The number of independent livestock operators has grown over the last few years, and Keith Cooper blames them for affecting meat company margins.
Why has this situation arisen is the question he should ask? Firstly most of these independent agents have come from the PGG and Wrightson stable, many after the amalgamation, which based on PGGW performance and reducing market share, has severely underperformed.
These independents have blossomed, farmers appreciating service and lower costs in marketing their animals. The bigger company forgot the agent is more important than the brand, and farmers have followed good agents into independence.
I think another reason for the swelling of independent agents is meat companies historical lack of transparency. Secret deals and the hiding of schedules built a mistrust of even the Co-Op companies they owned, and they sought a true independent agent to ensure they got the best deal.
With rural debt ballooning in the past years, cash has become king and waiting for a payout in the future is not financially feasible for some.
What are your views on why independent agents have blossmed in the past few years?
Swarming livestock agents are holding meat companies to ransom and affecting company margins, says the chief executive of Silver Fern Farms. Speaking to Rural News in the wake of the cooperative’s results announcement, SFF’s Keith Cooper said the trend is hampering supply chain reform and runs contrary to the trend in lamb numbers.
“What we’re seeing is a proliferation of these independent agents increasing the competition for stock in the field and breaking down any hope of creating integrated supply chains. “The reality is companies need to make money to be sustainable and to reinvest in their businesses. If they don’t it’s ultimately going to cost suppliers if we don’t keep up with innovation and technology.”
Cooper says the large number of agents is giving a false sense of value to suppliers. “It’s all counter to modern supply chain value management, about the customer being linked to the grower.” Data soon to be published will show that getting better prices at an auction on the day is a short sighted philosophy, he says.
Though acknowledging some farmers see the auction system as the best way to maximise value, SFF’s view is the best way to create value is by producing the product that aligns with customer requirements.
26 Comments
My independent agent works for me. I want him to maximise my returns not these idiots profits.
In the big dry, the pricks wouldn't kill my ewes even though I killed the same number of ewes year after year at the end of November. I eventually got them killed at the end of Feb for $35, $30 less than i would have got in November and they ate all my grass. Now he wants loyalty, what a dick. Mr Cooper can go stick his head where the sun doesn't shine for all I care. Its time SFF replaced the board and the CEO. I guess we have to wait till they go bust for that to happen. Meanwhile this company supported electronic tagging of all animals and then Ram lambs which AFFCO were keen to get rid of as they ruin our quality but the big boys who carry a lot of ram lambs had a word with the works and it got dropped. Also we didn't even get to vote for a director, they chose some prat for us.
Ive got a bottle of Champagne I'm going to open with the locals when this company finally goes down.
This is the rural part of the forum Chris??? If farming interests bother you so, I am sure you can find a forum where your interests lie. And please explain a rube...
Lets face it Andrew we are at war with our business partners.. crazy but true. And right now as the warm wind blows they plot against us....as our fields dry, our crops wilt, they sit and plan their thievery
The processing companies go on about pasture to the plate marketing and wanting loyalty from farmers to supply. How about loyalty from the processing companies. They take too long to put out their forward prices. The companies come up with supply contracts and when it suits them they renege on contracts to shore up there end of year balance sheets. A farmer can have animals booked in to the works for slaughter as what has happened to me and the works lay of staff and reduce shifts and then you can't get the stock in when they are at their optimum weight, so you are forced to sell at auction and guess who buys them, the bloody works buyer at a reduced price. Cooper seems to wants to blame every one else, he needs to look in the mirror. Famers that have been supplying same sheep, same time of the year, year on year go to book sheep in get told there is no space. Processing companies manipulate farmers to the detriment of the pastoral industry.The reason farmers are reluctant to commit to supply is the lack of integrity within the meat industry, and the lack of transparency.Famers need to make money also so they can reinvest in their business and without the farmers the companies will sink, There is to much over capacity in the meat processing industry and until the meat companies learn to work together in a more cooperative manner the industry remains fundamentally flawed. To quote Cooper "last man standing" one you need something to shoot at, two you might be the last man standing but it could be a lonely experience.
Dear chris we are open to surgestions you seem to be a xpert
Right now we seem to be borrowing our way to survive perhaps you should take a pay cut since you are such a expert and can survive without the need of money the country needs to generate money some how we don't seem to be alowed to mine some of the wealth in our national parks so what do you surgest cheers Brent
If Mr Cooper is so anti the independant agents perhaps he should desist from useing them to procure stock!
His main point however is valid, the problem being farmers see SFF or whatever meat company as the market. They're not the market, it is the customer and capturing the maximum return from said customer with an efficent supply chain and top marketing.
Its somewhat ironic that elsewhwere in the news today Fonterra has lifted its payout by another 30c/kg. Here is a group of farmers that work together, garantee their company 12 months supply, hence allowing maximum efficencies in processing and marketing.
When are we sheep farmers going to get it? We must work together and look at the long game not focus on an extra 20c/kg here and there, thats the crumbs off the table. I agree some new leadership is needed but even that will be futile whilst we are so small thinking.
Quite right SS. We do need to get those efficiencies by guaranteeing supply to our companies.
Interesting dynamics developing again this year, with a drought possibly dictating supply.
A bunch of farmers down my way got together and had an on farm lamb sale, so they could get rid of their lambs in one hit. Alliance came a long and bought everything killable, and payed top dollar, by all reports about $10 more than if they had been hooked. I would be a bit peeved if I was an Alliance shareholder!!!!. The lighter killable lambs they bought were placed on to their own finishing farms. The ironic thing was that the vendors were all SFF shareholders.
I disagree, monopolies are a disaster, they may give short term relief but in the medium and long term they will demand monopoly rent. Fonterra is a disaster in the making, it may take a few more years but its future will not be as rosy as people think. Its product mix gives it huge advantages over meat producers but it will still screw up.
We need new investment, new ideas not bloody great companies with no competition. What we need to face is that our cost structure is out of kilter with our markets, we need less Govt and less costs. If the oil price keeps climbing then heaven help us.
I had a friend who was a works agent ,he gave up after 7 years as he got sick of having to lie to farmers all the time.
The meat industry is going to change out of all proportion in the next decade I say, let the market do its stuff.
Good points in your article Andrew.
Smaller nations need to think smaller, but with greater ideas – that is the future and this leads unavoidable into sustainability and great NZfarming, diversity, quality products etc.
Nature, NZfarmers practising sustainable farming, communities, the taxpayer and eco tourism are currently the losers – just too many.
A healthy environment with clean and accessible waterways, leads to good community spirits.
Smaller nations need to think smaller, but with greater ideas – “100%NZpure Economy” - a new way into the future - for the wellbeing of our nation and the next generation.
Aj , im not suggesting a monopoly. I would however love to see a single stong co op for meat along side one for wool as well. I believe we have an unprecendented opportunity to leverage off the exceptional supply demand dynamics presently in existence. Lamb prices in the UK are up 10% in the last month on top of what was already record prices. We have for the first time in a very long time the whip hand in the markets and if UK and Europe dont front up with the cash they know that the US and Asia will. We are in a wonderful position but unfortuately our messed up procurement/ processing system wont allow us to fully capture the gains.
I cant see your rationale behind knocking Fonterra, IMHO they are doing a bloody great job for their shareholders and I hope the dairy cockies dont stuff it up by splintering off to the proliferation of independant start ups. I watched a segment on CNBC where Steve Segwick was compareing Fonterra to OPEC in the context of its power in the market. Well played the NZ dairy industry!
The words of a typical “ NZDairyfarmwallstreetbanker” – “it’s us and we don’t care about the “Rest” - with the tendency of blinding megalomania and greed !
Q-I cant see your rationale behind knocking Fonterra, IMHO they are doing a bloody great job for their shareholders and I hope the dairy cockies dont stuff it up by splintering off to the proliferation of independant start ups. –Qe.
Sheep shagger is right, meat companies are not marketing companies they are processors. There does need to be in my opinion a single desk marketing organisation responsible for selling NZ's meat protein. Currently we rely on traders to sell our meat at the lowest price lok what happened to NZ's veal exports. One compeny was doing a good job of it others entered the industry, undercut each other to get market share now we have veal stockpiled in USA and virtually no market. The meat industry is going to change severely because the supply of lambs are going to diminish due to lack of profitability. 80% of the xmas chiiled lamb that went to the EU was last season's lambs so those consumer's that paid alot of money for a "taste experience" may strike a one year old ram ? lamb thats been shagging,testicles the size of melons and will have a very strong flavour that peoople will not find pleasant and would they consider buying more NZ lamb, don't think so.The Japanese call it the barnyard flavour and they don't like it. Just another example of our processing companies/marketing getting it wrong, at the cost of the farmer.
Janette
Our markets are controlled by large multi national corporates. They thrive in globalisation and have suceded in total control of the food chain via highly profitable supermarkets. Take Tesco, going on memory 35 billion pounds in sales 12 billion in profit.
There is no way in NZ we could ever have the power to go head to head with these monsters. They play with us like a cat and mouse. They will not give up their profits and have the ear of Government.
The processors will always try and play suppliers off against one another its the name of the game, its just unfortunate our lives depend on it. I think getting rid of ram lambs by x-mas would be a great start to getting our quality better, we also need to allow more fat, too many lambs are too lean.
I think some of the smaller lamb suppliers into the USA Canada are doing a a great job. I saw our lamb their and it looked great. I still have grave fears for the future of sheep farming in NZ, the trend thats being going on all my life is all downhill.
The agriculture bubble can be compared with the property one. The situation is accumulating and accelerating to bursting point. “The world” will not be able to pay for protein - unless prices go down.
This isn’t possible under Climate Change and the current worldwide situation and beyond – a real dilemma.
Even when it does it has devastating consequences for big co-operations. Animal welfare standards and our environment and health will suffer because of that. Communities will dissociate from the farming community because of that.
Nature, NZfarmers practising sustainable farming, communities, the taxpayer and eco tourism are currently the losers – just too many. The “Patchwork Economy” is continuing we need urgently major changes.
Smaller nations have to think smaller, but with greater ideas – “100%NZpure Economy”- the new spirit of New Zealand - a structured economy.
Walter old bean...first the learning to live without debt...then the discovery that fiscal prudence brings financial reward...leading to a wealthier country no longer being farmed by the banks...Concentrate on driving that message into the brainless and there might be a future. The govt and RB will not do it. They are very happy to provide a feast for the banks for as long as silly Kiwi can be sucked into borrowing to get stuff....The same borrow mentality sickens govt.
The best news to date is the rise in long term rates taking place due to Bernanke's fiddle and the realisation that the USA is flat broke..rates will rise a good deal and the overleveraged in NZ will not be bailed out by govt because this country is broke too. Stand back and watch as the ratings agencies put the boot in during 011. Do not be surprised if a snap election is called early in the new year.
The changes I’m (and a few others) looking for and **advocating here for months must come from both side, but first the private business sector, the public (at least part of) incl. the media should force the government for changes. In case it doesn’t happen soon, only revolutionary events will lead to changes – for the better or not I don’t know.
The PM with his team isn’t active enough to strive for **a better NZ and in my opinion badly advised by policy makers in this country and from abroad.
sounds like home,
robertbrowne Today 02:44 AM The IMF/EU deal is now going to be voted on in the Dail next wednesday and one government TD has already indicated that he will vote against it. The reason for the vote is that Sinn Fein threatened the government with another Constitutional case. Cowen thought he could pass the deal without putting it to the Dail which is unconstitutional.
All is not lost, the IMF have now refused to submit the loan cheque to be signed off and the EU are scratching their heads.
It was one thing to be able to hide behind a budget but now they are going to have to come out and "Vote" to hand the country over to foreigners. Who wants their name on that roll call of ignonmy? In any event, the bailout if accepted is only a holding exercise. 40% of salary cheques written each month are financed by borrowed money. In reality that 40% must then be paid for with a 7 year loan from the IMF and EU. What kind of madness is that? We have people in a bankrupt Irish Public Sector earning over 500,000 Euro and supplying Mr. Lenihan their willing stooge with a master plan to get them out of the mess....tax the blind (hit with 3 measures) reduce the minimum wage rate by 12% leave all government workers protected by the Croke Park agreement but reduce dole payments. As you can see Ireland is morally bankrupt and that is our gravest dilemma. Government workers for the expedient of trying to protect their salary for another few months have failed to admit that Ireland has an insolvency problem not a liquidity crisis. When you pay yourself with borrowed money and plunge the economy into a debt deflationary crisis you have an insolvency crisis. In times of trouble you unite not divide a society but our leaders think they can get away with it. They are that morally corrupt and will soon be financially bankrupt. ReportRecommend
de_Tocqueville 21 seconds ago R & B" As you can see Ireland is morally bankrupt and that is our gravest dilemma. "
Seems like Taoiseach Brian Cohen and Co. have misplaced their Irish catholic values. ReportRecommend
jonlivesey Today 02:04 AM Recommended by1 person If Ireland is selling its Banks - and I think they should - it would be a good idea to get on with it. Next year there will be a lot of over-supply. drjonathanwilson Yesterday 07:16 PM Recommended by
12 people And so the lies continue to flow.
Mrs Merkel must tell her electorate that the permanent rescue mechanism (PRM) is not in effect a debt pooling mechanism (what the German taxpayer does not want to hear) but rather a barber shop for greedy investors (what the German taxpayer wants to hear).
In other words, like David Cameron on the EU Constitution, Mrs Merkel must walk backwards towards her objective.
Like David Cameron, Mrs Merkel and Sarkozy are consummate liars - they know how to brew the best of lies - a grain of truth mixed with generous helpings of deceit.
This is necessary as the national and global socialist agenda can only be carried along on a river of lies.
Jonathan http://www.telegraph.co.uk/finance/financetopics/financialcrisis/819465…
Wolly," first live without debt." Credit Card debt in this country is more than rural debt. How ironic. The rural sector wouldn't be able to cope with higher interest rates it would spell the death of NZ's economy which is struggling anyway. Meat exports down about 18% Dairy up slightly but it usually is this time of year with the peak in production. We re already seeing our European markets not being able to afford high protein. Interestingly if you read the new business strategy for NZ "going forward" and how to grow NZ"s economy over the next 5 years. The focus is on Tourism, It, and a lot of the detail focuses on how successful Ireland was, Duh! Agriculture not mentioned once. The disconnect between urban and rural is getting wider and wider and that reflects in govt policy.
Wrong. Rural debt is currently about $48.5 bil, whereas credit card debt in NZ is only about one tenth of that $4.4 bil. New Zealanders have never been big splurgers on their credit cards.
If you want to compare rural debt with all consumer debt (that is, including credit cards, personal loans, everything except housing debt) you 'only' get to $11.8 bil. or less than a quarter of rural debt.
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