Industry Action Group Disappointed By Meat Co-Ops

13 May 2007 -- Farmers interested in reforming the meat industry were disappointed by the attitude of Alliance Group and PPCS after they met with them in Dunedin on Friday.

The Meat Industry Reform Group and the Meat Industry Action Group were disillusioned after being “stone-walled” by the two co-operatives. The MIAG, a group of Southland sheepfarmers, who were optimistic about the prospects of reforming the industry were disappointed by the attitude of the companies.

The meeting, between Keith Cooper (PPCS CEO), Grant Cuff (Alliance CEO) and the industry groups was designed to discuss issues and possible solutions to problems both within the co-operative structure and the wider industry.

“Our group members should have left that meeting on Friday with renewed hope and growing confidence. By contrast, we were deflated by how little progress was made,” MIAG spokesman Keith Milne said.

“We wanted to discuss the development of closer co-operative relations, the possibility of better undertakings on procurement and get an end to special deals. We wanted to discuss the need for better market co-ordination between not only our two co-ops but also the whole industry and we wanted to tell them of the need for better communication to shareholders.

“We have the best lamb in the world and consumers lining up to buy it but we have an industry model of a ‘big old dinosaur that is spiraling down’ and not evolving and threatening to take the whole industry with it. We need to change this,” Mr Milne said.

The meeting with the heads of Alliance and PPCS was the first formal meeting since the MIAG drew a crowd of over 500 disillusioned sheepfarmers to the Federated Farmers AGM in Invercargill on Wednesday. MIAG Chairman Mark Crawford told farmers at that meeting of the bright future ahead for the industry if farmers and co-operatives could learn to work together with trust and vision.

“We need planned, integrated procurement and marketing,” he said. Farmers responded overwhelming giving their support to three remits which included calling for an end to secret deals on procurement agreements, asking for more transparency and for the two co-operatives to work closer together on areas of procurement, marketing and Research and Development.

Friday’s meeting was in total contrast, with neither co-op CEO prepared to address the real and urgent issues facing the industry, Mr Milne said. PPCS CEO Keith Cooper pointed out his company was trying to curb the current procurement issues by the announcement of the Euroquality Lamb Supply Agreement sent to shareholders last week asking for a supply commitment for next season.

Shareholders have been given a deadline of Friday 18 May 2007 to commit. But, as Mr Milne said, “What’s the rush? Farmers are prepared to wait for a well-thought out procurement plan.

“Undoubtedly PPCS deserves some credit for setting a forward price and offering a supply agreement open to all shareholders but how many farmers will be prepared to commit to this when none of us has any idea what the schedule price will be for the coming season?

“Where is the supporting information behind this idea? Why aren’t they trying to actively sell the concept to farmers? Do they really believe farmers will commit to a supply agreement under these circumstances? It worries us they might now turn around and suggest farmers have been offered an agreement but have shown they are not interested.” We need to rebuild trust and commitment but the haste and inequality of this agreement could undermine this further and “they have not denounced the secret deals and secrecy appears to be part of this agreement.”

We believe the concept is right but the fundamentals to make it work are missing, Mr Milne said. Another issue which concerns the group is the transparency of an above schedule premium for out-of-season supply.

Our two co-operatives were formed to provide procurement and production of a commodity product a job they did well for a time. But our commodity product, NZ Lamb, has evolved into a world icon and our co-operatives are not evolving fast enough to be able to deal with potential opportunities.

MIAG members believe in the co-operative model as it should allow farmers control over their destiny … but why are we able to move ahead in some areas and not others? There appears to be a group of people resistant to change. These, and other issues, must be dealt with if we want our industry to not only survive but also move forward and prosper,” Mr Milne said. Members of MIAG will meet with Mike Peterson, Chairman of Meat and Wool NZ, later this week and are currently putting together a potential business model that would provide unity between the co-operatives in the areas of procurement and marketing.

Summing up at the meeting debrief, Mr Milne said: “Our co-ops need to understand that the average sheep farmer has had enough of the nonsense! Farmers want sensible and well thought out plans. They want a level playing field and they want to be informed. They want pride and trust returned to their industry and they want profit. We are not going to rest until this has been achieved.”

SIDEBAR:

Fed up with poor market returns over the past two years more than 500 farmers came to support and hear the views of the Meat Industry Action Group at a Federated Farmers meeting in Invercargill on Thursday. Three remits were motioned and passed that day with overwhelming support.

They were:

- “That our farmer owned co-operative PPCS and Alliance Group have a transparent and fair livestock procurement system that does not reward volume supplies.”

- “That farmers demand greater coordination between NZ meat companies marketing our lambs to improve the price promotion and R & D.”

- “That farmers and companies commit themselves to livestock supply contracts in a way to move our industry forward.”

Trudi Baird writes regularly for Farmnews and is also the publicity officer for the MIAG. www.farmnews.co.nz

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