Comment: Red meat sector in good heart at conference, Barber finds

Allan BarberIt’s wonderful what a bit of buoyancy in the market for beef and sheepmeat will do for morale, especially when it coincides with a solid drop in the predicted dairy payout, writes Allan Barber in this column which has appeared in this week’s Farmers Weekly.

It isn’t just about absolute price returns, but also a reduction in the gap which has opened up this year between red meat and dairy prices.

Meat Industry Excellence (MIE)’s chairman John McCarthy has already characterised the improved mood among processors and exporters as signalling a desire to preserve the status quo, which is why he and MIE are thrilled to have obtained the funding required to produce a business plan. This is intended to ‘deliver a definitive roadmap for farmer profitability’ through committed supply, coordinated marketing and best practice.

The big question is whether the business plan will succeed in identifying a blueprint that the whole industry will buy into or become yet another document that analyses the shortcomings of the sector, but goes no further.

There was plenty of optimism at the Red Meat Sector Conference which just happened to coincide with MIE’s AGM, also held in Wellington last Monday. The Conference kicked off with a political debate moderated by Colin James and cocktail party in Parliament’s Great Hall where delegates were hosted by the Minister for Primary Industries.

The topics of the debate were trade, water quality and the state of the meat industry. As can be imagined the positions were generally predictable. Nathan Guy defended National’s achievements in trade negotiations and water policy, while confirming its hands off stance with respect to industry restructuring but celebrating the Primary Growth Partnership (PGP) projects and the success of the sector.

The trade topic soon morphed into the damage to Brand New Zealand from deteriorating water quality, supplemented by Damien O’Connor’s lamentations about the resurgence of the sheepmeat carcase trade to China. Somewhat surprising was his willingness to commit Labour to work closely with the industry on restructuring proposals and to scrap the PGP scheme which he called a socialist programme introduced by a National government. ‘Working closely’ sounds suspiciously like willingness to legislate.

And, of course every opposition party thinks it can bring down the exchange rate by changing the Reserve Bank Act.

There was much amusement among delegates at just how out of touch with agricultural reality the politicians seem to be, but, being charitable, the pressure to state policy in three minute slots may have hindered their capacity to show total understanding of the sector. However, I have a strong suspicion they were already in electioneering mode, bent on making their points regardless of the needs of the sector.

But this set the tone for an extremely positive day’s Conference on the Monday which was packed with good speakers on a range of topics including the prospects for global protein markets, the importance of harnessing the potential of Māori farming, the Agri-Women’s Development Trust’s role in training women to become true partners in farming enterprises, a snapshot of China’s economy, a superb explanation of water pollutants by the Parliamentary Commissioner for the Environment and a riveting presentation on innovation by an Auckland University physics professor.

Although the Conference content was extremely interesting and thought provoking, for me the best part of the conference was the opportunity for networking and conversations with farmer and industry leaders. The impression I got from my discussions was of an industry in good heart in spite of the perennial problems of livestock procurement, the impact of floods and droughts, and land use changes.

However, the prospects for at least the next year or two indicate strong prices for beef, especially from the US where pork and chicken are seriously affected by disease and production problems, and for sheepmeat as a result of tight global supply and demand from China.

Another reason for optimism is the small increase in forecast lamb numbers for next season, reinforced by B+LNZ’s chief economist Andrew Burtt when he presented figures which demonstrated the superior profitability of sheep and beef farming on the right type of land when using an integrated farming strategy.

The last session was possibly the most stimulating. There were two presentations, one by the Economist’s director corporate services on the prospects for China’s development and the factors that will influence it and the second by Shaun Hendy, the Auckland University physics professor. The title of his talk was Tale of Two Innovations which covered two New Zealand discoveries, Icebreaker and Goretex.

Icebreaker is a success story with revenue of US$100 million, still New Zealand owned; Goretex is no longer New Zealand owned and has revenue of US$3 billion. So this begs the questions why Goretex has grown so much larger and what are the pre-requisites for innovation. First, there must be a critical mass of innovators, because innovation doesn’t occur in isolation; but after that, collaboration based on openness and trust appears to be the best means of building diversity and uniqueness.

The meat industry isn’t a great example of collaboration, openness and trust, but perhaps the recent delegation to China may signal the way ahead. The need to innovate will possibly be the best message to come out of the Conference.

Allan Barber is a meat industry commentator. This column has appeared in this week’s Farmers Weekly magazine. Allan has his own blog Barber’s Meaty Issues and can be contacted by emailing him at allan@barberstrategic.co.nz.

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