The meat industry's fast diversification impresses Guy Trafford. But he wonders where rural workers will come from in the future when we have much stricter visitor controls in place

The meat industry's fast diversification impresses Guy Trafford. But he wonders where rural workers will come from in the future when we have much stricter visitor controls in place

The Meat Industry Association (MIA) have just published their report on the month of February. It makes an interesting contrast to the same month last year when life was a lot more stable.

Gross returns were almost the same for both years at NZ$921 million for sheep and beef. However, that’s where the similarities finish. China was down -45% and the USA, Taiwan, Japan and the UK all up, making up the losses.

Singapore, which had been declining in importance grew a massive +726% from $2.1 million to $17.3 million.

Credit has to be given to the meat companies for managing to so rapidly find alternative markets when the Chinese market closed up shop.

The other positive that can be taken from this is the demand for animal protein, at the right price. And, it seems that there is not a huge difference in what the different markets are prepared to pay.

At the moment, the short term issue the meat industry has is getting animals processed. This is especially so where farmers are watching the winter countdown and reports are of a 3 - 6 week wait for sheep and potentially longer for cattle.

Staff at freezing works are required to operate with the 2 metre safety zone which is slowing through-put down to 50% and some have reported it to be down to 30%-40%. Market reports are that importers are prepared to pay but with half the planet under some form of lockdown and many of these countries in normal times importing New Zealand product for the restaurant trade it will be some time before trade continues.

As has been noted probably too often now, China is still our biggest hope for some sort of market resurrection.  While schedules have held up to this week with the falling NZ$ taking up the slack, things now have got a bit more grim and not just for venison. Lamb and mutton have had -25 cent and -20 cent falls respectively and beef has had falls of -15 cent to -20 cents from some of the works.

Some store livestock sales are taking place through the online systems but they don’t appear to be capturing anything like what the saleyards would put through. The Stock Agents Association is calling for saleyard auctions to be released from the lockdown sooner rather than later.

Going online to see what feed stocks are available and at what price, the news doesn’t get any better. There appears to be a nationwide lack of good quality feed and what is there is, is not going cheap. While the news has moved away from climate change temporarily, many farmers will be hoping for a mild winter to help alleviate problems. With the lockdown about to move into its third week, not a lot has changed depending upon your situation. Numbers of those affected with covid-19 appear to be under control and hopefully by the time this is read we will have seen two successive days when new numbers have dropped. It is unlikely that there will be any reduction in the 4 week lockdown but at least for some regions, perhaps island by island, it looks as though the nationwide Alert Level 4 we are under may not persist much beyond 4 weeks.

The government is coming under increasing pressure to make more exceptions to the lockdown rule. While these all appear on the surface to be quite reasonable requests (such as the saleyards above), the risk is the more exceptions there are the more likely ‘holes’ will appear and we end up having to prolong the 4 week lockdown period. As we go passed the two-week period people are going to get more confidence that they are safe and ‘push the boundaries’. It is going to be these next two weeks that are the most critical ones.

The coming rural labour shortages

An interesting aspect to New Zealand life in the years beyond the lockdowns is going to be where both agriculture and horticulture are going to get their labour force from. This year is already proving difficult and we have had a ‘captured’ work force already in New Zealand with many overseas workers able to get extensions and stay on longer. If the border proves to be a lot more difficult to come through in future then the traditional sources of labour from the Pacific and parts of Asia, notably the Philippines, may be more difficult to access.

Unemployment within New Zealand is set to skyrocket with estimates ranging from 11% (as occurred in the late 1980’s after the restructuring of the New Zealand economy) to as high as 30%. This will mean that there should be plenty of domestic workers available, but unfortunately New Zealand society has moved en mass to the larger urban areas, particularly the ‘golden triangle’ between Tauranga and Auckland. This may mean that horticulture in this area may be able to access these people to help on farms but it is still going to take quite a mind shift of the potential workers before they are prepared to shift to more manual work.

And then there is still the rest of the country without the same numbers available. In a world flush with capital there would be some potential for more automation, especially in horticulture. However, after this shock if there is capital available, farmers will be reluctant to invest any more than they have to, despite what the economics say.

One of the potential solutions is going to be getting the world vaccinated but that appears to be some way off yet and even further before governments have confidence that any vaccine provides permanent safety from covid-19.

Another issue is the logistics around the manufacturing and distribution. Assuming we want the whole 7.85 billion world population vaccinated then if the manufacturers work 7 days a week, they will need to churn out approximately 21.5 million vaccines per day for a whole year. Then they have to be distributed and given. This is certainly not going to be an overnight cure. In a humanitarian world, it should also be the least able to protect themselves, i.e. the developing nations, that receive the vaccines first with the likes of New Zealand, assuming we can eliminate it in the meantime being at the end of the queue. I wonder how the USA, whoever is President at that point, will react to that?

P2 Steer

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22 Comments

Another aspect is that, in decades to come, there will have to be repayment of the massive debt we are running up. This demand (via yes, New Taxes) subtracts directly from the capital available, needed to make some of the changes you mention (changing products grown on farm, automation).

The meat processors have returned abysmal profits for a long time now, far too long. The objective is twofold. Pay enough to the farmers for stock to keep them ongoing and then to be financially buoyant themselves, sufficient to carry through from one season to the next. The move into further processing high end value product came with difficulties attached in that it requires really serious aptitude in terms of product safety and presentation to retail right through the entire process. The workforce has to be trained and up to it. Not that easy to attract and retain that sort of labour, monotonous work standing in the cold, especially when only on a seasonal basis.

Balanced reporting so thanks. Meat may provide some much needed jobs in the short term if demand continues across alternative markets other than China. Great to hear that we can quickly pivot away from the huge dependency we have on China. May convince some rabid vegan haters it’s a productive industry with economic benefits. Although haters will always hate. I know where I’d rather get my B vitamins from! MEAT! Not a pill made in a factory.

Balance reporting - Some top sources of B vitamins include meat (especially liver), seafood, poultry, eggs, dairy products, legumes, leafy greens, seeds and fortified foods, such as breakfast cereal and nutritional yeast. Sounds like you absolutely hate vegans?

Vegans absolutely hate meat eaters so whats the difference?

In NZ we have a mindset that service jobs or white collar jobs are superior to manual work. Look at the pecking order of University Degrees over trade apprenticeships. Having 10% or 20% unemployment doesn't mean we will have labour to fill the shortfall on farms and in the processing plants that overseas staff currently cover. Labour is not that fluid, especially if there is significant government support to provide an option.
Northland is an example - with local unemployment and processors offering intensive training programs but having to fly in staff from the pacific Islands.

Its indoctrinated in our education system. If I had been informed properly while at secondary school of the opportunities trades and other work on the job industries provide I probably wouldnt have gone to university. I was told if you want to be successful university is the way.

Yep if I had my time again I would have gone for a trade rather than burying my nose in books.
In my younger days in the corporate office world I used to think the attitude I sometimes came across to the blue collar workers was just some kind of in joke thing. But no, lots of people really do equate $$ earned as to 'I worked hard for that/deserve that'

The processors are to be congratulated on their success in keeping meat flowing to our overseas markets.
However the current falling schedule is unrelated to overseas pricing, has some relevance to additional costs in maintaining staff physical distancing and the resultant higher processing costs per head but is mostly/largely a consequence of the current drought. One processor was clear - the latest 15c reduction in cow schedule was purely supply and demand - farmers need to unload before winter. The cattle will come regardless of the ruling schedule. The best we can hope for is one of mid size processors keeps them a little honest.

It just made me think about family farms way back when. The wife would cook, clean and provide the labour via multiple offspring.

then get bored..have an affair and take off to the city..(just some real life stories)

Sadly, our traditional Farm, Agriculture, Horticulture & other nature based producers are all being ushered for their guarantee loan based on FIRE economy back bone, The OZ banks, central/local govt, majority of politicians, economist were all sub-consciously cave into the mentality of 'too big to fail', if it does? then the rest and future tax payers shall carry the burden. This book is one of many out there, elaborating this:

https://www.scoop.co.nz/stories/HL1507/S00101/the-fire-economy-new-zeala...

Looking at the BOP...It will be interesting to see how redeployed workers responding to the kiwifruit sectors labour shortage fare after a week or two of being rained off with no rain pay and being mercilessly shortchanged by cunning orchard owners....

I briefly worked on a farm in my teens, at the time you got less than the dole for your slog, only the dumbest would have stayed. I have not seen it improve a great deal, long hours, poor conditions, limited prospects, little respect and bosses of questionable intellect with their heads full of how it was in their day. So the land based industries have turned to those who can be trapped by a work visa. This event has shown up the wisdom of reliance on that, my take away is "you reap what you sow". Let's see how many are smart enough to learn from this?

Or how fast the Automation Drive replaces those unwilling woikers with Tireless Robots. The California Grape Harvest is a forerunner, as told by Chiefio....

Sadly the land based sector isn't smart enough to harness capital and automate they prefer to harness capital to buy boats and baches..... I first saw a milking robot in Ireland nearly 25 years ago I was astounded having grown up on the legend that NZ dairy was the world leader in innovation and you used your hands to milk...

Sadly some whom comment, are not smart enough or would rather choose not to educate themselves. NZ agriculture has plenty of intellect and certainly would automate if it was economic under our pasture based farm systems. Strange how an automated dairy farm in our district is still on the market at a cheaper $/kgms and $/ha rate than others which have sold! Maybe it is that automation brings with it a raft of extra expenses with out the expected labour savings. I also know of a 2 local automated dairy farms which have since been decommissioned. One of which was a demonstration farm for a business then selling automation for dairy sheds. The business continues to be very successful but no longer services or sells robotic milkers.

Having grown up in the city I too worked on a farm in my teens. Also paid less than the dole, but treated it as on the job learning. Loved the physical outdoor work, with the feeling of satisfaction from having done something worthwhile at the end of the day.
Completed a tertiary education and went back to farming seeing good opportunities. Thirty years on and after a fair share of knocks, I wouldn't change much other than the timing of some of my decisions.
With unemployment rates below 3% in our district,and less than 5% nationally, finding suitable quality employees required to help run a finely tuned, changeable on a daily basis business is near impossible without "go getter" migrants.
But who am I to know having been only the dumbest!

Regarding rural wages and work environment. Lets agree anyone working for wages twenty,thirty,forty years ago was for many a pretty crap experience. Too many farmers held the 'carrot' of eventual farm ownership as justification for poor pay and long hours. Or worse - "man up - that's how I got to where I am".
Modern wages and working conditions are vastly different. Organisations such as Fed Farmers with their employment contracts provide much better protection. Our minimum wage law protects against excessive hours and our tenancy laws give workers rights.
Our staff are on a range of salary between $60k and $100k and no one works more than six days without a break.

That was a big reason why I didn't pursue farming, even though I would love to. I know of a couple sheperds who gave 30+ good years to their bosses and have not much to show for it bar a flogged ute and busted knees

This event will highlight the big demographic problem we have coming, is here now. Its no ones fault but simply an ageing population. Rural industry will always appeal to a group of people and as commented most wages are not to bad. The key is how do we work these industries, well all really - urban and rural, when we have less people to do the work and young ones want to live in urban areas. Be interesting to see what happens as some industries struggle to operate in the next 12 to 18 months and how many people will transfer across to others such as primary and then remain when the world starts rebounding and things change again.

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