The New Zealand Meat Industry Association (MIA) and Beef + Lamb New Zealand (B+LNZ) have jointly developed a strategic plan to boost the country’s meat exports, currently standing at $8 billion per annum.
The three-pronged strategy takes into the consideration that the greatest potential uplift in sustainable profitability will only be delivered by all sector participants taking action in three key areas:
• In-market coordination – creating a strong brand position and acting with scale through greater coordination of exports to grow targeted markets.
• Efficient and aligned procurement – shifting the focus of competition from the farm gate to offshore competitors.
• Sector best practice – developing farming systems and improving productivity at all stages of the supply/value chain, leveraging R&D and knowledge transfer.
Mike Petersen, B+LNZ chairman, said: “While the sector currently generates nearly $8 billion annually in export earnings and forms the basis of the visual and social landscape of New Zealand, over time its profitability has been inconsistent and often unsatisfactory, as is reflected by conversion of sheep and beef farm land to other uses such as dairy farming and forestry.”
The MIA and B+LNZ initiated the development of this sector strategy – with unprecedented input from the sector and underpinned by extensive data and in-depth analysis by Deloitte – to identify ways of achieving sustainable profitability and promote re-investment in the industry.
“The level of sector input and the rigorous process of analysis means the strategy not only reflects the sector’s collective views on the issues and opportunities, but also demonstrates a genuine desire for change and commitment to that across the sector,” said Bill Falconer, MIA Chairman.
“While the strategy canvasses some long-held beliefs that fixing the sector’s problems is simply a matter of addressing one-off issues like over-capacity and excessive stock transport, the data and analysis clearly shows that there are other opportunities for bigger and more sustainable improvement in sector profitability,” said Petersen.
Success, he said, needed to be underpinned by ‘informed aligned behaviour change’. This meant working towards greater transparency of information exchange and each value chain partner becoming a more integral part of their partners’ strategies to reduce inefficiencies through misaligned objectives.
Falconer said a single blueprint covering the entire industry would be inappropriate or practical given that sector participants are independent commercial entities accountable to their own shareholders or owners.
But the strategy did outline a range of valid and effective actions that farmers and meat companies can take, and most importantly quantifies how the underlying principle of working together more will deliver sustainable profitability,” he said.
While only the individual commercial parties – both farmers and meat companies – can implement the strategy, a Strategy Coordination Group is being established to promote the strategy, monitor and report back on progress. The Group will initially be chaired by the chairs from B+LNZ and MIA.
Petersen said sector participants should closely study the report and identify what actions they can take in the three key areas, particularly investment in best practice. With the current improvement in prices for sheepmeat and beef there is a unique window of opportunity now to take advantage of improved cashflow for re-investment to make those changes that will deliver sustainable, long-term profitability, he added.
The possible gains presented in the report will take time to achieve, but are compelling not just for the sector but for New Zealand as a whole. NZIER modelling suggests a 1.3% increase in GDP and real value change of $3.4 billion pa by 2025 if the strategy is successfully implemented, with significant flow-on to the broader agricultural sector and the wider economy.
