The New Zealand meat industry's historical focus on throughput had ignored consumers' wishes, Taranaki farmers have been told.
Silver Fern Farms chairman Eoin Garden was visiting Taranaki last week to address small groups of farmers at shed meetings around the province.
A farmer for 47 years, Garden has a high-country farm in Central Otago with 4000 breeding ewes, 200 breeding beef cows and 600 hinds and a dairy operation run by his son - the type of farming operation he says is replicated all over the country.
"The meat industry now is no different to what it was 40 years ago," he told about 20 farmers gathered in the Huiroa woolshed of Peter Hansen, east of Stratford.
"I've seen companies go belly-up time and time again because competing for livestock has not added value.
"It's all been throughput-driven - it's been about how many heads are cut off; it's not been about the consumer."
Garden said the challenge facing the farmer-owned co- operative was to get the message successfully to farmers that the production of three 19kg lambs was more effective use of their pasture than producing two 25kg lambs.
"We want to take the mindset away from producing the biggest animal to one where farmers are thinking about the consumer and what he or she will pay for. Consumers don't want a big lamb leg or a lamb rack with a big eye muscle and rib bone.
"As farmers, we have to think about what the consumers want - and make money from innovative products which appeal to them.
"To get a high-value product, we may have to change the way we farm."
Maybe farmers should draft their lambs every 10 days to ensure a good weight range, especially in the spring, and that they complied with the European definition that a lamb was an animal that had not yet cut teeth.
Garden said taste, odour and texture were important to consumers. In future, farmers could be paid on the basis of tests for those attributes.
"At the end of the day, it's about the consumer."
Garden said that in the last four years the company had turned its focus to consumers - "the people who decide they want to pay that extra bit of money for our product."
Proudly based in Dunedin, the co-operative was making a huge investment to have half its total production carry the Silver Fern Farms brand to consumers at the top of the value chain.
"Branding is about marketing a unique item to consumers," he said.
Increasing the value of the product in the marketplace would increase the return to farmers.
"Our focus is to add value by getting the consumer to pay more. Our vision is simple - inspirational food created by passionate people."
Chilled 2-kilogram lamb legs, shoulders, racks or loins were becoming commodities, just as frozen carcasses were in the 1950s.
As the biggest market for New Zealand lamb legs, Britain bought 40 per cent of production. But they were often "specialled" by supermarkets to attract customers.
"And that is our problem. It's still throughput-driven."
Garden said young urban professionals often did not know how to cook a 2kg lamb leg.
Silver Fern Farms' vacuum- packed, prime meat cuts with recipes on the packs were developed after consumer research showed New Zealanders were prepared to pay considerably more per kilo for high-value branded product developed from the lamb leg.
Initiative and innovation were necessary to be ahead of the game.
"We have to add value and capture as much of that value as we can. We've got to have a product that has assurances of quality. We're not in the volume game."
Garden said there was a world shortage of high-protein lamb, and consumers would decide the quality they were prepared to pay for.
Although lamb was the world's highest-value red meat protein, the price had fallen in Britain and Europe. With the high New Zealand dollar, the lamb schedule this season would be in the $5-25-$5.75kg price band - lower than last year.
In the 18 months to December 2011, the price to consumers of New Zealand lamb legs in Britain increased 60 per cent before falling 30 per cent in the six months to June 2012.
However, the price of consumer packs, costing much more per kilo than a lamb leg, tracked up in parallel and flatlined this year instead of dropping.
Garden said nothing in the New Zealand meat industry changed the value of product sold offshore.
"What does change the value is events overseas - Argentina's ban on beef exports, US subsidy on corn production for ethanol, the Japanese tsunami.
"Political or natural disasters affect the lamb and beef schedule, as does the strength of our currency against the US dollar. So we have to create value ourselves to insulate us from events we cannot influence," he said.
- © Fairfax NZ News
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