Dairy Boom Highlights Need For Reform

The dairy boom highlights the urgent need for reforms to the struggling sheep and beef sector, said Keith Kelly, chair of Federated Farmers’ Meat and Fibre industry group.

“Good on dairy farmers for getting a decent return on their investment and hard work. They deserve it and sheep and beef farmers wish them all the best.

“But sheep and beef farmers are not reaping the same rewards and many would have listened to radio reports yesterday of the dairy payout increase and felt very deflated about the state of their industry,” Mr Kelly said.

“Sheep farmers’ average income is well down. Twenty dollars a head for store lambs is not sustainable and many farmers are in dire straits, particularly on the eastern side of the North Island where they haven’t properly recovered from the summer and autumn drought. Prices of finished lambs are also well below their long-term averages and last year’s prices.

“Reasons for this crisis include the strong New Zealand dollar and higher costs imposed by legislation, procurement activities that add cost and not value, aggressive selling of product overseas, and the growing power of overseas supermarket chains. That said, farmers must take responsibility for their predicament due to their complacency and failure to create an industry that works for producers,” Mr Kelly said.

“The key to fixing the situation is replacing the outmoded marketing model the industry continues to use. We remain a fragmented and overly competitive industry when it comes to selling. Until we unite and begin selling our premium products at premium prices, we will continue to be price takers rather than price makers.

“To achieve change, the industry must develop a marketing strategy that recognises and delivers on this model. We need to focus on very high quality products, having processors that are skilled in their preparation, marketers that are able to set prices and, importantly, seek out new high-value markets for our world-leading products.

Federated Farmers’ meat and fibre industry group is committed to working on pushing through these much-needed reforms, so that sheep and beef farmers can match or exceed the success of our friends in the dairy sector.”