In light of dire predictions for the viability and economic sustainability of the red meat sector, the latest investigation to improve the performance of the $8 billion export earner cannot be allowed to become yet another doorstop.
The sector's history of failing to address its falling performance does not augur well for this latest report, the fifth to look at such issues in recent years, but this time the response must be different.
Time is running out.
The Red Meat Sector Strategy report, written by business consultants Deloitte and commissioned by Beef and Lamb New Zealand and the Meat Industry Association, was released last week and warns the sector has five years to retain its critical mass by improving its economic viability and sustainability.
Unlike previous reports, the Deloitte strategy is not prescriptive and does not apportion blame, rather it looks for improvement from all the participants.
All sectors were consulted in its preparation and, remarkably for such a competitive sector, there was consensus over its solutions, which include co-ordinating in-market behaviour, improving efficiency and aligning procurement and adopting best sector practice. In short, Deloitte is calling for more co-operation and less confrontation.
This report, however, faces the same challenge as did its predecessors: getting buy-in from the sector.
The red meat industry is characterised by strong, hard-nosed individuals justifiably proud of roots that can be traced back to the farmer co-operatives formed last century to break the monopoly of foreign-owned meat processors and exporters. That individualism still exists and works against the sector - in contrast to the dairy, kiwifruit, merino wool and apple and pear industries, which are united behind dominant grower-owned co-operatives.
Sheep, beef and deer farmers tend not to have the same loyalty to their processor as other producers. This means processors compete both for their raw material - buying livestock from farmers - and then with other exporters for market share: in the case of our largest market, the United Kingdom, that means with 19 other exporters.
Having in some cases paid above market rates for the raw material, processors and exporters then face having returns bid down by competition for customers.
Deloitte estimates that co-ordinating in-market behaviour, having more efficient and aligned procurement and using best-sector practice could boost earnings to the economy by $3.4 billion by 2025.
These gains will not only help the bottom line of farmers, processors, exporters and the Government, but also address the erosion of the sector as farmers, exasperated by its boom-and-bust economic cycles, replace sheep and cattle with dairy cows and trees.
The sheep flock has halved in 20 years and the lamb kill has fallen from 25.4 million in 2005-06 to an expected 19.3 million this year. Despite farmers enjoying record lamb returns this season, some are still exiting because they lack confidence.
Deloitte's report reinforces solutions outlined in studies by KPMG and the Ministry of Agriculture and Forestry, but this effort must not go the way of others and end up gathering dust.
Given the strategy reflects the collective views of industry participants, it could be concluded that it has wide-ranging support. The issue is whether that support has substance and leads to a change in behaviour across the sector.
This is where an independent monitoring system is needed, similar to Fonterra's Shareholder's Council, which each year reports independently on the performance of the dairy co-operative.
Farmers ultimately will dictate which companies survive by where they direct their livestock, but to do that objectively, and to ensure our second largest export industry has a future, they need impartial information on how the various participants have performed.
The Deloitte report sends a sobering warning that on current trends the red-meat sector could lose its critical mass within five years as customers switch off lamb, in particular, because they cannot source it.
Action is needed now and, with high prices being paid for lamb, the time is right to start changing behaviour and performance. The reality is the industry will continue to shrink if our red-meat farmers keep on doing what they have always done.
