Abandoning challenge, not my way Rick Powdrell

Federated Farmers address - Abandoning challenge, not my way Rick Powdrell

Monday 27 June 2016

There is one thing in life that never changes. The moment you overcome one challenge, there is sure to be another. Once in a while a challenge crops up that might be easier to abandon, but that’s not my way.

You guessed it, that last reference is to the New Zealand red meat industry.

At our February meeting we discussed our role going forward. The emphasis was on continued dialogue with key players, notably Beef + Lamb, the Meat Industry Association, Meat Industry Excellence Group and other parties keen to engage.

There have been plenty of people willing to engage, some notable for their commercial self-interest, and others to talk about specific elements within the industry. All have relevant ideas and the passion and desire to see the industry move forward. But until key players come together with a common goal, the quantum shift required will not occur.

Since our February meeting discussions have been had with Beef + Lamb. A number of us have been involved in development and test groups for its market development plan. The focus has been very much on this project, which you will be updated on later in the meeting.

Hopefully the manner in which all the parties, farmers, processors, marketers, government, and other stakeholders, have come together will result in an agreed way forward.

Should that prove to be the case, similar approaches could be forthcoming to address other industry issues.

You will recall in my February address I spoke about my thoughts on the UK lamb market. There is need to engage with industry participants to attempt to bring together players from both ends of the hemisphere for the betterment of all.

As the polls for the Brexit vote came closer together in recent weeks, the possibility of an exit vote heightened people’s awareness of major change in our dealings with the UK.

Just what the exit vote will mean to New Zealand is unknown. One thing we do know is there will be significant unrest in all aspects of the UK economy. How industry leaders and government of this country respond will be vitally important.

Now is not the time to sit back and watch what develops.

Now is the time to act and mould the future with our UK counterparts for the betterment of all.

It is important to remember the UK marketing strategy will more than likely be turned upside down.

For us in this room our lamb markets to the UK face the biggest risk. We have a product that presently is not rewarding farmers for their effort. Preservation is the minimal acceptable outcome.

As B + L have highlighted, the EU and UK are our most valuable sheepmeat markets. Maintaining our quota of 228,000 tonnes at zero duties to these markets will be important. How that can be achieved, and what the end result looks like, and over what time-frame is unknown.

The duration of unrest as the UK settles in to its new freedom may require some patience. But we must be patient at the table in the UK, not watching from the sidelines here in New Zealand.

Another major issue has been the Silver Fern Farms/Shanghai Maling joint venture proposal.

The release of the Financial Markets Authority’s report, on the validity of the Silver Fern Farm resolution process, dispelled the disgruntled shareholders case against that process, and that of New Zealand First also.

It is my belief both parties are committed to this venture, but until the Overseas Investment Office and the Ministers come down with their decision the process is stalled.

I am also of the opinion that the majority of shareholders still support their original decision to enter this joint venture. Whatever their views I encourage them to be engaged in the resolution before them.

Should OIO and ministerial approval be granted, the board of SFF has no option other than to honour the contract with Shanghai Maling, provided Shanghai Maling meet its contractual obligations. The risk of not doing so could cost the company a large sum of money.

This last week news broke from China that its government wishes to reduce its citizen’s meat consumption by more than half.

Climate change enthusiasts jumped on this news claiming it would reduce greenhouse gas emissions by one billion tonnes by 2030. It was predicted the present rate of increased meat consumption would add 233 million tonnes over the same period.

However the Chinese government promoted the reduction based on concerns that as meat consumption has risen, the health of the population has decreased.

Having recently been to China and witnessed the ongoing westernisation of the population I ask is this goal really achievable?

Presently the average citizen consumes 63kg of meat per annum with the government targeting a reduction to 14-27kg per person. This is a significant reversal of a trend moving rapidly in the opposite direction.

China consumes 28 percent of the world’s meat including half the world’s pork.

All indications from meat industry participants we visited pointed to a rising consumption, with a high-level of optimism around future potential.

This proposal would be a monumental u-turn from the current pathway.

So how will the government achieve these reductions? I can’t see the population reducing its consumption voluntarily, so will the government enforce substantial reductions of livestock numbers and imports?

If so the population will need another food source to replace the red meat. Can this be provided easily and at reasonable cost? In 1982 meat consumption per head was 13kg per annum, so the diet of that time may well be the answer, except the population was far smaller than it is today.

We need to watch this possibility as should it become a reality, it may well impact our volumes to the Chinese market.

One thing that is very evident when you visit China is that if the government is serious about doing something, it will be done.

Another challenge we can all feel better about is that of Health & Safety.

It has been an intense journey but we are now seeing workable outcomes. There are a number of excellent toolkits to assist farmers in the implementation of good practice on farm.

Some of us will continue to resist, some will hang on particular aspects they can’t accept, but the bulk of us are getting on and ensuring our staff and family arrive home safely every night.

Too often on journeys of this nature we get hung up on a particular issue, and before we know it we have left the main highway and ventured down a gravel road.

So often if we carried on down the main highway, and ensured that it met our requirements, and then went back to the gravel roads to tidy up the side issues, our journey would be far easier.

When NAIT was first mooted many in Federated Farmers, and other bodies, had very strong voices on what could and could not be included and how the information was to be used.

Today, after the implementation period we know a number of things, compliance is average at best, herd accuracy has some way to go, understanding by many is poor, and we could use the information for other benefits.

It must be remembered that NAIT stands for National Animal Identification and Tracing.

Those words tell me that it exists to identify animals and to be able to trace their movements.

Those words tell me it has an important role to play in a biosecurity event, whatever the animal.

So when we are having a review shouldn’t we be talking about all options, all the different animal species, and all the possible uses of the system?

This doesn’t necessarily mean every animal in New Zealand has to have a NAIT tag in its ear but perhaps they all need to be accountable in the system.

Whatever we are looking at - how about we focus on the highway, then look to tidy our gravel roads?

Hopefully this analogy can be followed in the wool domain as a number of new initiatives are progressed.

The government is supporting two programs: the Merino NZ PGP; and the Strong Wool Initiative.

Both these programs have the potential to be beneficial to all industry players. Both require open minds, fresh thinking and unity. The big risk is players getting stuck looking at the history rather than focusing on the future.

Later today you will be presented a proposal for future wool harvesting training in New Zealand. This is a new approach, a new model which, should all industry participants accept, will replace the system that has seen training at an all time low.

A new model does not guarantee success, how people promote, implement and use the model is the key.

Like all successful enterprises, it is people who are the key. We are all part of the group of people vital to the success of this model.

We will always have a multitude of challenges before us, how we deal with these challenges is the measure of the men and women in this organisation.

ENDS

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