Chris Irons: Strategy report aims for unity

The meat industry is complex, with wide and varied perspectives.

The Meat Industry Excellence Groups report, titled "Pathways to long-term sustainability", focuses on the processing aspect of the industry and is well worth a read.

We've seen the red meat sector strategy (RMSS) report in 2011, which explored possible changes that could be made behind the farm gate and in the market.

This group of hard-working, dedicated farmers have put a great deal of effort and personal sacrifice into driving their belief that the red meat industry can, through a united approach, move to a stronger position for all. I encourage all to read this report if they want more information or are struggling to form a view.

Not everyone has agreed with all the Meat Industry Excellence (MIE) suggestions since they formed and this should not surprise us. The thing to admire is that they have not wavered against their critics in their determination to see change in the industry. The meat industry is a complex beast with wide and varied perspectives.

Ultimately it will be up to the meat company directors to make the call if the options put forward are worth pursuing. Directors have strong legal obligations and will be worried about making big calls, especially those they think may be marginal. It is important that the directors' decisions are in the best interest of their shareholders in a legal capacity and for the future of our industry.

I think most people will agree that there are some over-capacity issues in the sector. Although the delays in getting stock killed this year have been put down to the drought, some of the capacity issues are because some works can't run at full capacity because they have a shortage of skilled staff, and the cost associated in upskilling doesn't stack up. There are also storage and market issues when processing at seasonal levels that are higher than usual.

The processor can pay additional storage costs and freeze the product thereby reducing its value; or they can or provide additional product to the market -- which may not want it -- and receive a lower price. It makes me feel grateful knowing how lucky we are in the Waikato, having some very efficient operators.

Much of the discussion in the report about procurement focuses on reducing stock-trucking kilometres. However, the industry has concerns over what coverage the proposed final plants will have. Some areas would be required to truck stock long distances, which is particularly concerning when I think of bobby calves and milk lambs. Reducing trucking distances would require some level of toll processing (a fee for processing services where a plant may process local stock for more than one export company). This is not an unknown concept, as other industries, notably kiwifruit, have very successful toll processing companies with the competition driving highly efficient businesses.

Right now farmers can only support the industry by aligning themselves with a company that suits their business and moral beliefs. So if the industry goes ahead with any rationalisation it would be useful to have farmers knowing what side of the fence they are on.

So where to from here? Read the report with an open mind and then share your views. For this industry to make any big changes all participants will need to be on board, whether a large rationalisation or progressive smaller steps to something bigger.

Chris Irons is Federated Farmers Waikato Meat & Fibre chairman.