Innovative ideas such as companies processing stock for competitors are needed to improve the viability of the sheep industry, said the head of one of the country’s largest meat companies.
Alliance Group chief executive Willie Wiese said more value needs to be returned to sheep farmers to improve their viability, and if that can come from greater industry collaboration, then that should be looked at.
He has discussed the idea with other meat companies and said at least two are open to considering the idea.
“It is challenging initially, but something we need to talk about,” said Wiese.
It could mean an end to stock trucks passing competitors’ plants, which would reduce costs, provide animal welfare benefits and lower greenhouse gas emissions, he said.
The Meat Industry Association and five meat companies were asked for comment.The MIA said it is a company issue, one company declined to comment and none of the others had replied by deadline.
Federated Farmers board member Toby Williams sees merit in the proposal and said following Cyclone Gabrielle last year, plants processed stock on behalf other companies, which shows it can be done.
Change is needed, he said.
“Sheep numbers are not growing, we all know that.
“The industry is effectively in crisis and there is nothing to arrest that slide, no innovation or collaboration. The wool industry is in disarray,” said Williams.
Even if two or three companies co-operated with processing it would be beneficial.
“We needed this 10 years ago but meat prices have been quite good so there wasn’t the need.”
Wiese said with sheep numbers forecast to continue falling, companies could face the choice between consolidation or rationalisation.
“Could we have a different processing arrangement, some relationship between meat companies?”
He is confident the sheep industry has a future but said farmers face challenges now from forestry and alternative land use options.
“For sheepmeat to have a viable future, we need to find ways as a sector to be more efficient and bring value back to farmers.”
That requires a different approach and, in some cases, a NZ Inc view.
“Right now we have significant competition within the sheepmeat industry to solve, but we need to find better ways in the future to be competitive.”
He is not advocating an end to competition.
“It’s about having sustainable processing in NZ otherwise we won’t have anything to compete for.
“There are exciting opportunities but we have got to think differently instead of trying to solve tomorrow’s problems with yesterday’s solutions.”
Beef +Lamb New Zealand data shows sheep numbers have fallen from about 33 million in 2009-10 to 26 million in 2020-21 with ewe numbers declining from 22 million to 16 million over that same period.
Since 2017, forestry companies have bought and planted at least 175,000 hectares of farmland, resulting in a drop of 1 million stock units, which equates to the loss of $170 million in farm production and $245m in export receipts.
The Climate Change Commission this week forecast 500,000ha of new exotic forest plantings between now and 2050.
Wiese said in addition to sector efficiencies, the government needs to end the ability of fossil fuel industries to offset all their emissions by planting forestry.
He acknowledges the difficulties facing sheep farmers in particular and said Alliance, in common with all meat companies, is looking for new ways to create value.
Sheepmeat will always be a niche product and Wiese said it will benefit from the continued growth in demand for protein, with the potential of commanding less volatile, premium prices if it can be positioned as a premium product,
“The opportunity is definitely there, it’s how do we value the supply channel to get those premium prices and how do we get this back to farmers,” he said.
