Red-meat industry told to pull together
Changing attitudes will be the red-meat sector's biggest challenge, following the release of a report outlining a strategy for improving profitability, South Canterbury Federated Farmers president William Rolleston says.
Launched at Parliament last night, the Red Meat Sector Strategy Report was drawn up by a Deloitte team headed by partner Alasdair MacLeod under Beef + Lamb NZ and Meat Industry Association oversight.
The strategy identified three areas where industry participants had to take action for sustainable profitability: in-market co-ordination, efficient and aligned procurement and following sector best-practice.
Central to its success was greater trust and loyalty between farmers, processors and exporters.
The report talked of the need to "rebalance incentives and practices to remove any one sector participant's ability to profit at the expense of another". It said building greater trust would bring a "self-sustaining change process".
Dr Rolleston backed the need for behaviour change within the market and at procurement level by both farmers and processors, and the report's call for greater farmer loyalty towards meat processors. But he questioned how those behavioural change could be achieved.
"How are you going to change the attitudes of people?"
The report was a step in the right direction but its implementation had to come from within the sector. That would decide its fate, he said. "That's the challenge the industry has."
Although the report did not advocate meat industry structural change, if there was behavioural change within processing and marketing areas, then structural change would follow, he said.
How those various players are going to change their behaviour remained to be seen.
"How are you going to give them the incentive to make the changes that need to be made and co-ordinate it better?"
He supported the report's call for "co-opetition" – collaboration between normally competitive rivals to tackle a market, but he said there was still deep distrust between meat processing firms.
"It's very hard to put baggage behind you. It's easy to say, but it's very hard to do."
For farmers, the strategy has several proposals, headed by commitment of supply. It suggested they commit at least 70 per cent of their stock to a single processor and, ideally, they could be prepared to supply 100 per cent with the remaining 30 per cent supplied out of contract. This would allow farmers scope to manage seasonal changes and animal conditioning.
They could also follow the practices of top-performing farmers, such as the optimal use through renewing pastures and improving business skills through an increased use of technology.
Dr Rolleston said he supported the call for the adoption of greater technology by farmers.
"The high performers are the businesses that have adopted technology."
Leadership at the farming and processing level was also needed to drive through the changes outlined in the strategy, he said.
"Leadership is about understanding everyone's position and coming to a path forward that is in everybody's best interests and not in one person's interests."
Beef + Lamb Central South Island director Anne Munro said the challenge for the meat industry was to work towards making the changes outlined in the report. The industry had to get in behind the report and support it.
"It is the stake in the sand for the industry to take it forward. It outlines the industry as it is now and this is where we start to go forward to make sure that our future is sustainable and assured."
The report has provided the industry with the best opportunity to move forward, she said.
- With Fairfax
The Timaru Herald