Candidates advocate sheepmeat 'Fonterra' setup
A farmer-owned meat industry co-operative with size and scale is the key to lifting sheep farmers' returns.
That's the view of Silver Fern Farms (SFF) board candidates Dan Jex-Blake and Richard Young, and Alliance Group board candidate Don Morrison.
The trio, who have stood down from the Meat Industry Excellence (MIE) executive to focus on the upcoming board elections, aired their concerns about the red-meat industry at a recent meeting in Heriot, West Otago.
Jex-Blake said the meat companies lacked vision.
"They are bereft of leadership. The only strategy they have is survival, not growth," he said.
Jex-Blake, who farms a 24,000 stock unit property near Gisborne, said the sheep industry could learn a lot from Fonterra about size and scale and being market-led.
"As a shareholder of SFF, not a lot of value is being created and support for the co-ops in the North Island is minimal."
Jex-Blake believed consolidation of livestock supply and processing would generate "millions of dollars a year". He was concerned that demand for lamb was heading north while supply was trending south.
"What we really need is mature and constructive discussion between the boards of the co-ops," he said.
Morrison, who farms 15,000 stock units at Waikaka Valley, said he was seeking a position on the board out of "sheer frustration" over diminishing returns.
His two sons were looking at pursuing different career paths because they could not see a future in sheep farming.
"That's a sad indictment of our industry, but we can't farm profitably with the prices we are getting," he said.
Morrison said Alliance was a a strong company but it was underperforming because of its structure.
"We need a strong, robust co-op that rewards shareholders."
MIE advisor Ross Hyland spoke on behalf of independent Alliance candidate John Monaghan, who was unable to attend the Heriot meeting. He said the sheep industry was in the same position dairy farming was 14 years ago.
"We're struggling for profit and credibility. Sheep farmers used to be the pillar of the country but there's been a complete reversal," he said.
Hyland believed the sheep industry should aspire to a model like Fonterra, whose farmers were the best paid in the world.
Young, who recently stepped down as chairman of MIE, said any consolidation must be based around the co-operative principles.
"We need a structure with size and scale and to bring the two co-ops together. And we need to stop looking at the costs involved and identify the prize," he said.
MIE chairman John McCarthy said farmers owned the co-ops but had put up with a lack of accountability and bad results. "The future is in our hands," he said.
The Southland Times