Is our sheepmeat processing industry run by amateurs?

THE collapse of lamb and mutton returns to the New Zealand farmer in the past two months has crushed any remaining confidence in our industry.

We run a modest-sized sheep breeding and finishing property in Southland and in this past week received an average of $6.13/kg for a line of high-yielding heavy lambs that were ready for processing the second week of December, but weren’t processed because of the staff shortage at processing plants pre-Christmas.

Mutton is now about half the value it was three months ago, and wool sales subsidise some of the shearing costs.

How could the expert forecasters have gotten the positive outlook for the current season so wrong, only a couple of months back?

Beef + Lamb NZ were predicting an average lamb price of around

$8.20, which if correct would mean a sharp increase in pricing very soon, which I doubt we will see. At roadshows in October, the co-op we supply was suggesting a minimum price of $7.80 for lamb. It’s currently $6.45, with no suggestion the bottom has been reached.

There has been deafening silence from our industry leaders while this pricing has been in freefall.

At the time of the rosy price predictions a few months back, there were indications of a slowing tighter world market to sell our fantastic products into. Why did the signals not get picked up, to give farmers a heads-up?

The CEO of our co-op has told us several times now that the pricing is going back to the average pricing of several years ago.

Maybe some of the experts and people running our processing industry who have got this so wrong could surrender a third of their remuneration or directorships and leave a bit more in the pot for the suppliers who are now in financial crap.

Almost all input costs have increased, to the point that decisions will now need to be made on which inputs can be reduced, or not purchased at all in this coming year. This will have a flow-on effect to suppliers of products and services.

Maybe it is time to take some lessons from the dairy industry on how to keep a stable pricing system through a season and support your producers so there is still product to process in the years to come. I see professionalism in running the dairy industry, but I see a lot of self-interest and kneejerk decisions currently in the red meat industry.

The sheep industry in New Zealand has made enormous gains in recent times in terms of productivity.

The passion and adaptability of our farmers is amazing, responding to environmental, financial and market signals quickly. However, what has happened in the past two months in our industry may have caused as much long-term damage as the many changes being forced on us currently. We are well aware of the challenges processors have been facing in actually being able to deliver to consumers. On the whole the processors have responded very well to changing conditions and labour shortages, and should be commended for how they have handled the last couple of seasons while still delivering good results to the farmer suppliers. It is unfortunate that the current conditions were not foreseen, which has left many suppliers of lamb gobsmacked at the implosion of our pricing. It seems our product is going down as quickly as input prices are shooting up – the maths is not adding up.

I have just read an article about a looming crisis in our industry – but it is already happening.

I am very proud of our industry and the products we produce, as are most of the sheep-farming community I am regularly in contact with, but we need more professionalism to keep the industry level and viable.