Comment: Changing world for sheep farming and sheepmeat

Allan BarberIt may be a statement of the obvious, but the world for sheep farming, processing and sheepmeat has changed dramatically, particularly in the past 30 years, writes meat industry commentator Allan Barber.

The age of massive single shift plants, high wool prices, large stations, the frozen carcase trade with the UK and farm subsidies has disappeared for ever. It has been replaced by a new era in which the main characteristics are no subsidies, less sheep and lambs, smaller, more flexible plants, an increasing proportion of chilled product, higher value co-products with less income from wool, and progressively more trade with markets other than the UK and Europe.

To a casual observer or time traveller who has spent the last 30 years elsewhere, there are still some obvious similarities, but a more careful study would show the differences pretty quickly. For example, the swathes of irrigated land from mid-Canterbury to Southland with dairy cattle instead of sheep grazing, thousands of hectares now covered with vines in Central Otago, Marlborough, Hawke’s Bay and Gisborne, the size of lambs going to slaughter, the volume and price of wool at auction and the number of saleyards round the country would all indicate more than a token shift in farming practice.

A visit to the supermarket and butcher would provide evidence of a significant change in the way lamb is sold to the public. Some of the product in the chiller is packaged so expensively that you can’t even see the product, but just a nice photograph of a specific cut. The contrast in overseas stores is even more pronounced with some stores offering the chance by scanning a barcode to view the farm from which your piece of lamb originated and possibly a short talk from the farmer.

A study of trade statistics would demonstrate the decreasing importance of the UK as our main market, the increasing importance of Europe and the emergence of China as our largest market by volume. To show nothing ever stays the same for long, two years ago China took hardly any sheepmeat, while a recent report suggested Europe’s consumption of sheepmeat would start declining from here.

It’s possible to imagine from this list of changes that the world of sheep farming might have changed almost as fast as the world of computers and mobile phones. But it hasn’t.

To read farmer opinion about their industry, you would think the lamb price was still where it was 30 years ago, meat companies were doing nothing differently, and the present state of the industry was totally their fault. Of course, the processors don’t pay enough (except when stock numbers are short and a procurement war breaks out), they cut each other’s throat in the market place (thus losing money that should have been paid to the farmer) and the NZ dollar is too high (because they don’t take out foreign exchange cover).

The solution is for farmers to own their industry, so they can avoid all the mistakes of the meat companies, as well as keeping hold of the profits which would otherwise have gone into the pockets of those greedy private companies.

Sorry guys, but I don’t think you are being realistic! If sheep farmers can’t run their own farm unit profitably, what possible hope is there they can run a meat company any more successfully? This is not to suggest there aren’t any competent and successful sheep farmers, but I suspect they are getting on with the job quietly and profitably without complaining.

However the meat exporters, substantially if not exclusively processors as well as marketers, have overseas contacts and trading relationships which enable them to market the available product at a generally satisfactory price. The problem comes when the price moves too high and the market gets indigestion, because the companies paid too much and end up holding inventory that they can’t move.

It would be much better if farmers and exporters continue to do what they are each best at and concentrate on building a better, mutually trusting relationship. Then each would be able to get on with their business to the best of their respective abilities.

Allan Barber is a meat industry commentator. This post has also appeared at NZ Farmers Weekly. He has his own blog Barber’s Meaty Issues and can be contacted by emailing him at allan@barberstrategic.co.nz.

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