Meat companies lambasted

Press, 13 June 1986, Page 10

Meat companies lambasted

By

HUGH STRINGLEMAN

Meat companies were reverting to their “old habits” of undercutting each other on world

markets and driving down returns to farmers, it was alleged at the annual conference in Wellington of the meat and wool section of Federated Farmers.

The exporter group structure was breaking down and companies were not honouring their agreements with each other and the Meat Board to work together, to apportion markets and not to undersell. “The meat schedule has fallen since the companies took over to a point where the livestock industry is totally unprofitable,” said Mr Stanley Phillips, of Auckland.

He was one of a number of Federated Farmers leaders to allege that the company group discipline was breaking down and some called for the resumption of marketing control by the board.

But the board chairman, Mr Adam Begg, said the exporter group system had not been blatantly disregarded by individual companies although some incidents had come to the board’s notice.

"The group discipline hasn’t been fully tested

yet because of the low product volumes due to the strike,” Mr Begg said.

He said the distribution of further processed trade among companies was not being handled well; the general manager of the board, Mr Jim Bremner, said the Greek price was lower than it needed to be and that a company had been caught underselling in Italy and barred by its fellow companies.

Mr Bremner said the progress made in recent years in the Pacific area had gone “out the window” since the return of marketing to private companies. Meat companies came in for a deal of criticism at the meat and wool conference — for their handling of the recent meatworks strike, their schedule prices to farmers and for their handling of exporting and marketing this year. “No one can deny there are difficulties, but for a group that had canvassed (the Government) so strongly on their ability to do a better job than the Meat Board their performance is abysmal,”

said the meat and wool chairman, Mr Bruce Anderson.

He supported the formation of a strong group of farmer-owned companies to counteract the other large players in the industry and to safeguard a stake in the industry beyond the farm gate for producers. Mr Begg said Freesia Meats, an investment company of the Meat Board, was finding it difficult to get a large farmerowner company group together, although it was pushing ahead. He suggested that Freesia may have to look at more direct investment in processing facilities, in perhaps smaller new plants. Mr Bremner reported that several proposals for small one-chain lamb processing works had been put to the board. A conference delegate from the West Coast, Mr Kees van Beck, said his region would be ideal for such a plant. The Meat Board has a particular concern about the degree of processing competition in the lower

part of the North Island, the conference was told. Mr Bremner said competition from smaller plants would be one way of getting the large companies to lift their wbrks utilisations and cut processing costs. He mentioned a turkey processing throughput in the United Kingdom that with one chain and only 70 employees in the plant was greater in terms of hourly tonnages than the combined output of six chains at the Whakatu freezing works, Hawke’s Bay.

The Meat Board chairman, Mr Begg, said pressures to introduce new technology and shift work were coming on the companies but until now they had shown a lack of urgency or complained that they could do nothing in that area.

A Southland delegate, Mr Aubrey Begg, said it was a disgrace that companies had introduced expensive new technology and then caved in to union demands for excessive manning levels. A remit calling on the federation to support a return to Meat Board ownership of meat was defeated on voting by two to one. Supporters of the

remit argued that economic conditions in the sheep industry had never been worse and companies were doing little to help farmers. Another supporter commented that farmers owned companies controlling 65 per cent of processing throughput but had been unable to influence their own managements and the industry in favour of farmers.

Although the remit was lost, a by-product was a strong direction to the board to be more aggressive with Freesia’s investments in all levels of the industry.

The North American lamb selling operation, Devco, came in for its usual share of criticism at the conference, with several delegates hinting at substantial operating losses for the company despite a record tonnage in sales.

Mr Begg replied that the board was uneasy about the profitability of Devco and was in the middle of a review of the need for the company, which is jointly owned by the major meat companies and a farmers trust administered by the board.