Saturday, February 9, 2013

Meat companies researching crossing sheep with dairy cows?

No they are not, at least I hope not, but hopefully this got your attention. I like most farmers have become incredibly disillusioned with the competency of our meat companies. Things have to change, but will they? I have had many private conversations with many farmers about the problems and what perhaps should be done, but I am not sure if this achieves anything. I believe we need to take the debate public and get everyone’s attention and input and perhaps again (MIAG) get momentum for change. If we keep going like we are with wildly fluctuating prices from year to year, sheep numbers will continue to decline, even though simply because of falling numbers I believe the prices will be better next year or the year after.

I have been a staunch supplier of alliance, I believe in loyalty, but after last year’s debacle, who are you to have any faith in? I went to some bank presentation towards the latter end of 2011, where a rural economist from wellington presented a graph showing how the price of lamb had increased at a rate very disproportionate to its substitute products like beef, chicken, pork etc: in other words you did not have to be a genius to realise the price was unsustainable, this was well before the new year of 2012. Surely a prudent well managed company would act conservative in the wake of such information; yet the meat companies continued to pay ridiculous money for lambs well into the New Year and even more ridiculous money for store lambs, these cooperatives are supposed to be acting in our best interests. The standard line we have been fed for the losses is the drop was so fast and so unexpected, but essentially they were caught with their pants down, should they have been, I don’t believe so (at least not all the way down) and have heads rolled over it, NO.
Lamb prices are and were particularly last year fuelled by procurement battles for the lambs from farmers between the companies, not by overseas market demand, we all know this. What business determines prices by procurement, surely its demand? If the meat companies kept out of the Store lamb market all together, then we may be getting paid more this year, as instead of all cooperative shareholders having to cover their losses by getting paid less for lambs, it would only be those farmers who bought lambs suffering now, not all of the shareholders. It’s still happening, a farmer told me recently if sells his own lambs to lamb plan, he reckons he will make around $10 a head more than keeping and killing them himself, that figure is probably increasing giving the rate the schedule is dropping, how farcical. Alliance is just as much to blame in this regard as their schedule is more based on what SFF pay than anything else. You even get an email these days from them that shows you if x% of lambs meat the yield requirements, then you will receive this amount, i.e. to essentially show you that their price is competitive with its main rival SFF. It’s not a yield premium at all; it sets its schedule to take account of what its average yield payment may be to ensure that their price is on a par with SFF.
Alliance this year announced its $20 upfront payment through the media, the first I knew about it was reading the farming magazines. Wouldn’t a well run company inform it shareholders first before the media, and in writing and in sufficient time to make an informed choice, not days before the cut off date to make the decision (when I received it), this again just smacks of incompetency.
I submitted a query in writing about some lines of lambs that were killed in January and February last year, to date I have had no response at all, what sort of company treats a shareholder like this, an incompetent one I would suggest. I can single out Alliance as I have been dealing with them, but I doubt if the others are any better.
All of the above are simply signs of poorly run businesses. I have a lot more to say, but limited copy space precludes me from elaborating on it now.  Note I wrote this to go in local farmer periodical.