MIA Matters: Red meat business in good shape for the uncertainties of 2018-2019

John Loughlin
MIA chairman John Loughlin.

The red meat business is in good shape to face uncertainties in markets overseas and at home as the 2018-2019 red meat export season kicks off this week, writes Meat Industry Association (MIA) chair John Loughlin.

Building on last year’s reasonably good season, the MIA and our 36 members have been working quietly over the past 12 months, alongside the rest of the sector.

Our task has been to improve production efficiencies at home, including adoption of new technology, to push hard at deepening trading relationships and to move up the value chain towards higher-value branded product so New Zealand can earn more from our overseas markets.

Now the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) has been signed, we’re looking forward to its ratification. Good relationships have been forged ahead of a post-Brexit United Kingdom and ties have been further deepened with trade contacts in China. We also welcome the start of negotiations on a free trade agreement with the European Union.

However, we are also facing major uncertainties in the coming season.

Any threats to market access for beef and sheepmeat exports are troubling. Protectionist attitudes in the US, the huge uncertainty posed by Brexit together with the unacceptable UK-EU proposal re quota splits are of concern. We will be fighting hard to preserve our rights and the rules-based international trading system.

In China, Government agency restructuring could potentially impact on access and we are ready to engage with the new system at the earliest possible time.

Here at home, the new coalition Government brings more change for red meat business, including its ambitious goal for carbon neutrality by 2050. Our sector is deeply engaged in the work in this area and we welcome Beef + Lamb NZ’s new Environment Strategy and investment in environmental programmes. If we are to market our products to the world’s most demanding customers, then we must be able to prove our environment credentials.

However, MIA is strongly opposed to the inclusion of agriculture into the Emissions Trading Scheme where the point of obligation is at the processor. This would charge performing farmers and non-performers at the same rate with no differentiation for environmental outcomes – effectively becoming a tax on meat production that none of our heavily-subsidised international competitors will have to bear. More can be done for the environment through patient hard work focused on practical on-farm solutions and targeted rewards for outcomes.

The Government’s industrial relations agenda is another cause for anxiety, particularly the possible introduction of Multi-Employer Collective Agreements and Fair-Pay Agreements. We are concerned that these treat employment issues within a nine-to-five, five-day week and standardise arrangements across sites. This simply does not reflect the reality of meat processing work, which needs a high level of flexibility to meet seasonal changes and to innovate and respond to customer demands.

Tomorrow’s sites will become more and more different from each other as businesses respond to different markets, channels and customers, amongst other things. What is proposed could reinforce commodity traps rather than supporting the addition of value – running contrary to the Government’s agenda for a higher-value economy. The proposed reforms could also significantly worsen the tight labour constraints industry is already under, especially with the shortage of labour already impacting industry’s ability to process some product to its highest possible value.

One of MIA’s top priorities in in 2018-2019 will be the development of a strategy to resolve the labour shortage. This will include advocating for a flexible, highly-skilled future workforce. This has led to the establishment of a new Human Resources Leaders Group to improve industry strategic direction and coordination.

Work done by MIA in preparation for its Government Industry Agreement, signed in September 2017, helped direct the primary sector in its response to Mycoplasma Bovis (Mp. bovis), which is now headed by Government, B+LNZ and DairyNZ. The disease response showed there is an urgent need for the National Animal Identification and Tracing scheme (NAIT) to be strengthened, especially in the area of farmer compliance.

MIA Annual report-2018 - 9 SepNAIT was intended to be a world-class tool to underpin a rapid response to a biosecurity incursion which could minimise the number of farmer victims and preserve market opportunities for as many unaffected farmers as possible. However, like all information systems, NAIT can only be as good as the data that goes into it. Mp. bovis has given us a brutal lesson. We should learn from it, improve and be grateful our failures weren’t exposed by an incursion of the nature of Foot and Mouth disease. We believe the capability and resolve of the Ministry for Primary Industries needs to be strengthened in enforcing standards for the benefit of the primary sector and the nation.

This year has seen major challenges for our industry and a very busy year for MIA.

Work will continue in many areas that affect our members. But let’s also celebrate the fact that change brings opportunity to those who grasp it. Thus, the challenges and opportunities are how we respond and maintain the sector’s ability to innovate to enhance collective profitability.

Our sense is that we are in good shape to face this disruption and turn it into a real opportunity for the sector to capitalise on the opportunities that emerge.

The MIA’s latest annual report, for the year ending 30 June 2018, is now available at www.mia.co.nz.

The report notes the past 12 months have been “reasonably good” for the red meat export sector. New Zealand beef and sheepmeat worth $8.1 billion – $1 billion more than 2016-2017 – was exported to 120 markets in 2017-2018. The “stand out performer” was combined lamb and mutton exports, which hit a record $3.4 billion – 24 percent more than in 2016-2017. Co-product exports exceeded $1.5 billion – an increase of seven percent on the previous year, while the export value of beef increased by nine percent to $2.9 billion.

 

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