KEY POINTS:
Federated Farmers' meat and wool lobby yesterday launched a campaign to set a goal of $150 per lamb earnings from the sheepmeat and wool sectors over the next five years.
The call for earnings nearly three times the current levels was made by the federation's meat and fibre chairman, Bruce Wills, who said the downward spiral of the sector's earnings was "potentially terminal".
"For several years now sheep farmers have been getting inadequate returns on their efforts and capital," he said at Stortford Lodge stockyards in Hastings. Typically, they received only 20 per cent of the retail price of the meat.
The average lamb price received by farmers over the past three years was only $55 per lamb, and the average sheep farmer's income was $19,400 last year.
"This has resulted in many sheep farmers leaving the industry," Wills said. "The targeted return should be at least $150 to restore viability to the sector".
The $150 was "tangible, inspirational and achievable".
Federated Farmers "wants all those involved in the lamb supply chain, from the paddock to the plate, from our farmer members to processors, researchers, marketers, transporters and supermarkets to lift their sights".
Partly as a result of big changes in land use - such as the widespread migration to dairying in the wake of the average Fonterra farmer getting a payout of $900,000 last season - sheep numbers are dropping from around 40 million in 2006 to just 34 million.
"Poor returns have had a flow-on impact in New Zealand's towns and cities," said Wills, who noted job losses at freezing works. "Lamb exports contribute over $2 billion per annum to the New Zealand economy and it is of grave concern to the country that such an important industry is in crisis," he said.
"This downward spiral is potentially terminal and will continue if the value farmers receive for their lambs stays at current low levels," he said.
"To continue to have viable sheep-meat and wool industries, to preserve the tens of thousands of downstream jobs many communities rely upon and to maintain major overseas earnings for New Zealand, it is essential that farmers get more for their stock".
There has been a robust debate over the need for rationalisation of exporters, but moves by some farmers and lobbyists to force the Alliance Group and Silver Fern Farms companies to merge their red meat exports and create greater critical mass have been stymied.
Instead, a big rural services company, PGG Wrightson, is investing more than $200 million in Silver Fern, to pay off debt and to modernise its remaining meatworks.
Wrightson has called for Silver Fern to base its production around the specifications of key overseas customers, and has offered to provide farmers with animal and plant genetics to meet those specifications, with farmers contracting in advance to supply the animals.
Wills said the $150 campaign could provide a clear target for the industry over the next five years. "We see much of this extra value coming from efficiencies and rationalisation within the supply chain," Wills said.
Like Wrightson, he called for farmers to commit to supply contracts with meat processors and to spread the selling season.
"A recognised target will give farmers a context within which to make decisions about how they farm and a focus on future changes to industry structure," he said. Industry players proposing change should ask: "How will this initiative help reach the $150 lamb target?"
- NZPA
