Not all farmers happy about spending Meat Board reserves, says Barber

Allan BarberNot all farmers are happy about spending Meat Board reserves to support the latest PGP initiative, Allan Barber finds.

The exciting news last week about the Collaboration for Sustainable Growth programme, involving $65 million of investment in improving on farm productivity, hasn’t met with universal approval from farmers.

It’s not yet clear whether the mutterings are symptomatic of a wider level of disapproval or just that of a small minority. It’s an important question, as Beef and Lamb NZ Ltd (B+LNZ) will ask its levy payers for approval to spend $19.5 million of levy funds and Meat Board reserves at its AGM in March.

I predicted last week that it would be a surprise if levy paying farmers voted against the proposal, because it represented a significant step forward in fulfilling least one of the strategic objectives of the Red Meat Sector Strategy (RMSS) launched two years ago. Now the participation of six meat companies indicates readiness to put some of their money, admittedly earned from farmers, towards an industry good programme.

But some of the views expressed in the farming press are less than ecstatic at the prospect of spending farmers’ money on finding out how farmers can perform better, when the main problems seem to be in the market and in livestock procurement. These correspondents see it as rather patronising to suggest that farmers should bear the responsibility for the ills of the meat industry, when, as they see it, it is the shortcomings of the processors and exporters in their insistence on competing furiously at the farm gate and in the market place.

The problem for B+LNZ is its responsibility to its levy-payers to secure a grant from the Primary Growth Partnership which would enable the private investment to be matched in equal proportions by the government. To achieve this it had to do two things: find a project which did not replicate the Silver Fern Farms (SFF) led FarmIQ programme and address a specific strategic objective from the RMSS. Further to get commitment from the other parties, mainly meat companies, it had to address sector best practice.

In the opinion of the meat companies, behind the farm gate is where the majority of the gains are to be found and this is where they were determined to get B+LNZ to focus its efforts. The prospect of being ‘helped’ to resolve the inadequacies of in market behaviour and procurement methods would not have gained any commitment at all from the meat companies.

Some of them, notably SFF, Alliance and ANZCO, have their own programmes which are designed to obtain contractual supply of livestock to the correct specification which will meet their customers’ exacting specifications. Therefore, they would not be remotely prepared to spend any of their own money on being taught how to procure livestock and market their products.

It’s still a classic case of both parties talking past each other. The farmers complain that the meat companies are still willing to pay premiums to large suppliers to guarantee livestock volumes, while this defeats the purpose of signing up to livestock contracts. Then they hear about the undercutting going on in the market which only confirms why their prices are heading downhill.

On the other hand, the meat companies see farmers’ determination to sell on the spot market and to shut the gate when they have plenty of grass, while blaming the companies for cutting the price when grass is in short supply and livestock is plentiful.

Not all farmers behave like that of course and meat companies don’t always sell too cheaply in the market. But there’s enough truth in it to preserve a level of mistrust between the parties which is unfortunate when cooperation is in everybody’s interest.

This is why I am certain farmers should give their organisation a positive vote in favour of investing in the Collaboration for Sustainable Growth project, because it is essential for the industry’s future prosperity that producers and meat companies learn how to trust each other.

Allan Barber is a meat industry commentator. He has his own blog Barber’s Meaty IssuesThis item has also appeared at www.interest.co.nz.

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