Market-led scheme for red meat sector

Photo / Brett Phibbs

A consumer-focused meat industry initiative will boost annual exports by $2.3 billion by 2025, say its backers.

The programme plans to turn a production-led approach into one that was market-led and focused on responding to consumer needs.

Silver Fern Farms, PGG Wrightson, Landcorp Farming and the Government, through the Primary Growth Partnership, will fund the $151 million seven-year programme.

Silver Fern Farms chairman Eoin Garden said the current red meat industry model was broken.

"We know it's not working and it desperately needs fixing," Garden said.

A KPMG report this year painted a sobering picture of declining stock numbers, industry overcapacity, livestock value more influenced by currency than market, dysfunctionality through supply chain relationships, lack of farmer commitment and a procurement tension that distorted market signals, Garden said.

Research would be undertaken into what overseas consumers wanted in meat, including preferences for taste, colour and texture.

"And then we'll develop new ways for farmers to produce the exact meat that a specific market wants," he said.

State-owned Landcorp's operations included 61 sheep and beef farms and production in 2008/09 of 10,130 tonnes and 11,162 tonnes of sheep meat and beef respectively.

Chief executive Chris Kelly said: "I urge all New Zealand farmers to take note and come aboard."

Landcorp would commit a significant number of stock over time.

It was anticipated that by year seven about a third of sheep, beef and deer would be under the programme.

New Zealand Institute of Economic Research chief executive Jean-Pierre de Raad said models showed the programme would provide a $521 million net economic benefit over seven years.

By 2025 the plate-to-pasture model was projected to increase red meat industry export revenue from $4 billion to $6.3 billion a year.

Silver Fern Farms chief executive Keith Cooper said the market component of the project was "heavily weighted towards investing in what consumers wanted - getting into the hearts and minds of the consumer, understanding what's going to make them buy our product".

Information would go into a database, including consumer preferences, genetics and yield, and be fed back to farmers in real-time, he said.

The market value of products was expected to account for 31 per cent of benefits, with 13 per cent coming from gains at processing plants and 56 per cent from productivity gains on farms - a large part of which would come from animal genetics.

MORE MUSCLE
* $151 million collaboration focused on responding to consumer needs through an integrated value chain.
* Seven-year programme will be run as a joint venture through a new company, FarmIQ Systems.
* Projects include market analysis, genetics, a database, processing improvements and farm productivity.
* Models show net economic benefit of $521 million over seven years.