Optimism on meat progress

Sheep farming leaders sense that a group of meat companies are coming closer to announcing a decision on whether they can find a way to work together in reforming the red meat industry.

Federated Farmers president Bruce Wills said he felt talks were "imminent".

He said he would be surprised if farmers did not see some announcement in the next two to three weeks.

"We are going to have more in-depth industry discussions the next few weeks when the meat company proposal comes out.

"We hope that will be a positive.

"Farmers know the status quo is not a good place to be... and let's hope it leads to a more prosperous future for everybody in the meat industry."

Will said no-one had easy answers that would make the red-meat sector more efficient and prosperous.

The meat companies, believed to be Anzco, Affco, Silver Fern Farms and Alliance Group, have been in talks this year in reaction to volatile lamb prices.

Alliance Group chairman Owen Poole told farmers at a Feilding meeting run by the farmer-driven Meat Industry Excellence (MIE) group in April that the companies would be in a position in several months to decide whether to abandon or progress with discussions.

Earlier this month he said the companies were "progressing" in working through a complex issue.

Wills said the eventual response by the meat companies could include a proposal for transferable killing rights but there was unlikely to be a new concept.

"The problem has been around so long that there is nothing we haven't thought about how to sort it out."

The killing rights idea, first raised nearly 30 years ago, would involve an independent authority issuing companies rights to kill stock at the start of each season, based on the average kill in recent years. These rights could be traded depending on the needs of a company.

The theory is the rights would give each meat company certainty about how many animals it could kill in a year and assist with processing through supply highs and lows.

The rights would help them avoid paying too much for animals when there were worries about maintaining throughput.

The major hitch is that legislation would be needed to make it work.

Wills said killing rights would probably be useful for three to five years in delivering a more efficient industry and give some consolidation.

After this period the industry might be best to return to a competitive market with fewer companies and less processing capacity, he said.

Farmers and meat companies alike have come to the conclusion the industry cannot afford another season like 2012-13.

The drought on top of low lamb prices and losses made by meat companies had until recently shaken farmer confidence.

The Press