Trail blazers challenge meat industry mind-set

Trail blazers challenge meat industry mind-set

29 November 2007

Traditional thinking in our beleaguered meat industry is being well and truly challenged by two of this year’s Kellogg Rural Leadership participants.

Southland farmer Jason Miller and South Canterbury farmer Neil Campbell have thrown the spotlight on present cooperative marketing practices and quota management.

The Kellogg participants, this week, presented their projects to a Lincoln University panel made up of some of the country’s leading marketing and commerce academics.

Their projects are well timed as both subjects are under some scrutiny at present, with many industry leaders starting to focus on the on-going poor returns to sheep farmers and subsequent precarious future of the sheep industry.

Marketing

Mr Miller, also a candidate in the current Alliance Group Board of Directors elections, has spent the past eight months researching the meat cooperative marketing models including historic and current practices - and then, investigating future initiatives to maximise returns.

Mr Miller’s project, while identifying issues resulting from the current practices, also put forward an outline of what could be achieved in marketing if the current thinking were to change.

“It focuses on marketing initiatives to increase returns to cooperative shareholders. There is more in-depth work to go into strengthening the findings but it provides a searching report on where the industry should head to secure a strong and sustainable future.”

Feeling extremely buoyed following his presentation and assessment, Mr Miller said there were three different projects all focused on the meat industry, presented this year – “all related to what is happening now and why we have to break out of this cycle of last man standing.

“This failure to working collaboratively will destroy the industry.”

Professor of marketing and past-assistant Vice-Chancellor (Business Development) at Lincoln University, Tony Zwart, described the project as very good and said he would like to see Mr Miller continue to work on his proposal for the meat industry.

While we have examples of meat companies working together in the market place it is Mr Miller’s proposal to this united approach of working together to collaborate marketing, from source, that is unique.

Quota management

Neil Campbell, whose project was focused on quota management, said farmers have formed the view that the number of meat company players is having a detrimental effect on quota rationing “so I wanted to see what improvements could be made.”

At present New Zealand’s 226,000tonne annual EU quota is allocated by Meat NZ while most EU quota is allocated via Brussels.

The contentious issue is how quota is distributed to meat processors and Mr Campbell was astounded by what his research revealed.

The project investigated the areas highlighted as being of concern i.e.; the 2% quota held for new entrants, local consumption impact on quota eligibility and the time frame used to average out current quota allocation.

“But the influence these three areas are having on actual quota allocation and resulting lamb returns is absolutely minimal.”

Mr Campbell said undoubtedly he would like to see these issues managed better, but the real issue is actually the 85% of quota held by six of the larger export companies and the behaviour of these six.

‘This is much more crucial.”

To highlight this, Mr Campbell said in the early 2000s there were more export companies supplying the market but the prices where better than now. Adding to this, he points out that there have been no new entrants taking up the 2% quota allocation in the past three years.

To sum up, Mr Campbell said basically the present quota system, while not perfect, is pretty good.

The third meat industry-related project was by James Reeves, and investigates the opportunity and threats in meat industry economic policy.

ENDS

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