Sunday, April 21, 2013

Meat industry reform: where to now?

I attended the meeting organised by the Meat Industry Excellence Group (“MIEG”) in Christchurch last week, which was to outline their principles and “gain a mandate from farmers for industry change”

I commend all those involved with Mieg for the time and effort they are putting into this and seriously believe that they are well intentioned as to their goal.  They did get a mandate for change, but unfortunately I am not sure if they got a mandate as to how to go about it.

However while I don’t want to be the pessimist in the room, I am afraid it feels like déjà vous to me.   A few years ago a group known as the Meat Industry Action Group (“MIAG”) was trying to achieve a similar goal and unfortunately we all know how that turned out. 

I was optimistic after reading the media reports after the Gore meeting, but less so before I attended the Christchurch meeting because:
  • I read that two members of the MIEG executive had already resigned, because essentially they disagreed as to the way of going about obtaining industry reform, to which I shared similar reservations; and
  • MIEG's first principle of 6 outlined by them is “Up to 80% of red meat processed and marketed by one “coalition of the willing” structure”  Note the two coops only account for around 50% as I understand it, so we are talking about convincing private companies owned by non farmers to be part of this big entity; and
  • I spoke with a member of the now defunct MIAG who agreed with me and echoed my concerns that MIEG with this 80% goal are biting off something they cant chew and as such are unlikely to achieve anything (at least not for a long time) and that we need to focus on the coops, where farmers have some control and can force reform.  We have no influence over Anzco, Affco etc who are privately owned companies, (who incidentally had no representatives at the meeting, one because they never had enough notice apparently and another would not attend).  

At the meeting there were a number of speakers, mostly talking about business models, target and niche marketing etc which is all well and good but probably more matters for any final entity that one day might be formed.  For me personally the “on the money” speaker was Professor Woodford of Lincoln University who basically said “sort out procurement and it will all flow from there”.    I am have been banging on about this for years now.

We need to change this immediately, along the lines that we all get paid the same on any given day (equitable and fair), and receive say 60 to 70% of what they budget and get the rest at the end of the season if they achieve budget, in return we as farmers must contract to commit all our lambs to them.    We as shareholders need to unite and make the coops do this (we need everyone as the traders, Landcorp etc won’t be keen on it).   This procurement question was put to Mr Garden of SFF and he didn’t answer it.

A merger of the two coops in name and administratively wise only (no restructuring or consolidation in the first instance) which is all I advocate initially, is not the panacea,  but I believe it’s a start which would assist in changing the way they procure lambs and hopefully achieve MIEG's ultimate goal.  I put this to the executive at the meeting, who did not agree which is why I felt somewhat pessimistic about change as I just cant see how you force private companies who have a responsibility to make as much money as it can, probably at the expense of the grower as opposed to cooperatives who in theory have an obligation to make as much as it can for its supplier shareholders (the growers).!

Finally a video presentation given posed the question: if a man in the woods gives his opinion and his wife is not there to hear it, is he in fact wrong?