Meat industry report deserves a hearing

Meat Industry Excellence Groups report serves up a positive outlook.

Have you read the Meat Industry Excellence Groups (MIE) report, Pathways to Long-Term Sustainability?

This group of hard-working, dedicated and passionate farmers, has put a great deal of effort and personal sacrifice in to driving the belief the New Zealand red meat industry can, through a united approach, move to a stronger position for all participants.

Through the life span of MIE, not everybody has agreed with all of their suggestions. This should not surprise us. The meat industry is a complex beast with wide and varied perspectives. The thing to admire is they have not wavered against their critics in their determination to have industry change.

For me, the exciting highlight in the report is they have put their figure on the size of the prize if the suggestions in the report were to be adopted.

MIE was first to admit we will not all agree on the numbers presented. But as many people who have been through significant industry change have said, you have to have some idea of the end reward.

I hope all those in governance and management of processing companies, agents and farmers will read this report, starting with a positive mindset, even though we will see some things differently.

For this report to be of more value to many produced in the past, we all need to identify what concepts we could accept and then compare with others to identify common ground that may be progressed.

So what were the positives for me? Obviously the previously mentioned identifying the size of the prize. This has always been a cornerstone starting point for industry change in my view.

Industry participants need to ask themselves whether the status quo can achieve anywhere near the identified prize, or what have we to lose if we go after the prize, even if it is only a certain portion of that stated in the report.

One of the key areas of much debate is the industry capacity. This is far more than just bricks, mortar and steel.

The labour force is a huge part of this discussion, even during this latest drought not all capacity is being used, as a shortage of skilled staff means companies have to weigh up the high costs of training against productive output.

The nature of the killing season, particularly in the South Island, has and will continue to make managing the labour force awkward.

The report has suggested various rationalisation proposals, very much tied to how stock is procured from farmers. This encompasses some significant blue sky thinking. I personally do not agree with the proposed final plant coverage, as I see some areas that would be required to truck stock long distances, particularly concerning to me when I think of bobby calves and milk lambs.

Who procures stock and how is always an interesting discussion. Companies use an array of different models. Some have their own agents, others use a third party, or combinations of both, plus other variations.

In this space, there will be much debate, often this area of procurement is over-simplified without the actual wishes of farmers and companies considered.

Much of the discussion around procurement in the report focuses on reducing the stock trucking miles. In my view, if this is to be achieved it would require some level of toll processing. This is not an unknown concept, as other industries, one notably being kiwifruit, have successful toll processing companies, with the competition driving highly efficient businesses.

Toll processing then naturally leads the debate to marketing models. When reading this section of the report, I found myself asking questions around how international trade law might play out with various marketing options and also what commerce commission implications might arise in any industry rationalisation.

I can accept the report did not venture in to those two areas, along with any possible government legislation. These matters would be addressed, as any rationalisation proposals progressed, with much work having to be carried out before they became factors.

One area I totally align with MIE is over-commitment to supply. If we could have all stock committed on an annual basis, companies would know their expected annual throughput, subject to seasonal variance, and then be able to contract to both farmers and markets.

So where to from here? Please read the report, have a positive approach and then share your views.

For this industry to make any monumental changes, all participants will need to be on board, whether a large rationalisation or progressive smaller steps to something bigger.