Reforming role for Federated Farmers

Keith Cooper
Keith Cooper
Federated Farmers has been asked to help drive changes in the structure of the meat industry in the absence of anyone else able to do the job.

Silver Fern Farms chief executive Keith Cooper told the federation's annual meeting in Invercargill last week his company had tried to make a difference.

Meat and Wool New Zealand did not have the mandate and while the Meat Industry Action Group had tried, it was disorganised and had no strategy or structure.

"Federated Farmers, in my view, does have a role and an opportunity to step up to the plate and convince farmers to take a long-term view of the future."

That future, Mr Cooper said, involved marketing and branding lamb, as opposed to what he called simply selling with a logo on a bag.

His approach required finding out what consumers wanted and linking that back to farmers, but it also relied on farmers understanding meat company business strategies and supporting those that would benefit the future of the industry.

That could involve the federation commissioning an independent analysis of marketing strategies and consumer behaviour on behalf of farmers.

"If you want the last man standing, then that's exactly the path we're going down," he said of the current state of the industry.

That view was supported by Lincoln University's Prof Caroline Saunders.

She said the path the industry was taking would lead to continued industry fragmentation, a broken supply chain and companies competing for markets and supply.

It was "unbelievable" the industry was in such a perilous state, given it had preferential access to Europe, the world's largest, most affluent sheep meat market, Prof Saunders said.

"The tragedy is that you have made huge achievements in technology and productivity - but how many of you are rich from it?" Mr Cooper said the company's target market was small, affluent households who paid more per kilogram for branded specialised cuts, which appealed to consumers on the grounds of health and wellbeing.

Food service would remain another key market, but the focus on commodity markets would fall off, although some cuts would always be sold as commodities.

Silver Fern Farms (SFF) was investing $60 million over seven years in conjunction with PGG Wrightson and Landcorp, developing an integrated supply chain with estimated provisional returns of $180 million a year, of which 90% would be returned to farmers.

The volume of New Zealand sheep meat sales to Europe had fallen from 4.3% of all meat sales in 1998, to 3% now, and the region would continue to diminish in significance as a market, Mr Cooper said.

There was a limit to how much more Europeans would pay for lamb, as it was now 2.5 times the average cost of other meat, evidence meat exporters were not selling it too cheaply, he said.

He urged farmers to em-brace new technology, saying that there was potential to earn an extra $32 a lamb.

Prof Saunders said New Zealand should not aspire to feed the world, but target high-paying markets.

However, supplying those markets meant satisfying consumer requirements concerning health and animal welfare, and while some issues should be fought over, consumer sentiment had to be considered, she said.

"If we want to stay a developed country, if we want a first-class healthcare service, we have to supply premium markets, not commodity markets."

Most of those requirements were simple and were already being met, but needed to be recorded and turned to our advantage, she said.

For example, protecting stands of native bush could be seen by consumers as environmental stewardship.

Employing a wildlife management plan would satisfy other concerns.

While tail docking could be seen as animal cruelty, the benefits of it could be explained.

Livestocks' carbon footprint accounted for 18% of greenhouse gas emissions, and could lead to criticism.

But Prof Saunders said that could be countered by highlighting the importance of animals to humans and also by putting it into perspective, for example, by comparing it with emissions generated by cheap flights.

She warned that in regard to carbon emissions, New Zealand should take into account the Australian wool industry's reaction to the attack on mulesing, which it chose to ignore but lost markets as a result.

Prof Saunders said there would be gains for the meat industry if there was change from the current policy of companies fighting at all levels of the sector.

She quoted comments by a Marks and Spencer meat buyer, who claimed he had had two New Zealand sellers in his office bidding each other down, and he had not had to say a word.

 

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