Dispute over saleyards threatens farmers and jobs
For Immediate Release April 24 2003
Dispute over saleyards threatens farmers and jobs.
A dispute over access to North Island saleyards has broken out, 10 years after a Commerce Commission ruling that Wrightson, Elders, Williams & Kettle and Pyne Gould Guiness must be allowed access to yards.
The dispute has arisen after Wrightson withdrew access by Elders Livestock and Williams & Kettle Ltd to the Rangiruru saleyards at Te Puke in the Bay of Plenty.
Elders has been operating at the yard since 1997 while Williams & Kettle has been operating there since 2000.
Attempts by Elders and Williams & Kettle to negotiate a settlement with Wrightson have failed and as a result, Court proceedings have been filed in Wellington.
Elders and Williams & Kettle say Wrightson's move has serious implications for livestock farmers and also threatens local jobs and established local businesses. It could also have serious implications for other North Island centres.
Of the 28 saleyards in the North Island in which livestock companies share ownership, Wrightson has two-thirds ownership in 16 of the yards, with the balance usually held by strong regional operators, in most cases Elders Livestock, Williams & Kettle and Allied Farmers.
Since 1994 Elders, Williams & Kettle and Wrightson have had a joint strategy to develop liveweight sales complexes in strategic saleyards in the North Island and to rationalise smaller uneconomic saleyards. All three companies worked together to establish liveweight saleyard facilities at Kaikohe, Tuakau, Te Kuiti, Feilding and Stortford Lodge in Hawkes Bay.
In the case of Te Kuiti, Wrightson sold Elders a share and together the two companies developed it into a liveweight selling complex. Rangiruru was to have been the next yard to be developed to liveweight selling.
In its letter of termination, Wrightson offered to sell stock at Rangiruru on behalf of Elders and Williams & Kettle on a commission basis, but it has not put forward any formal proposal.
Elders and Williams & Kettle say such a proposal will not work, given that both want to continue to provide total livestock marketing services to their clients with a full suite of options.
If Wrightson is able to establish a monopoly operation at Rangiruru, there will be negative consequences for Elders and Williams & Kettle, and very serious consequences for livestock farmers and for those working in the livestock industry in the Bay of Plenty, and for the industry generally throughout the entire North Island.
Under the current system where all reputable companies are guaranteed access to saleyards by the Commerce Commission, farmers have major markets with significant numbers of buyers in which to sell their stock. Likewise buyers have a more extensive range of stock from which to make their purchases. A stronger market means better choice and better prices for both vendors and purchasers.
But with only one owner-operator, the outcome for farmers will inevitably be lower prices, higher costs and a fragmented market.
Elders and Williams & Kettle say that the removal of competition opens up the opportunity for monopoly pricing, reflected by higher commission rates and higher saleyard fees. They are also concerned at the potential for other monopoly practices such as restricting access by trucking firms to one supplier, further removing competition and opening the way for further price increases.
The loss of access to this saleyard is viewed very seriously by Elders and Williams & Kettle because of the flow-on effects on their business in the region.
They say saleyards are the "shop window" of the live stock business, affording livestock companies an active and high profile, and the chance to represent their image and brand at an important local event. It also provides the opportunity to have visual and personal contact with farmers - clients and non-clients alike.
The consequences of their non-presence means a significant loss of income for both Elders and Williams & Kettle , which will flow over into other important sales activities such as paddock sales and private treaty sales, both of which would eventually cease.
* There are 60 to 70 stock sales a year at Rangiruru. Last year more than 30,000 head of cattle and 34,000 sheep were sold through the yards.