Address the ‘elephant in the room’, B+LNZ chair

Mike Petersen, B+LNZ Ltd chairman.Several gruelling weeks of farmer meetings discussing its proposed Red Meat PGP with levypayers have ended. Beef + Lamb NZ (B+LNZ) chairman Mike Petersen has called on the meat companies to address the ‘elephant in the room’ – competitive procurement – and also to ‘tell its story better’.

Speaking at B+LNZ’s 2013 annual meeting in Wanaka on Friday, he said that through all the current market and economic issues, the consistent view is that “those in the business of food production remain in the box seat for future prosperity.

“This optimism is cold comfort for those facing drought and a collapse in meat pricing well below the levels companies indicated earlier this year,” he said, adding that B+LNZ’s focus is to look through the pricing issues today and provide tools to build a better future for the next generation of farmers.

The message he had heard “loud and clear from farmers” is they want action to turn the current situation around, he said. “The volatile returns for farmers and industry over the past few years are a real threat to our industry’s future.”

Petersen commented that the mood and lack of confidence among farmers is worse today than five years ago after three years of low lamb pricing. He pointed to confidence as being a “key component for investment”, both in infrastructure and in people.

“In this regard, higher returns need to be an urgent priority for those responsible for selling our products to onshore and offshore customers. However, it is not the whole equation and on-farm there is still much that can be done to assist in this transformation.”

RMSS: not a blueprint

The two year old Red Meat Sector Strategy (RMSS), developed by the meat industry with B+LNZ is not a blueprint, he said. “However, the three themes identified in the strategy are a framework that remains as relevant today as when it was launched.”

Those themes are: co-ordinated in-market behaviour; efficient and aligned procurement; and sector best practice.

Some of those framework themes are being addressed with government pitching in with money for five Primary Growth Partnerships to match meat industry funding on a number of projects. While not the only activity underway, a combined total of over a quarter of a billion dollars of government-industry money being spent on four already approved red meat PGP projects that together are estimated to add more than $3 billion to the country’s GDP by 2020. These are:

  • FarmIQ – Silver Fern Farms, PGG Wrightson and Landcorp Farming
  • Foodplus – ANZCO Foods is adding value to the beef carcase by investigating new  food, ingredients and healthcare.
  • Wagyu beef  – Brownrigg Agriculture and First Light Foods
  • NZ Merino – the goal is to produce sheepmeat, wool and other merino products ready for market within seven years

In addition, B+LNZ’s proposed $65 million Collaboration for Sustainable Growth programme, on which the organisation’s levy payers are voting to spend its reserves, pulls together meat companies, banks, accountants and farmers together with government.

The programme would address the best practice theme, “the one where farmers have the greatest influence to be able to lock in better long-term profitability,” according to Petersen.

“Never before has the sector come together in such a manner, focused on one common goal,” he said, adding that in meetings up and down the country B+LNZ had often found itself defending the performance of industry partners.

“I know about much of the good work the meat companies have been doing in recent years and the new programmes under way. Company involvement as partners in the PGP programme is very important and we welcome it.

“However, the perception among farmers is that most of the incredible productivity gains they’ve made over the past 20 years have been frittered away by companies competing in the market here to buy and then competing in overseas markets to sell.”

Tell of gains made

He had been told “unequivocally” that farmers want to to hear for themselves of the gains companies have made in the procurement and market areas. “Not in ‘PR speak’ but real number of real gains that are making a dollar difference in returns to farmers.”

Petersen said the RMSS outlines the size of the prize. “Farmers and industry partners are picking up the challenge with a capital injection to take on-farm performance to new levels.”

There has been some good work in terms of processing and marketing, but more needs to be done. “Companies need to tell their stories better.”

Call to address competitive procurement

He moved to the ‘elephant in the room’ to discuss the addressing of the competitive procurement situation that will only get worse in the coming season. “Excess capacity may not seem to be an issue for us in drought areas today, but it is real and needs to be addressed.

“A simple merger of the two co-operatives as suggested by many in my view is not enough, but today I am calling on companies to address this area once and for all.

“Farmers are increasingly demanding change away from the status quo. We have been told that even if there is not one dollar for farmers for a period of time after an industry reorganisation, they need to see some options on the table to give them optimism for the future.

“If we do nothing, then nothing will change.”

He urged farmers to look through the haze to the long-term prosperity promised: “if we all do our part to seize this opportunity,” he said.

“We owe it to the next generation of farmers.”

(We still await the results of the vote on the Red Meat PGP).

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