Saturday, 21 December 2013

The Feds' meat menu

As you may recall, the meat sector is plagued by excess capacity, and lots of time & effort is going into sorting out the mess. I've been a tad critical of some of the ideas being floated.

Now the Feds have worked up a set of reform options, which will be released in "the New Year". Based on the teaser, it seems that their report considers 4 ways forward...

  • just copy Fonterra, which is rightly panned as silly;
  • Tradeable slaughter rights (TSR), which is also quite silly;
  • Toll processing, which would leave the marketing to someone(?) that isn't the processor; and
  • Total value transparency (TVT).

It sounds like the Feds prefer the last, which they describe as a "truly innovative concept" and add that it
... merits discussion as it could drive a material change in behaviours at the marketing end. It is one means to improve coordination, collaboration and in-market behaviour while generating value and demonstrating where that value is being added." 
I have no idea what that means but hopefully the full report will explain all.

Good on the Feds though for having a crack in this way: lining up some options and putting them out there for discussion. I'm keen to see the report - actually I wish they'd just release the whole thing now instead of making us non-members wait till next year.

Hopefully the report also tackles the higher level questions about whether there is any collective market power available to NZ meat farmers in international markets, and about what that implies for organising the industry here.

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