Stock agent fees under scrutiny by farmers

The red meat sector is worth more than $7 billion a year to New Zealand but some farmers are struggling. Photo / Christine Cornege

The writing is on the wall for livestock agents with a new initiative for the red meat sector, says Deloitte partner Alasdair MacLeod.

MacLeod is leading a team putting together a red meat sector strategy on behalf of Beef and Lamb New Zealand, Meat Industry Association, Ministry of Agriculture and Forestry and New Zealand Trade and Enterprise.

After four months of information gathering and analysis, a round of consultation meetings to discuss the preliminary findings with farmers will start on Monday.

Areas identified as offering opportunities for immediate improvement included in-market behaviour of exporters, the stock procurement process and the adoption of best practice across the sector.

"In that stock procurement area we've also identified from feedback ... the costs imposed on the industry by the stock agent part of the sector appear to be very significantly greater than the benefits that accrue from their involvement," MacLeod said.

Some farmers who used stock agents had been astonished when calculating how much they were paying in fees each year.

"In the discussions that we've had with a number of them [stock agents] the really smart ones have known for some time that the writing is on the wall," he said.

"The really good ones will I believe continue to play an important role in the sector but there's scope for improvement."

The red meat sector was worth more than $7 billion a year to New Zealand.

There were outstanding performers across the sector, which had improved its productivity during the past 10 years, but a large number of farmers were struggling.

"While it's viable, the returns are currently not enough to hold at bay competing land use at the margins," MacLeod said.

"There is a need to lift the collective game and there is a determination across the whole sector to do that."

Meat Industry Association chairman Bill Falconer said there were precedents for collaborative work in markets.

"I don't think that we should be looking to the strategy to prescribe what companies should do in a particular market," Falconer said. "I think what it will do is lay out the logic of collaborative action."

Beef and Lamb New Zealand chairman Mike Petersen said good prices did not mean there were not opportunities for improvement.

"This is not meant to be a criticism," Petersen said. "This is meant to be looking at opportunities for improvement and we've all got a part to play in that."

The meetings will start in Gore and finish on February 14, with MacLeod aiming to complete the report by March. Phase two would look at big new opportunities once the sector was stable.

Federated Farmers Fibre chairman Bruce Wills said: "Farmers are at a stage that they know something's got to change, they're ready to grasp this and ready to do something different."