A proposed radical shake-up of the meat industry could create one of New Zealand's biggest companies.
Southland-based meat processor Alliance Group yesterday proposed creating a single industry entity to manage 80 per cent of New Zealand's livestock from farm to market.
The meat processing and export industry is
made up of large operators such as Alliance and Dunedin-based PPCS with other smaller operators.
The new group would have turnover of about $5 billion, putting it firmly in an exclusive club of billion-dollar businesses including Fonterra, Fletcher Building and Telecom.
Alliance chairman Owen Poole said low returns in recent years were threatening the viability of suppliers.
"While the concept is bold and radical, no other initiative considered to date has the potential to deliver the level of increased returns as quickly, or sustainably, while providing a new platform towards a brighter future," Mr Poole said.
Many sheep farmers face a third season of cash losses, with animals selling for less than production costs.
The concept would lift farm returns by about $400 million a year and deliver short-term gains of about $15 a lamb from market cohesion, reduced overheads and by removing excess processing capacity, Mr Poole said.
Farmer co-operative Alliance will discuss the concept with shareholders before talking to the wider industry.
However, processing rival PPCS gave the idea early backing.
Chairman Reese Hart encouraged the industry to consider the concept in time to provide clear direction within the next few months.
"What's the point of waiting around for another whole season before we can get it in place?" he said. "If we're going to do it, let's do it."
The two companies account for about 59 per cent of sheep-meat, 37 per cent of beef and 78 per cent of venison national exports.
Meat & Wool New Zealand chairman Mike Petersen said the industry would look favourably at the concept.
"If we see lots of farmers getting behind this proposal then it'll be very hard for companies to stay outside."
The creation of the new entity would need legislative assistance from the Government. Agriculture Minister Jim Anderton said he had noted the proposal with interest.
"There is clearly some over-capacity, so there is an element of procurement competition that could go on until the last man is standing."
