Meat and Fibre Chairman Rick Powdrell, Address to Industry – Abandoning challenge, not my way
27 June 2016
There is one thing in
life that never changes. The moment you overcome one challenge, there is sure
to be another. Once in a while a challenge crops up that might be easier to abandon,
but that’s not my way.
You guessed
it, that last reference is to the New Zealand red meat industry.
At our
February meeting we discussed our role going forward. The emphasis was on
continued dialogue with key players, notably Beef + Lamb, the Meat Industry
Association, Meat Industry Excellence Group and other parties keen to engage.
There have
been plenty of people willing to engage, some notable for their commercial self-interest,
and others to talk about specific elements within the industry. All have
relevant ideas and the passion and desire to see the industry move forward. But
until key players come together with a common goal, the quantum shift required
will not occur.
Since our
February meeting discussions have been had with Beef + Lamb. A number of us
have been involved in development and test groups for its market development
plan. The focus has been very much on this project, which you will be updated
on later in the meeting.
Hopefully the
manner in which all the parties, farmers, processors, marketers, government,
and other stakeholders, have come together will result in an agreed way
forward.
Should that
prove to be the case, similar approaches could be forthcoming to address other
industry issues.
You will
recall in my February address I spoke about my thoughts on the UK lamb market.
There is need to engage with industry participants to attempt to bring together
players from both ends of the hemisphere for the betterment of all.
As the polls
for the Brexit vote came closer together in recent weeks, the possibility of an
exit vote heightened people’s awareness of major change in our dealings with the
UK.
Just what the
exit vote will mean to New Zealand is unknown. One thing we do know is there
will be significant unrest in all aspects of the UK economy. How industry
leaders and government of this country respond will be vitally important.
Now is not
the time to sit back and watch what develops.
Now is the
time to act and mould the future with our UK counterparts for the betterment of
all.
It is
important to remember the UK marketing strategy will more than likely be turned
upside down.
For us in
this room our lamb markets to the UK face the biggest risk. We have a product
that presently is not rewarding farmers for their effort. Preservation is the minimal
acceptable outcome.
As B + L have
highlighted, the EU and UK are our most valuable sheepmeat markets. Maintaining
our quota of 228,000 tonnes at zero duties to these markets will be important. How
that can be achieved, and what the end result looks like, and over what time-frame
is unknown.
The duration
of unrest as the UK settles in to its new freedom may require some patience. But
we must be patient at the table in the UK, not watching from the sidelines here
in New Zealand.
Another major
issue has been the Silver Fern Farms/Shanghai Maling joint venture proposal.
The release
of the Financial Markets Authority’s report, on the validity of the Silver Fern
Farm resolution process, dispelled the disgruntled shareholders case against that
process, and that of New Zealand First also.
It is my
belief both parties are committed to this venture, but until the Overseas
Investment Office and the Ministers come down with their decision the process
is stalled.
I am also of
the opinion that the majority of shareholders still support their original
decision to enter this joint venture. Whatever their views I encourage them to
be engaged in the resolution before them.
Should OIO
and ministerial approval be granted, the board of SFF has no option other than
to honour the contract with Shanghai Maling, provided Shanghai Maling meet its
contractual obligations. The risk of not doing so could cost the company a
large sum of money.
This last
week news broke from China that its government wishes to reduce its citizen’s
meat consumption by more than half.
Climate
change enthusiasts jumped on this news claiming it would reduce greenhouse gas
emissions by one billion tonnes by 2030. It was predicted the present rate of
increased meat consumption would add 233 million tonnes over the same period.
However the
Chinese government promoted the reduction based on concerns that as meat
consumption has risen, the health of the population has decreased.
Having
recently been to China and witnessed the ongoing westernisation of the
population I ask is this goal really achievable?
Presently the
average citizen consumes 63kg of meat per annum with the government targeting a
reduction to 14–27kg per person. This is a significant reversal of a trend
moving rapidly in the opposite direction.
China
consumes 28 percent of the world’s meat including half the world’s pork.
All
indications from meat industry participants we visited pointed to a rising
consumption, with a high-level of optimism around future potential.
This proposal
would be a monumental u-turn from the current pathway.
So how will
the government achieve these reductions? I can’t see the population reducing its
consumption voluntarily, so will the government enforce substantial reductions
of livestock numbers and imports?
If so the
population will need another food source to replace the red meat. Can this be
provided easily and at reasonable cost? In 1982 meat consumption per head was
13kg per annum, so the diet of that time may well be the answer, except the
population was far smaller than it is today.
We need to
watch this possibility as should it become a reality, it may well impact our
volumes to the Chinese market.
One thing
that is very evident when you visit China is that if the government is serious
about doing something, it will be done.
Another
challenge we can all feel better about is that of Health & Safety.
It has been
an intense journey but we are now seeing workable outcomes. There are a number
of excellent toolkits to assist farmers in the implementation of good practice
on farm.
Some of us
will continue to resist, some will hang on particular aspects they can’t
accept, but the bulk of us are getting on and ensuring our staff and family
arrive home safely every night.
Too often on
journeys of this nature we get hung up on a particular issue, and before we
know it we have left the main highway and ventured down a gravel road.
So often if
we carried on down the main highway, and ensured that it met our requirements,
and then went back to the gravel roads to tidy up the side issues, our journey
would be far easier.
When NAIT was
first mooted many in Federated Farmers, and other bodies, had very strong
voices on what could and could not be included and how the information was to
be used.
Today, after
the implementation period we know a number of things, compliance is average at
best, herd accuracy has some way to go, understanding by many is poor, and we
could use the information for other benefits.
It must be
remembered that NAIT stands for National Animal Identification and Tracing.
Those words
tell me that it exists to identify animals and to be able to trace their
movements.
Those words
tell me it has an important role to play in a biosecurity event, whatever the
animal.
So when we
are having a review shouldn’t we be talking about all options, all the
different animal species, and all the possible uses of the system?
This doesn’t
necessarily mean every animal in New Zealand has to have a NAIT tag in its ear
but perhaps they all need to be accountable in the system.
Whatever we
are looking at - how about we focus on the highway, then look to tidy our
gravel roads?
Hopefully
this analogy can be followed in the wool domain as a number of new initiatives
are progressed.
The
government is supporting two programs: the Merino NZ PGP; and the Strong Wool Initiative.
Both these
programs have the potential to be beneficial to all industry players. Both
require open minds, fresh thinking and unity. The big risk is players getting
stuck looking at the history rather than focusing on the future.
Later today
you will be presented a proposal for future wool harvesting training in New
Zealand. This is a new approach, a new model which, should all industry
participants accept, will replace the system that has seen training at an all
time low.
A new model
does not guarantee success, how people promote, implement and use the model is
the key.
Like all
successful enterprises, it is people who are the key. We are all part of the
group of people vital to the success of this model.
We will
always have a multitude of challenges before us, how we deal with these
challenges is the measure of the men and women in this organisation.
ends