Total sheep 50.3m, including 36.2m lambs.
2003: Total sheep 39.5m, including 31.8m lambs.
2007 (forecast): Total sheep 39.1m, including 32.3m lambs.
- OTAGO DAILY TIMES
