KEY POINTS:
The precedent set by Fonterra could smooth the legislative path for a new mega meat company, says Southland-based processor Alliance Group.
Farmer co-operative Alliance has proposed creating a new entity to manage 80 per cent of the country's livestock supply from farm to market, with turnover of about $5 billion.
The concept aimed to lift on-farm returns by about $400 million a year.
Alliance chairman Owen Poole hopes legislative changes to enable the creation of the large entity would not be difficult to achieve. "Twenty per cent sits outside it to give a bit of competitive tension," he said. "Again we'll have to talk to [the] Government about that and the Commerce Commission but there's precedent for it."
The precedent was dairy giant Fonterra, which controlled a greater proportion of the dairy industry than the 80 per cent amalgamation being proposed for the meat industry by Alliance.
Alliance planned to hold meetings with farmers this month to get a mandate for the concept before talking to other industry players and the Government.
The company had held preliminary talks with other operators about the concept, which would not need a large number to sign up to achieve the required size, Poole said.
Agriculture Minister Jim Anderton said the meat industry needed to organise and invest for the future.
The proposal would need widespread consultation and the Government would look at its merits, he said.
Meat & Wool New Zealand chairman Mike Petersen said there would be issues to resolve but he was confident the Government would look favourably on the concept. "The momentum should just carry it through," he said.
Dunedin-based processor PPCS has given the concept early backing. Alliance and PPCS together account for about 59 per cent of sheep-meat, 37 per cent of beef and 78 per cent of venison exports.
"We believe it is the size that is necessary, for the New Zealand sheep-meat industry in particular, in order to get that real change in price that everyone is after," said Alliance chief executive Grant Cuff of the proposal. Any similarity between it and the Fonterra development was co-incidental, he said.
