Wednesday 4th May 2011
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Livestock farmers have been told that the red meat sector could boost the nation's gross domestic product (GDP) by 1.3% - a lift of $3.4 billion - by 2025 if all the industry's participants work together.
But they have been told in the latest meat industry strategy, released today, that a lot of the competition now seen at the farm gate - as farmers play off meat companies against one another to secure the highest price for their animals -- will need to be transferred to battling rivals in international markets.
Meat farmers have complained for decades about low returns for their beef and lamb, but many have shown a marked reluctance to join in a cooperative approach similar to Fonterra's role in the dairy industry
They are currently enjoying a boom in commodity prices, partly driven by aspiring middle-class consumers in Asia - particularly in China and India - seeking western-style foods, and the livestock sector currently generates nearly $8 billion annually in export earnings.
Agriculture Minister David Carter said today the new strategy was an ambitious plan to lift the performance of the meat industry and to give it clearer direction.
But he also warned: "The industry functions needs to improve.
"There is a real risk that current good returns will create farmer complacency about addressing the long-term issues facing the sector".
Carter said the strategy developed by the meat industry board and meat exporters would only be successful if the sector continued showing the level of co-operation needed to develop the plan, and worked together to implement it.
A greater flow of information between farmers, processors and marketers would be the key to this, he said.
The beef and lamb industry board chairman, Mike Petersen, said that over time the profitability of meat farming had been inconsistent and often unsatisfactory, a factor in the conversion of sheep and beef farm land to dairy farming or forestry.
The strategy used robust analysis to show that the greatest potential boost in sustainable profitability would only be delivered by all sector players participating in coordination within export markets, efficient and aligned procurement, and best practice in developing farming systems and improving productivity at all stages of the supply chain.
"Critically, there is a need to shift the focus of competition from the farm gate to offshore competitors," he said.
Rather than simply addressing one-off issues such as over-capacity and excessive stock transport, the strategy's analysis clearly showed opportunities for bigger and more sustainable improvements in sector profitability.
But this depended on all the players changing behaviours.
"This means working towards greater transparency of information exchange and each value chain partner becoming a more integral part of their partners' strategies to reduce inefficiencies through misaligned objectives," Petersen said.
Improved meat prices meant there was a window of opportunity for re-investment to make changes for sustainable, long-term profitability.
Meat Industry Association chairman Bill Falconer said there was no single blueprint, but the report outlined a range of effective actions that farmers and meat companies could take.
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