KEY POINTS:
Market-place competition is usually a good way to sort out the wheat from the chaff - demand drives supply, better performance is rewarded, the bar is raised and everyone prospers. Usually.
But the consensus in the meat industry is that radical change is needed and some say competition is part of the problem.
Southland-based processor Alliance Group is proposing the creation of a dominant market entity to manage 80 per cent of national livestock from farm to market.
The target is to generate $400 million more each year in farm returns and boost prices by $15 a lamb, from market cohesion, reduced overheads and by removing excess processing capacity.
The concept will need legislative support, for which there is precedent in the form of Fonterra, and has initially drawn wide backing from across an increasingly desperate industry.
Some sheep farmers face cash losses for the third season and no business can operate for long on that basis.
In a perfect world everyone from the raw material provider to the retailer is focused on growing consumer demand and thereby returns for the entire supply chain.
But sheep-meat supply is getting pushed about by factors outside of demand, including drought and agricultural policy reform in Europe, plus processors and exporters are hampered by a lack of visibility on availability and some farmers produce to the farm gate not the dinner plate.
If consumers get pushed sideways in the decision-making process there is a greater risk they won't like what is delivered, which can also put downward pressure on prices.
As it is international prices have actually risen about 7.5 per cent but the value of the New Zealand dollar means returns are unchanged.
Sheep numbers have fallen from a high of 70.3 million in 1982 to 38.6 million last year.
Should we care? Many meat farmers are swapping business into the currently profitable dairy sector and if market forces say meat production is not viable then surely that's the market doing what it does best?
It's true the dairy sector is in a golden spot at the moment but in a cyclical business tougher times are bound to return and in a country so dependent on agriculture for income we should be wary of putting too many eggs in one basket.
Most of all the meat industry can be a big success, generating total meat export returns of more than $5 billion despite everyone appearing to struggle.
Meat Industry Action Group chairman Keith Milne says many farmers are looking over the fence at the achievements of dairy on the world stage. "There is no reason we can't do that with sheep."
The New Zealand industry has the best on-farm production systems, the best genetics, a climate normally conducive to low-cost production and about 65 per cent of global tradeable lamb, he says.
"We have a dominant position or an enviable position there if we can get ourselves organised really."
A major issue facing the industry is the fragmentation of marketing, with companies competing against one another and 18 or 19 operators selling into the EU and Britain, Milne says.
"There's definite evidence that the supermarkets play them off against one another to achieve lower prices for us but better prices for the supermarkets."
One major company could ensure best-fit processing capacity, remove cost duplication, stop value-destroying haggling and potentially drive better planning on availability, marketing and connection to the consumer.
A bigger meat company could also give the industry more clout on the global stage, as Fonterra has done for dairying.
Alliance says 80 per cent is enough critical mass to get the benefits with the other 20 per cent outside any new entity providing competitive tension.
Having a fifth of the industry outside the plan may also help with getting Government approval, although quota allocation will need to be resolved, with some assurance for companies other than the proposed major player.
Federated Farmers Meat and Fibre chairman Keith Kelly says there are a lot of fish hooks but the basic concept is excellent.
"The grizzle that's coming back both from the European and New Zealand farmer is the industry is fighting against itself to sell its product," Kelly says.
At present a farmer feels "once the lamb's left the farm gate he's finished with it", Kelly says. "Under this concept I can see the farmer taking an interest all the way through and doing more what is wanted in the market."
It's early days in the process and as always the devil will be in the detail. As more is known about the proposal critical voices may appear but right now the industry appears eager for big change.
MORE RAIN PLEASE
The rain that fell last week after weeks of hot, dry weather was welcome but at normal levels it is not enough to revive drought areas.
Rural Support Trust chairman Neil Bateup says rainfall across the Waikato was about 15mm. "That really doesn't make any difference at all."
Environment Waikato declared a drought zone this month, with January the driest month in more than 100 years.
The rainfall needed to break the drought would be about 75mm followed by about 50mm the following week, Bateup says.
"We've still got a long way to go to get out of trouble yet."
Federated Farmers president Charlie Pedersen says Waikato has a soil-moisture deficit of 150mm, growing by 3mm a day.
"So they need 150mm of rain to fall on that soil before it's capable of returning to normal growth rates," Pedersen says.
Last week's rainfall was generally at normal levels but drought-breaking rain is not predicted to hit the country until April, Pedersen says.
"That's [normal rain] a great relief because it means at least we won't get into any worse situation."
Across the country it is not a crisis, although there are some bad areas.
Waikato, Wairarapa and Northern Canterbury are among the worst hit but some parts such as Northland, the West Coast of the South Island and Wairoa actually have higher levels of feed than normal for this time of year, he says.
Although welcome, the rain will raise yet another issue - animal health.
Federated Farmers Meat and Fibre chairman Keith Kelly says the rain increases the worm burden of animals and enhances facial eczema.
"Seems to be a perpetual moan, doesn't it, farming," Kelly says.
The rain that has come is patchy and it will take several weeks of reasonable rain to bring the grass back to what is considered a good autumn level, he says.
DROUGHT MEETING
Last week the Government held a drought meeting attended by about 30 industry leaders to discuss the impact of the dry weather and potential contingency plans.
A drought committee is being formed and will hold its first meeting on Thursday.
Agriculture Minister Jim Anderton says particular concern was expressed about the effect of stress on families as they face worsening farm conditions.
"There was broad agreement that, while hoping for the best, we must prepare for the worst," Anderton says.
Federated Farmers president Charlie Pedersen says the meeting provided an accurate picture of the situation nationwide. The first action is to determine the demand and availability of animal feed, hoped to be ready by Thursday.
"[This] will tell us looking forward whether we've got any big gaps or not - in other words, can the country grow its way out of this dry spell or are we going to have to import some feed?"
Reassuringly a free-phone number set up by Federated Farmers to match farmers in need of feed with those with feed available - 0800 335 663 - has received about 70 calls which are roughly in balance.
"What that is starting to point towards is that we won't have to think about importing any feed."
