Meat mega-merger essential to NZ's prosperity

Meat mega-merger essential to New Zealand's prosperity

25 February 2008

Merging the four largest meat companies is essential for the restoration of New Zealand's meat industry says Dr Andrew West, Chief Executive of AgResearch.

"New Zealand lamb is the world's elite, mass produced edible protein yet returns to farmers have dramatically fallen in the past 24 months. Lamb has not failed as a product. It is our industry structure that has failed and the good news is that it is in this country's power to fix the problem.

"There are perhaps three times as many people fighting to procure lambs for the meat processing companies as there are people marketing this wonderful product to supermarkets and restaurants around the world. We urgently need to reverse that ratio and the only way to do it is this mega merger.

"Farmers have to stop selling on the spot market. They must enter contracts that mutually bind them and the new meat company to produce lamb that wealthy consumers will pay considerable sums for and for which New Zealand Inc gets its fair share of those consumers' cheques.

"A large company – not a monopoly, but large – is the way to achieve this as the dairy industry has shown. If we as a nation don't give sheep farmers the same chance we conferred by legal means on dairy farmers then we will consign the meat industry to a cottage status. This will mean New Zealand will come to rely too heavily on dairying and when dairy commodity prices fall we'll be in real trouble. We'll also put undue pressure on the environment if we just rely on cows.

"For New Zealand to prosper the sheep industry must have a future and this is its best chance. We have two brilliant leaders in Mike Petersen and Owen Poole who, together with widespread farmer and community support, will make this happen.

"We now need to pull together, be bold and define a new, profitable and sophisticated future for the meat industry. It's not a time for faint hearts," says Dr West

"And this new meat company will have a massive incentive to reverse the declining fortunes of wool, as it strives to recover prime land from dairying, so that will be excellent for sheep farmers too."

ENDS

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