KEY POINTS:
The Meat Industry Action Group has gained enough shareholder support to force special meetings at the sector's two big co-operative processors, Alliance Group and Silver Fern Farms.
The aim is industry consolidation and although group chairman John Gregan says the two co-ops cannot be forced to merge, they can be made to sit around a table and develop a plan.
An initiative forcing talks between the big two players won't hurt but what more can be said?
Alliance turned down an opportunity to merge with Silver Fern Farms last year and then a bigger industry mega-merger proposed by Alliance fell over in April, lacking agreement with Silver Fern Farms.
A Meat & Wool New Zealand taskforce set up to develop a sector strategy was shut down last month lacking consent, with one participant in particular advising it did not support an industry strategy and wanted to follow its own plan.
In the meantime Silver Fern Farms has agreed to sell half of itself to listed rural services business PGG Wrightson for $220 million in a deal also promoted as a platform for rationalisation.
Everyone seems to want rationalisation and the collective pressure from all the initiatives could force a crack in the dam, although Alliance and Silver Fern Farms remain the central players.
Other major parties are reluctant to move until they see the big two players get together.
Farmers have plenty to ponder.
Alliance chairman Owen Poole says: "Alliance are looking at their own strategic initiatives, PGG [and] Silver Fern Farms are looking at their plan, we've got [the action group] coming over the top saying let's have a special general meeting of both co-ops to talk about aggregation.
"You'd have to agree that there's a lot going on."
Silver Fern Farms chairman Eoin Garden says: "One of our big focuses has to be on our proposal and if that's successful it's the way forward anyway."
Farmer control is not negotiable for the action group but PGG Wrightson is willing to see its stake shrink if other players such as Alliance get involved.
Silver Fern Farms needs 75 per cent shareholder support at a vote expected to be held in September, which is likely to be before any action group-forced special meeting.
There is farmer concern about giving away full control and approval for the proposal is far from certain.
A "yes" vote followed by a special meeting that starts merger talks between the co-ops would strengthen farmer control.
On the other hand, farmers could vote "no" to Silver Fern Farms and hope for a full-on co-operative merger from the special meetings without any corporate ownership.
But a "no" vote for Silver Fern Farms followed by a non-event at the special meetings and everyone is back to square one - possibly the worst outcome for those farmers desperate to see changes.
PRICES UP
The latest Rabobank Agribusiness Review spelled out good news for many farmers, including beef and lamb prices surging ahead of last year.
Farm-gate bull beef prices are about 26 per cent higher than the same time last year, with a rise of 26c a kilogram during June after a 20c rise in May.
Farm-gate lamb prices are up 34 per cent on last year, with a looming decline in the sheep flock raising expectations for the 2008/09 season, Rabobank says.
Higher prices for sheep meat cannot come soon enough for farmers in a sector that has suffered years of low returns.
The call for reform in the meat industry gets wide support but the route ahead is not certain and there are concerns that the pressure for change could be eased by growing profits.
The slaughter of lambs is running at a similar level to last year, although the number of sheep killed is up more than 30 per cent on last year and farmers continue to convert to the booming dairy sector.
The dairy industry benefited from a decline in the value of the dollar through June and early July, Rabobank says, with small gains in most commodity prices in New Zealand dollar terms.
Dairy prices as at July 4 saw skimmed milk powder at $4756 a tonne, up from $4494 last month but down from $6828 last year, and whole milk powder at $5746, up from $5731 last month but down from $6165 last year.
HELLO DEER
After some tough years venison farming is bouncing back.
Rabobank says venison prices are up 58 per cent on last year with prices likely to exceed $8 a kilogram as the peak of the chilled season approaches.
The venison marketing services manager for Deer Industry New Zealand, Innes Moffat, says the average price in the week beginning July 15 was $7.98 a kilogram, compared with $4.96 last year and a 10-year average of $5.36 a kilogram.
And things could get even better.
"We would imagine that prices, barring any external shock, should continue to improve over the next couple of seasons simply based on the expected reduction in our total production," Moffat says.
Production this year is estimated to be 580,000 animals, dropping to 450,000 next year and well down on the recent high of 766,000 in 2005.
Most venison is consumed between October and December but export companies have been working hard to broaden demand from the traditional German game season and restaurant trade. A slight oversupply to the German market and prices could collapse, but any under-supply could drive prices up.
"We've reduced our reliance on that so theoretically one of the reasons for the volatility in that venison schedule should have been removed," Moffat says.
He had hoped deer numbers might have stabilised this year but for the drought during the summer and autumn period, which put pressure on feed.
"Unfortunately I believe the reduction in the herd is going to overshoot and we are going to be left with a situation where we are very short of venison for the next year or two and that will lead to some volatility in prices."
Gradual rather than a sudden increase in production would see exporting companies achieve price stability, he adds.
The deer industry is recovering ground lost after 2001, when prices were $9.24 a kilogram on July 15 before collapsing to $3.81 in 2005.
Outbreaks of foot-and-mouth disease and BSE (bovine spongiform encephalopathy), the neurological disease otherwise known as mad cow disease, in Europe in 2000 and 2001 saw the price of venison rise sharply.
But consumers continued buying sheep meat and returned to beef faster than expected.
Importers took a hit, the price paid to farmers was cut, people left the industry and the ensuing slaughter of stock drove the price even lower.
At $8 a kilogram venison can compete with other land uses, apart from dairy farming, and the work on broadening both the market and season will smooth the future path.
The notion of seasonality no longer applies to many fruit and vegetables popular with shoppers, so why not venison? Venison - a taste for all seasons.
AWARD WINNER
Bevin Harris, science leader at listed animal and farm improvement co-operative LIC, has won the New Zealand Society of Animal Production's McMeekan Memorial Award for outstanding contribution to animal production during the past five years.
Harris has been a principal designer of the New Zealand system for genetic evaluation of dairy cattle.
LIC says the animal model for trait evaluations of dairy cows first introduced in the mid-1990s has become the currency for determining cow production potential and profit for most of New Zealand dairy farmers.
The animal model was replaced this year by a test day model which LIC says is the largest and most complex in the world.
The test day model performs genetic evaluation for all animals of a core database, analysing 16 million animals with 130 million herd test records, solving in excess of 420 million equations for milk volume, milkfat and protein every three weeks.
LIC says the benefits of the test-day model are estimated to accumulate to $137 million during 10 years.
"A unique contribution that Bevin has made to New Zealand science has been conducted in a language that few of us have either the grammar or vocabulary to comprehend readily," says LIC manager animal evaluation, Bill Montgomerie.
"So his unique contribution in software development is not easily described, but was vital for solving the very large systems of simultaneous equations quickly enough to be practically useful."
Harris graduated from Massey University with an Agricultural Science Masters Degree in 1985 and later studied and taught at Iowa State University, in the United States, from 1989 to 1992, graduating with a doctoral degree.
The award commemorates Campbell McMeekan, who was a founder of the New Zealand Society of Animal Production and the Ruakura Research Centre.
