Report seeks ways to promote meat industry

Press, 13 April 1985, Page 6

Report seeks ways to promote meat industry

PA Wellington The number < of meat works that would close if recommendations in a meat industry report were implemented would depend on how vigorous was the competition between works, said Mr Ralph Evans, a consultant who helped prepare the report At a press conference releasing the report by the consultants, Pappas Carter, Evans and Koop, to the Meat Industry Council, Mr Evans said that the number of works to close was “not something we can predict very accurately.” Set up a year ago, the 1700,000 study looked at the industry from the farm gate to ship’s side. The report does not seek a change in the number of lambs killed, but sees shiftwork, longer weeks, and a longer season as ways of encouraging the industry’s future. “We see the industry as being a very conservative one, which has been operating in a certain way for 3 years, and part of the of the tradeable killing rights scheme is intended to intensify competition among plants, some of which will expand and imErove their unit costs and e able to put considerably more pressure then on some of their neighbours,” Mr Evans said. “Now, just exactly how

far this process or chain reaction will actually go through the industry is really difficult to predict but we hope it goes quite a long way. “In this industry, there is a larger capacity and one of the reasons for that is that it is very expensive to close plants. “There are several plants in this industry that have lingered on for quite some time, despite being unprofitable,” Mr Evans said. The amount of time plants spent killing in New Zealand was “extraordinarily short” “They kill for 20 weeks in the year, five days a week, 414 minutes a day — not a lot of minutes — and that only amounts to about 10 per cent of total calendar time,” Mr Evans said.

That meant big capital was tied up in plants which were not highly used, helping to place a barrier for the introduction of new technology. If plants could work longer and kill more per chain, the returns from investment in new technology would rise, and its use would become accelerated.

The study gave an artificial device to the market for a temporary period which was intended to intensify it, he said. “But nobody here in Wellington is going to be specifying that plant A or

Slant B should be the one lat should close, or expand, or should do anything,” Mr Evans said. “That will be up to the individual decisions bv the managements of the plants."

The study covered the meat inspection service, which is carried out by the Ministry of Agriculture and Fisheries. Mr Evans said the service should try to “spin off’ into more than one inspection organisation — at present the most expensive in the world — which would differentiate between quality control and disease inspection.

“There is room to do that more economically because, when you think of it, this is a highly seasonal industry,” Mr Evans said.

“I would expect that a private firm doing that would be able to arrive at new forms of employing people that would respond to the seasonality rather than have people employed the year round when they are actually only used part of the year. “That is something that would be easier to do in a small organisation rather than having a massive public sector organisation. “Second, there is a gap between the power or authority of inspectors in the works to interrupt the flow of production and their accountability for any cost

consequences of what they do.

“This is an unusual situation in any organisation, and if any private or employeeowned firm were seen not to be operating in a verysensible sort of way, the client in that case would probably switch to another one in the next season," Mr Evans said.

Earlier, the chairman of the Meat Industry Council, Mr Reid Jacksonl said the council expected to make “substantive” decisions about the report when it met at the end of June.

He said one of the difficulties, if the tradeable killing recommendations in the report were implemented, would be the mobility of the labour force. “We believe that the sort of structural change that this recommendation might bring about could be a social problem, and expect that that might be a social cost,” Mr Jackson said.

“Unless you can get the cost of this point down, and then, as a result of the additional competition that this proposes, get those benefits passing back to the farmer, that’s when he’ll get his benefit.”

Mr Jackson said the recommendations would not provide a “quick fix” for the industry's ills.