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Jim Sutton Speech to Pork Industry

Hon. Jim Sutton
Pork Board AGM
1pm 26 July 2000

Chairman Neil Managh, Ladies and Gentlemen, thank you for inviting me to speak with you today.

Last time I spoke to an audience of pork producers - the World Pork Conference in May - things were not looking so good for your industry.

But now, I am told, things are much more positive.

The industry has rationalised and market prices have lifted - more than a dollar a kilo, I'm told. For those of you still working in the pork industry, things are improving immensely.

You are also celebrating another success - the eradication of Aujeszky's disease. Working with MAF, you have eliminated a disease which could have been a trade barrier.

On that note, I'm also told you are investigating setting up an export group to promote the export of your pigmeat products - something that hasn't been done since World War II. This is an exciting development. Increasing exports from New Zealand is something my government is keen to do.

However, while this development is good news, I don't think the huge pork producers of this world will get too upset early on. Here in New Zealand, we have only a small pork industry.

The United Nations' Food and Agriculture Organisation reports that in 1998, 88.4 million tonnes (carcass weight equivalent) of pigmeat was produced worldwide.

New Zealand-s inspected pigmeat production for the season ended September last year was 47,600 tonnes (carcass weight), a decrease of 1.5% from the season before.

The industry here has experienced very low returns over the past season, with reports of some farmers exiting the industry because of low prices, and others producing at a loss.

Much of the decline in profitability was due to substantial quantities of cheap pork being imported into New Zealand as a result of an over-supply of pigmeat on the world market following the Russian crisis (in 1998 Russia was the world-s second biggest importer of pigmeat).

For the year ended September 1999, the volume of imported pigmeat, mainly frozen pork cuts, was equal to a third of total domestic production. Most imported pigmeat is sourced from Canada. However, significant quantities also come from Australia and Denmark.

Pig meat exports to Russia from Europe and North America effectively ceased after the devaluation of the Rouble at the end of August 1998. At the time, Russia was the world-s second largest importer of pigmeat, consuming 17% of world pigmeat exports. The situation resulted in an excess supply of pigmeat and other meat products on world markets, and downward pressure on world prices.

International prices have had a major influence on New Zealand wholesale prices because of the scale of imports relative to domestic production.

Pig production in the United States is expected to increase sharply as the industry benefits from lower costs bought about through restructuring and concentration. Similar structural changes are occurring in Canada, with the result that North America is placed to continue to export significant quantities of pigmeat at very competitive prices. This is expected to keep world pigmeat prices, and New Zealand schedule prices, below historic rates of return.

The volume of pigmeat produced in New Zealand in the year to March 2000 was 46.2 million kilograms, 5% down from the previous year. The national pig kill is currently at the bottom of a trough, and is expected to rise again over the next few years. Production is expected to be peak at a lower level than in the past, at around 48.2 million kilograms. This is due to a reduction in sow numbers as the New Zealand industry continues to rationalise.

I must tell you, the pork industry is one I often have cause to think about. I get more letters about your animal management practices than I do about any other subject.

I have in the past criticised the campaign against the use of dry sow stalls as something being done because it was being done overseas. But regardless of that, it has struck a chord with many New Zealanders.

The letters and postcards pour into my office.

It is not easy to discount the long, carefully written, and from children carefully drawn letters from people explaining to me why they no longer eat pork - because of dry sow stalls.

Those letters are a danger sign for your industry. You can not rely on a market only of people who ignore such concerns.

New Zealanders want to know that the animals they eat are raised in a welfare-friendly manner and are free to display natural and normal patterns of behaviour.

Your industry supports a code of welfare, which will be reviewed by the end of 2002 as required by the new Animal Welfare Act. That review will be done by MAF, the National Animal Welfare Advisory Committee, your industry, the SPCA, and the veterinarians' association. There will be public consultation as required by the Act.

I know your industry struggles hard to compete against pigmeat imports. Those imports now account for a third of the $400 million retail market in New Zealand.

As a trade minister - one of my other hats - I understand your application for a safeguard measure is on hold. Proceeding with that is your decision to make.

Our role as Government is to ensure we have in place trade remedies legislation that can be used when circumstances warrant.

But equally, that this legislation and the processes we follow are fully compatible with our international obligations.

It seems to me that there are other ways to tackle this problem.

The major issue for pork producers no matter where you are in the world is that of consumer demand. Satisfying consumer desires is vital to all food producers, not just pork producers. And that means addressing the concerns of consumers about animal welfare issues.

Consumers increasing want to know what animals their meat came from and that those animals were well-treated before they were killed.

To me, this seems is a market crying out for product differentiation.

I've seen media reports complaining about the amount of imports and that people don't know they're eating imported meat. I've heard what you're saying about animal welfare - that less than half of all New Zealand pigmeat producers use dry sow stalls.

But your consumers don't seem to know this.

Why can't your meat be labelled and presented as "New Zealand grown free range" product- Or in certain cases as "organic"- Venison, lamb, and beef do it already, as do some egg producers - another group that feels the wrath of animal welfare groups regularly.

This will enable the sector of the market concerned about such issues - usually the more well-off part of the market - free to choose it. They won't feel they have to snub all pigmeat products.

Like much of the primary production sector, you are reliant on consumers buying your products.

If I leave you with no other message today, please take this one - animal welfare issues are critical. The top-end of the market, which is the most lucrative, is extremely sensitive to animal welfare concerns, and if you want them to buy your meat, you need to make sure you're using the most modern, enlightened animal management techniques.

Pork is a traditional Sunday roast meat in New Zealand and it would be a shame to let things that can be dealt with get in the way of that tradition continuing.

This speech has been heavy on welfare issues. I know there are other things that worry you as well.

Prominent among those are concerns about the implementation of the Resource Management Act.

In the past few months, some pig farmers have been forced to shut their farms by local councils acting on complaints from neighbours about odours and effluent. Pork producers are affected more by objections under the RMA than other farmers because of its intensive nature, and the growing intolerance of lifestyle farmers to rural smells.

This is harsh, particularly when pig farms have been in place for 50 years

The industry views that each regional authority seems to have a slightly different interpretation of the RMA.

A select committee is considering amendments to the RMA act now and I will raise your industry's concerns with Environment Minister Marian Hobbs. It seems unfair to me that longtime industries should be so badly affected by recently-arrived neighbours.

Your executive has also indicated to me a desire to alter the number of directors on the board to bring a balance between North Island and South Island representation - two each rather than the three to two it currently is - and when that proposal is brought to me formally, I will consider it properly.

I wish you well as an industry and invite you to ask any questions.


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