February 2013
28,850 copies distributed monthly – to every rural mailbox in Canterbury and the West Coast.
INSIDE SOUTH ISLAND
‘Get off your backsides’ — Plea to sheep farmers
AGRICULTURAL
By Hugh de Lacy
FIELD DAYS
A plea to sheep farmers to ‘get of their backsides’ and start making the sheep meat and wool industries profitable has come from former Minister of Primary Industries David Carter as he takes up his new role as Speaker of Parliament.
FEATURE ISSUE
Carter held the agriculture portfolio from 2008, but following his promotion by Prime Minister John Key he has been succeeded by Nathan Guy. Carter told Canterbury Farming his administration had two principal achievements to its credit, the reinforcement in the public’s mind of the critical role of agriculture in the nation’s economy, and the breaking of the deadlock over making water available for irrigation.
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CONTACT US Canterbury Farming 03 347 2314
The big disappointment has been the failure to shake sheep farmers out of their lethargy and force their toe-dragging meat co-operatives to collaborate in the global marketplace, instead of locking inefficiencies into the supply chain at home, and undercutting themselves and the independent meat companies in the marketplace. “I’m staggered that last year, when they amassed losses collectively of around
$100 million between the two big companies, that wasn’t enough to galvanise interest in the shareholders of Silver Fern Farms and the Alliance Meat Company,” Carter said. “Farmers need to get off their backsides, stop being apathetic, and realise that it’s their industry, it’s their future, and if they got activated and engaged I‘ve no doubt they could deliver long-term benefits to the industry and their own profits.” The chance to shake up the big co-ops which control about 60% of the red meat industry will come when Beef and Lamb New Zealand seeks farmers’ voting support, at its annual meeting in Wanaka on March 8, for the Government’s $65m Collaboration for Sustainable Growth programme, announced at the end of last month. Beef and Lamb wants farmer agreement to fund its $19.7m share of the programme’s cost by a combination of old Meat Board reserves and the spending annually of $2.8m over seven years. The aim is to raise the standards and sophistication of sheep and beef farm business management, and the first
exercise will be to research ways to stimulate farmer buy-in. The project has the support of the two co-ops, as well as independents Affco, Anzco, Blue Sky and Progressive Meats, banks ANZ and Rabobank, and corporate advisor Deloitte. Successive pleas over the years from lobby and industry groups for the co-ops to collaborate for the good of all have fallen on deaf ears, with farmers showing little inclination to force their feuding leaders into line. “We’ve got to do it or otherwise we’re going to continue to see more and more people converting land into dairying, and then we’re going to become so dependent on the dairy industry internationally for the New Zealand economy, and that’s a risk,” Carter said.
in
that has been seen over the past two seasons.
“Why can’t that be the catalyst to drive something together?” Carter asked.
The independents had in the past indicated a willingness to sit down with the co-ops and Beef and Lamb to create an expansive structure for the industry.
farmers with interests both companies.
The main reason the co-ops’ leaders cite for resisting any merger or close collaborative arrangement is that it would expose them to a bleeding of supply to the rival. Carter said he believed that could be addressed by insisting the farmers sign up loyally to supply contracts.
He contrasted meat farmers’ reluctance to take up and stick with supply contracts with that of dairy farmers who “sign up to a company and continue that loyalty throughout [their] farming career.
Historically, whenever a meat company has attempted to secure its supply by contracts with farmers, other players take the opportunity to manipulate farmgate prices so farmers abrogate the contract and supply the spot market instead.
“That doesn’t happen in the meat industry,” where 25-30% of the two co-ops’ shareholdings are held by
Carter said it was the coops, not the independent meat companies that were locking farmers into the price volatility
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It would involve cutting inefficiencies “whereby you’ve got lambs being drafted from the bottom of the North Island across to South Island plants for processing, and almost the same thing happening with lambs being drafted, say in Marlborough, and going north. “We’ve got to find a way to eliminate that excessive cost, and we’ve got to get farmers to become far more focussed on loyalty to companies and signing themselves up to longterm contracts.” Both farmers and the company have “got to be prepared to stick to it through thick and thin,” Carter said.