Costs warning to meat industry

Press, 6 March 1985, Page 6

Costs warning to meat industry

In spite of some recent efficiency gains, the economics of the meat-processing industry are grossly out of line with the realities of competing in potentially huge middle-income markets, says the chairman of the New Zealand Planning Council, Mr lan Douglas. He told the meat and wool section of the Rangitikei branch of Federated Farmers that a recent Planning Council study had found that demand in world markets should not be a serious constraint in the medium term on the growth of New Zealand’s meat exports. That growth potential, Mr Douglas said, came mainly from middle-income countries in east Asia, the Middle East, and North Africa and called largely for a “down market” form

of processing. “One alternative would be to do the processing overseas, probably in the buyer country. While this would enable us to sell our meat, it would deny us the extra income and employment from adding value in New Zealand,” he said. Present production economics in the processing industry made it extremely unlikely that it could service those market opportunities, which had the potential to absorb huge quantities of New Zealand meat. “If change in a positive direction is not achieved, negative change will undoubtedly occur,” Mr Douglas said. “In the present circumstances further works closings seem inevitable and if attitudes within the industry remain as they are the failures will con-

rinue. "The only thing we can be sure of is that the present industry structure is unsustainable.” Mr Douglas said that although it made sense to use established capacity where possible, “it may be that we will need a new kind of works, perhaps smaller and certainly capable of lower operating economics.” “If union rigidities do not permit labour costs to adjust, we might have to look at other options, such as cooperatives. “This may be especially interesting to Maori workers who stand to suffer heavily from the decline of the present industry. Cooperatives would have a strong incentive to be efficient, with the potential worker rewards coming from profits as well as wages.”