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April 2014
No BLNZ Money for MIE Board Candidates by Hugh de Lacy
Beef and Lamb NZ (BLNZ) has no intention of funding Meat Industry Excellence (MIE) candidates to contest seats on meat company boards, chairman James Parsons has told Canterbury Farming. BLNZ has tentatively agreed to partly fund meat industry lobby group MIE provided it’s not spent on activities that would clash with BLNZ’s responsibilities under the Commodity Levies Act. The decision to give funding support to MIE was made in response to a remit put to BLNZ’s annual meeting in Feilding in March which received strong endorsement from farmers. “That was a non-binding remit, but obviously we’re not going to ignore farmers’ views on that,” Parsons said. “So what we’ve done is engaged with the MIE and said we’d collaboratively work with them, but we need details of what they want to do with this funding.” The BLNZ funding decision, assuming it comes to fruition, is the second breakthrough step by MIE to restructure the meat industry as ‘a farmer-controlled entity to optimise returns to all stakeholders’, as its website says. It envisages a farmer-owned, vertically integrated industry with size and scale, underpinned
by farmers contracting to supply stock to specification. Last year MIE put up four candidates for the cyclical directors’ elections for the two large farmer-owned meat processing and marketing cooperatives, Silver Fern Farms and Alliance, which between them control about 60% of the industry. It has long been argued that the first step towards a more effective industry structure would be a merger of the two big co-ops, but repeated efforts over the last three decades to get them to cosy up have proved fruitless. The principal problems facing the industry are a chronic excess in processing capacity, and the rapid switch of farmers on better land from meat production to milk. Successive governments have declined to force restructuring on the industry which has been in steady decline, especially over the last decade and a half since the dairy industry amalgamated under the Fonterra brand, giving it the critical mass to take advantage of booming
demand for milk products in China especially. China is now showing increasing interest in New Zealand sheep meat, and it’s MIE’s goal to restructure the meat industry to take advantage of that. Asked if driving a restructuring of the meat industry should have been the responsibility of BLNZ or its predecessor, the Meat Board, Parsons said that whatever the shortcomings of the Meat Board, it was not BLNZ’s role to bring about structural reform. It would be “completely inappropriate for BLNZ to get on its high horse and try and dictate how other people operate their businesses, in the same way that it wouldn’t be acceptable that some meat company tried to tell BLNZ what it should be doing. “There’s definitely room for discussion around the ideal structure for the industry, but that’s something that’s got to be driven by the shareholders and owners of the companies, and BLNZ isn’t one of them,” Parsons said. There was, however, a need “for somebody to step up and do
these things, and that’s why we thought MIE should be funded.” That funding will be subject to close scrutiny by BLNZ, and Parsons specifically excluded its being used to support MIE candidates’ bids for more meat company directors’ seats. “If someone wants to stand for a company board and MIE wants to support them, they’ll have to fund that themselves,” Parsons said. “BLNZ is not going to fund that activity.” In last year’s co-operative board elections, MIE candidate Don Morrison of Gore was elected to the Alliance board, but the same board rejected a shareholders’ resolution
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calling for the appointment of former Fonterra director John Monaghan, on the grounds that as a dairy-farmer he was ineligible. MIE candidates Richard Young of Gore and Dan JexBlake of Gisborne were elected to the Silver Fern Farms board. The presence of MIE candidates sharply raised the level of participation in the two board elections. The Alliance election saw 48.83% of eligible votes returned in the postal ballot, compared to 25% in the previous election in 2012. Silver Fern Farms’ voter turnout rose from 16.7% in 2012 to 26.76% last year.