lambing
ploughing champs
Filling the financial hole left by falling meat and wool prices. page 28
Two-man team take out their first title. page 37
Rural NEWS
irrigation move Plans are afoot for drought-prone Wairarapa.
page 14
to all farmers, for all farmers
april 23, 2013: Issue 536
www.ruralnews.co.nz
80% plus needed ga re t h g i l lat t
ANY MEGA meat industry body would need more than 80% of processing capacity to work, says Silver Fern Farms chairman Eoin Garden. The Meat Industry Excellence Group, a collective of South Island dry stock farmers, is pushing for 80% of all meat processors to amalgamate to ensure profitable processing and steady farmgate prices for producers. But Garden told a meeting of Northland sheep and beef farmers in Dargaville last week that the MIE had its sights set too low. He says while MIE wanted 20% of producers to stay independent “to keep the big buggers honest” this would do nothing but cripple the larger body. “There will be an absolute scramble for everybody to be a twenty-percenter,” he explained. “Because the twenty-percenters will actually be able to skin the cat.” In fact, Garden says loss of procurement is the biggest factor holding back a merger between Silver Fern Farms and Alliance which, if successful, would account for a large part of the industry’s processors. “The conversation got to the point where we were discussing the proportion of supply we would lose if we merged and at what level it would negate the benefits of merging. “One company said it would be 15-20% while the other thought we could be smarter and just lose 10%,” Garden said. “Price Waterhouse Cooper
“There will be an absolute scramble for everybody to be a twenty-percenter, because the twenty-percenters will actually be able to skin the cat.” said if we lost just 5% of procurement share then we would lose any benefits of consolidation.” Garden said New Zealand’s meat industry needed a strategy change more than a structure change when it came to procurement. He said a small proportion of suppliers who “shopped around” meat companies were essentially holding the rest of the sector to ransom. “About 30% of supply floats
around, and about 20% of that is with independent stock agents.” Garden says these agents get a collection of livestock and then approach
different meat companies to ask for the best price, making it difficult for meat companies to plan killing schedules. “Those of us who have a 100% committed supply now are compromised by those that don’t,” he added. “If you have assets and don’t know if they will be fully utilised, half utilised or empty that’s not a bankable model. It’s not just a Silver Fern issue, it’s an industry issue.”
a taste of things to come? Taihape farmer Fraser Gordon gets his first taste of rain for the month of April – a measly 2mm. Despite last week’s downpours over much of New Zealand, many farmers in the central North Island got very little rain and for them the drought is far from over. Gordon, who’s a member of the Rural Support Trust, says this is the worst drought in the area for 70 years. See more on page 7
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However, Garden said marketing initiatives like the Angus brand and Hereford brand would go towards working free agents out of the system. “They won’t be able to take part in MeatEQ or any of the other programmes being put into place now; that’s where you’ll start to see value.” • See more on page 3 @rural_news facebook.com/ruralnews