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Farmers assert their independence from big meat processors. Allan Barber looks at the factors behind the decisive votes. Your view?

Farmers assert their independence from big meat processors. Allan Barber looks at the factors behind the decisive votes. Your view?

By Allan Barber

Keith Cooper’s resignation and call to farmers to give meat companies their levy funds for marketing appear to have, in B&LNZ chairman Mike Petersen’s words, “crystallised support for the organisation.”

He says he has received lots of emails from farmers confirming they want their own organisation with the five yearly referendum providing the opportunity to vote on its future, while they certainly don’t want to hand over the total marketing responsibility to meat companies.

Petersen told me that the recent election of directors was an endorsement of the two candidates, James Parsons in the Northern North Island and Andy Fox in the Northern South Island wards.

Equally satisfying from his point of view was the endorsement of B&LNZ’s direction following its narrow mandate at the last referendum and the resulting business restructure.

The voting returns show Parsons winning 70% of the votes cast, whereas Fox only received 45% of the votes.

The difference reflects specific factors – Parsons had only served one term, Fox two, while he had spent less time talking to farmers in the large top of the South Island ward.

There was also a suggestion a large Silver Fern Farms supplier almost certainly voted for the second candidate, Philip Smith, who took 36% of the vote.

B&LNZ holds its AGM next week in Hawkes Bay and will be very cheered by the vote of confidence it has received from its levy paying members; it will probably be grateful to Keith Cooper for lifting the organisation’s profile which gives it the chance to demonstrate that it provides effective representation, information and services for its members.

Replacements

ANZCO’s Managing Director, Mark Clarkson, has been nominated by the Meat Industry Association to join Craig Hickson from Progressive Meats on the board of B&LNZ, as the replacement for Cooper. Mike Petersen told me he is very pleased with the nomination because of ANZCO’s strength in both sheep and beef and their success in Asia, notably Japan and Korea.

The big question remains why Cooper decided to throw his toys out of the cot when he did, having been such a positive contributor to the improved perception of the meat industry in general and to the board of B&LNZ in particular. It was always totally predictable that farmers would not be prepared to let meat companies use their money to do all their marketing. After all, mistrust of meat companies is endemic among farmers, even when prices are good.

Judging by comments by Cooper and chairman Eoin Garden, Silver Fern Farms is clearly irritated by B&LNZ’s successful application for Primary Growth Partnership funding which may be at least partly due to the uptake of FarmIQ, rumoured at this stage to be disappointing.

The timing of the announcement of the PGP application being granted which came two days before Cooper’s resignation makes this the likely cause.

Although B&LNZ’s project focuses purely on achieving best practice on farm, Silver Fern Farms appears to see it as crossing over into territory for which FarmIQ was established. MAF’s Independent Advisory Panel, responsible for allocating PGP funds to qualifying programmes, obviously didn’t see it the same way.

The on-farm best practice project involves other meat companies as partners and it will target better uptake of technology and research, improving farm business skills, and introducing more rigorous benchmarking, taking advantage of the Economic Service’s capabilities. James Parsons has campaigned on ensuring B&LNZ provides much better measurement of farmers’ performance and outputs, rather than concentrating on inputs, while Mike Petersen believes a major constraint on farmers is that they don’t know how they are actually performing against their peers.

Transparency signals

Farmers also want more transparency of market signals, being frustrated by the lack of information they believe they receive from the meat companies. Ironically I suspect the companies believe they try hard to keep suppliers informed about market signals, while the suppliers would say they only get the information it suits the companies to provide.

It’s a difficult area, but there’s no doubt an independent provider of market signals would be seen as more credible which is where B&LNZ, the industry good organisation, wants to play a bigger role. However this is difficult when it has no responsibility for actually selling the product.

The Red Meat Sector Strategy which was released last year has provided B&LNZ with a very clear message about the gains to be made from concentrating efforts behind the farm gate and better industry alignment, as distinct from thinking there are major gains to be made from traditional myths like capacity rationalisation and transport.

This is why the PGP project for which it received funding approval offers the whole industry the chance to participate in performance improvement. It would be unfortunate if SFF believes it will conflict with FarmIQ, because both programmes will benefit the industry and achieve better alignment, one of the key recommendations of the Sector Strategy.

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Allan Barber is a commentator on agribusiness, especially the meat industry, and lives in the Matakana Wine Country where he run a boutique B&B with his wife. You can contact him by email at allan@barberstrategic.co.nz or through his blog at http://allan.barber.wordpress.com

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5 Comments

farmer support rising what a joke when the farmers wake up and find out how Beef and Lamb has betrayed them over this NAIT
 We will vote to have them wound upThey have betrayed us didn't even give us a vote on it as a sheep farmer when  sheep are put into it it will cost our farm at least 20 thousand dollars a year  I do not find this funny Cooper was put in there to push NAIT now the rats are leaving the ship
Farmers Start to many things in the end they can't control them and have the ball to shut them down almost like a addict

 
I am 25 have grown up on a sheep and beef farm for most of my life I was lucky enough to be able to be educated in accounting and economics and gain experience in financial markets overseas as an equity trader
My first problem with farming it is not the Farmer . Farmers are not reluctant for change they adapt to technologies, its fact  that Facebook  just will not help a lamb yield higher , they have shown the ability to change every season they are not static they move with the market. It is the ability or lack of  these board members to change they have all failed in my opinion there is no difference in what these people have  been doing  or what they did  10 years ago ,152 million to setup FarmIQ Really ? For a database, website, and advisory on best techniques.  Well done I could really see Innovative companies really wasting money like that.  Apple should mimic this behaviour  and we will see where the Nasdaq would land
2nd problem is Transparency
 I have conversations with a lot of farmers I ask the same question  “How   does the meat works / Industry sets its meat schedule?”  They all respond its based on  demand and supply and cost of producing end products . So Ok I can understand they you could control  supply of stock in theory  but  demand ! So every year demand drops at same time? A true market never drops exactly the same time every year or around the same time. I Believe these are complex calculations with future predictions on demands I can’t understand who is making these calculation as none of my  fellow Finance Economic colloquies work for the meat industry .Do the  board members  who may have meat market experience really have the qualifications to  calculate what   feel like a controlled futures market even with experience in the industry you would have to have  in-depth knowledge of  economic modelling  and be predicting correct every year if it truly was based on  variable demand and fuel prices which it suggest with its pricing  method.  Can they not clarify or justify to the farmers what is truly undermining the price of the schedule.   The high dollar is not an answer
Third problem Consultants
 I remember growing up seeing farmers using farming consultants ,giving advice of movements of market  and strategies, correct techniques to be using on farm, a lot of this  advice  was incorrect and cost 400 per visit for some people  . I could have told them then, if your debt levels are too high you will fail if there is a deviation away from your acceptable commodities prices   . Should these farmers not be entitled to their money back if the advice was incorrect?. How can a  student out of Lincoln university explain and give  advising on complex matters such as what the meat markets pricing is going to do, FARMIQ cannot do this yet how can these consultants do this . The banking industries a regulated in there advisory roles and so to should farm advise because one bit of bad advice could be the fall of that farmer. The payment for correct advice should be on post action eg percentage of saving or percentage of earnings from that advice
Can we not learn and move on it’s not just the future of farming in New Zealand it’s the future of New Zealand  

RNZ, I think the points you make are abit idealistic. No one owes us a living, we are responsible for our own choices re from whom we take advice or to whom we supply our stock. Do your own research in regard market signals there are many good meat industry websites that give a valueable global market overview from which you can draw your own conclusions.
 I agree there is duplication within the industries R and D spend which needs to be better co ordinated where public/levy money is involved. In reality most of us join a local farm discussion group or seek out other local farmers, we dont just look to the wider industry for the answers.

I will write a column which tries to explain the schedule setting process which is quite complicated and has to take a lot of different factors into consideration. I don't know that the answer will make it that much simpler to understand, although supply and demand remain the main determinant of the schedule, so clearly stock prices will be higher out of season than when supply is at its peak and the same applies to market prices i.e. frozen lamb supplied in May is worth less than chilled lamb before Christmas.
I can't comment on the merits of farm consultancy, not being a farmer, but I agree with Sheep Shagger that it's up to the individual to decide when and where to buy advice. 'No foal no fee' is a principle that you should negotiate before you make a commitment!

I am not a farmer . but i do crunch numbers on a daily basis 

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