Experts rebuff talk of closure

Affco's Rangiuru meatworks should close, a report on rationalising New Zealand's beef and lamb industry has stated.

Threats to the future of the Rangiuru meatworks have been downplayed by industry experts despite a nationwide study on rationalising the beef and lamb industry saying it should close.

The plant, which employs about 600 people at the peak of the season, has come under renewed scrutiny by the report, which was driven by uncertain and volatile returns to New Zealand farmers.

'Pathways to Long-Term Sustainability' has proposed far-reaching reforms to combat "inefficient and destructive competition beyond the farm gate".

The report, commissioned by the Meat Industry Excellence group, explored issues already identified as key weaknesses in the industry including inefficient procurement of stock by meat processing companies and the inefficient use of meatworks resulting in "poor utilisation and unnecessary cost".

The thrust of the report was that Rangiuru was one of the plants vulnerable to closure because it was no longer the centre of a lamb or beef farming area, with most stock trucked in over long distances.

Federated Farmers Bay of Plenty provincial president Rick Powdrell told the Bay of Plenty Times Weekend the odds were slim that Rangiuru would close. He said processing companies had taken very little interest in the report and Affco had told him it did not intend to close the plant.

He said the report did not factor in bobby calves, which in terms of processing were the same as sheep. While it was true that most of the Bay's prime beef ended up at Affco's Horotiu works in the Waikato, returning trucks were back-filled with sheep and lambs for Rangiuru because Horotiu only processed beef.

Mr Powdrell, Federated Farmers' national meat and fibre group chairman, said a lot of culled dairy cows were also put through Rangiuru.

Meat Workers Union national president Mike Nahu said there was no evidence the report's recommendations would be put into practice because it needed the cooperation of New Zealand's biggest processing companies to make it work.

"Other circumstance could dictate the future of Rangiuru."

The meatworks employed about 500 process workers at the height of the season and about 100 other staff.

The report highlighted how the focus of the meat processing industry was on stock throughput to meet fixed costs, instead of having a value-added consumer focus. Pressure on companies to procure stock meant that 50 per cent of the export kill was trucked past the gate of the nearest processing plant.

It said the sheep industry was the most in need of urgent rationalisation because red meat could never be as efficient as the production of milk.

Affco's operations manager, Rowan Ogg, declined to comment on the study, saying they were dealing with the author of the report and it was inappropriate to comment at this time.

Federated Farmers provincial vice-president and Western Bay District councillor John Scrimgeour said the closure of Rangiuru would be a huge blow: "It is a tremendous employer for the district."

Maketu Community Board chairman Shane Beech said Rangiuru was the town's biggest employer and closure would have a huge impact. Working there had become a family tradition, with kids following their dads into the works.

Key findings of the meat industry reform report

* Unused capacity of NZ's sheep processing plants: 53 per cent
* Unused capacity of NZ's beef processing plants: 41 per cent
* Savings from closing 19 of NZ's 61 sheep and beef processing plants: $215m a year
* Savings from redirecting 25 per cent of stock to the nearest processing plant: $97m a year