New Zealand meat companies abandoned efforts to consolidate and reduce surplus capacity last year because they lacked an agreed export strategy and farmers wouldn't commit stock to firms that closed plants, say industry sources.
The country's four biggest meat processors - farmer-owned co-operatives Silver Fern Farms and Alliance Group, accounting for about half the industry, the Talley's Group family-owned Affco and ANZCO Foods, with a majority ownership held by a Japanese food company - ended talks after failing to reach agreement last year.
A proposal for competitors to share the cost of closing plants was rejected, as was a plan for each company to retain its stock volumes for a period of up to five years following a closure, so they weren't disadvantaged, according to people involved in the talks, who asked not to be named.
The fragmented industry ownership and lack of agreement about how to market New Zealand meat overseas hindered the meat companies from conforming to a model which locked in supply, especially amongst the roughly 17 smaller exporters who would need to broadly agree to consolidation.