Rural News 20 Nov 2012

Page 1

grasslands

water quality

Gore plays host to 400 delegates at the 74th annual conference of the NZGA. pages 29-31

LAWF final report states more integration with land and water management needed. pages 4-5

Rural NEWS

economics Banker warns a lack of farm profits could stifle investment capabilities.

page 14

to all farmers, for all farmers

november 20, 2012: Issue 527

Council consistency concerns p e t er bu r k e peterb@ruralnews.co.nz

THE CHAIR of Federated Farmers Meat and Fibre group, Janet Maxwell, says there needs to be greater consistency in decision making by local and regional councils. This topic came up for discussion at the group’s council annual meeting in Wellington recently. She told Rural News that the lack of consistency in council decisionmaking is hard on farmers. “We have some councils out there doing some really great work with good collaborative governance. Then we have got others who have been chugging away through very long processes for really odd outcomes. We, as farmers, have to come to grips with some of these decisions that have been handed down. This is making things a bit tricky for farmers who just want to be able to stay sustainable.” She says the Federation has talked to government about this issue. Maxwell adds that sheep and beef farmers have a ‘softer’ environmental footprint than dairy farmers. She says there just hasn’t been the money in the sheep and beef sector to farm intensively. Maxwell believes that most sheep farmers wouldn’t head down the intensive track anyway, because fattening lambs in intensive situations doesn’t work well. • See more pp 4-5

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The red ink sector? pam tipa pamelat@ruralnews.co.nz

SILVER FERN Farms (SFF) did not see the early-2012 lamb market crash coming soon enough, says chief executive Keith Cooper. “Things were ticking over ok into Christmas; post-Christmas it hit the fan.” And he is calling for consolidation of smaller players in the meat processing industry, saying farmers could very quickly make this happen. His comments follow SFF reporting a loss of $31.1 million for the year ending

September 30, 2012 from total revenue of $2 billion – down from a $30.8 million profit the previous year. This follows Alliance Group reporting a net loss after tax of $50.8 million and Blue Sky Meats cutting jobs after reporting a loss exceeding $600,000 – after a $6 million profit the previous year. Explaining the SFF result, Cooper says there was a “disconnect between our view on the market, the customers’ requirements and the lamb schedule, which all manifested late in the day when the market crashed about Feb-

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ruary. We were comfortable with our margins going into that period then we got caught with the dramatic tail-off of demand value on a sustained basis. “Once we got that all into the mix the schedules tracked down rapidly, but arguably it was all too late at that point.” Cooper says the meat processing industry’s problems relate to “the number of competitors for the decreasing volume of livestock and the assets those competitors operate”. “It is probably more about the number of people in the sector as opposed to the number of assets in the sector.” Aggregation is needed, he says. “Hopefully the predicament the meat processing/exporting side of the sector finds itself in this year may instill some activities in people to start to address some issues which have been

show winners Judges Brian Hayman and David Wylie with Southdown carcase evaluation class winner David Gillespie who was among the champions in the Canterbury A&P Show sheep pens, where objective measurement of stock is playing an increasing role. More show pics and story, p7

there for a long time.” Cooper says the larger companies are there for the long haul. “Perhaps the discussions should centre on those outside the main four companies and whether there is an opportunity to aggregate at the smaller end of the industry.” Following recent union criticism of industry leadership, Cooper says “it is very fraught to compare the leadership in the meat industry – which has 23-odd players – with the dairy industry which has a very dominant large player where it is quite easy to show the leadership”. “The meat producers tend to like competition,” he says. While there was a decrease in plants and companies during the 1980s and 1990s, there’s been a “proliferation” in recent years. “Farmers support new plant and new players in the mistaken belief that it is healthy for the industry,” says Cooper. “All it does is further fragment and ensure there’s a lack of investment in the sector. “The simplest way to aggregate the industry would be for farmers to choose who they want to support, based on an informed set of data or strategic overviews of all the companies. Farmers could very quickly reshape this industry by picking companies that are investing in the future for farmers to create more value, to create sustainable returns for farmers.” Despite the result, Cooper says SFF is comfortable it has the right infrastructure, the correct sales channels and the right brand, underpinned by a robust investment programme. @rural_news

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