Sunday, November 10, 2013

Genetics Merger- beef and lamb etc

I have been reading the various promo articles (and in particular the recent one in the Farmers weekly of 28 October by Gerard Hall) as to why the proposed merger of Ovita, SIL (sheep improvement Limited) and Beef and Lamb should go ahead and I have also attended a coupler road show meetings on it.

 Let me say at the outset that I do support such a merger.  However I do think the various advocates of this merger tend to significantly overstate not only its significance in the development of the sheep industry to date, but also I think its contribution to it in the future.  An example of such a statement:

 The above entities are “the glue that holds together sheep genetics research and development in NZ and supports industry improvement.  These are the key ingredients in the profitability and competitive positioning of sheep and beef farming”

 The claim is made that for a $100 lamb SIL has been responsible for contributing an extra $14 more profit compared to the animals 20 years ago.  I am not saying the SIL hasn’t contributed something or been used as one of many tools to get there, but in my view the introduction of composites containing breeds of Fin etc with the resulting high lambing percentages made all other breeds focus on fertility to the point now for example the Romney breed, which is still the dominant breed in NZ, their lambing percentages and in particular number of lambs to  weaning (i.e. high survivability rates)  must be well in excess of $14 per lamb more than 20 years ago.

 People need to remember that genetics are one component of sheep farming, I would suggest it contributes around 10%, others (i.e. beef and lamb) may argue around 20%.    The balance, 80 to 90% is stockmanship, which is not only knowing what a good sheep looks like, but includes how you manage your stock, which in turn includes a basic judgment as to when you should shift them through to what pasture species, farming systems, fencing etc, all these things as a sheep or beef farmer you hone to try and maximum production out of your stock.  You assess the value of what you do by how your animals perform; it is your subjective assessment that makes the difference! 

 I believe it is the stockmanship aspect that is increasingly becoming a lost skill and accordingly as much attention, if not more, than the smaller genetic component, needs to be put on this to educate all of us and in particular those who we hope to continue with the industry into the future.  Ideally such education needs to be taught in tandem with SIL and sheep genomics etc and taught in high schools and Universities.    Some basic examples of what I mean;

·         I use a rough tool to measure dry matter in a paddock to determine how big a break I need to feed x amount of ewes or hoggets, but whatever the figure I get its only a really rough guide, if the weather is warm your stock need less, if its wet and cold they need more, if its been very wet for a while they need a bigger break still, these are judgements you should make every day.  The drymatter measurement tool is useful guide but ultimately the important judgement is the daily assessment of your stock; and

·         Making an assessment as to how subdivide your farm, a fence in the right place can make a huge difference to the utilisation of the pasture, i.e. if it’s a shady area or wet area etc.   I consider this a stockmanship assessment that has major impact on your production; and

·         An assessment of an animal’s structure, i.e. the phenotypic look of the animal is something that impacts on productivity down the track.   Simplistically an overshot or undershot sheep can’t eat enough to perform.    Dark skin, black spots on ears and face will ultimately affect productivity as not culling for it will mean that the black becomes so prevalent that you end up with inferior wool with loads of black in it.  Poor shoulder conformation if not culled for will have a significant effect on ease of lambing in future generations; this being one of my concerns about Alliance’s Viascan yield assessment, you need a good shoulder to get the premium but this maybe at the expense of lambing ease in future generations of sheep.  I could go on for ages about the various phenotypic traits of an animal and how if not culled for will ultimately affect the productivity of the flock in the future.

 There are loads more examples because it obviously comprises 90% of what we do.  Objective measurements or breeding values from SIL or indeed sheep genomic chips don’t or at best provide us with a rough guide on these decisions.

 The same article mentioned above talks about Shepherd plus, Sheep 50K, Sheep 5k etc.  I like many ram breeders provide DNA samples from sires to the present entity and presumably to the future entity to develop gene markers and refine the present ones so the accuracy of these tests can be significantly higher, but one of the major stumbling blocks to the use of them is cost and accuracy.  I would argue that unless you are an entity subsidised by the rest of us, then any breeder who utilises such tests on the scale advocated would, based on a cost benefit analysis, simply disregard the use of them.  Some presently use such science more as a marketing tool than as mechanism to improve their genetics.    Take the Shepherd plus, I can’t remember the exact pricing for this, but the cost to simply sort out sire parentage (let alone sire and dam) is ridiculous and, if you are good breeder, you still have to record and identify the mother in the normal manner, so what’s the point!!!!  Two things need to happen before such science can truly contribute to the development of the industry; the accuracy needs to continually climb and the cost of utilising such tests needs to keep coming down, there will be a point that it makes economic sense, but I am pretty sure we are not there yet.

 As stated above I am not against the merger and the continuing development into genetic markers etc, but I do believe that it’s not the panacea as some people seem to be portraying it in the media.   I do believe it can contribute, but as much emphasis needs to be placed on educating all of us on what I consider the basics of stockmanship, it’s a vital aspect of being a good farmer that can never be replaced by one or many objective tests, it is an art that needs to be learnt and as such it’s the new entity’s responsibility to also ensure that this aspect is also taught in high schools, universities and any other forum (i.e. field days) that farmers may attend or more importantly those who will be farmers of the future.

Wednesday, October 9, 2013

Some thoughts on some common ram marketing claims

As we are coming into the ram selling season, I thought it might be of interest to sheep farmers to give my thoughts on the merits or otherwise of some of the claims that are often used to suggest one’s rams are better than someone else’s.

I would like to make it clear that I am a passionate ram breeder and as such I am not a neutral independent commentator on the following; however I would like to think my opinion is a well informed and an objective view

Firstly, you do need to cast a cynical eye over what is often being claimed as sometimes it’s nothing more than marketing dribble used to sell rams and adds little (being polite here) or no genetic value to the rams. 

Myomax:   This is a Texel specific gene test only, so if someone is advertising Romneys or any non Texel breed (e.g. suffolks) with a single and/or double copy of this gene, then they are not pure, they are crossbreds: e.g. a Romney that has had a Texel put through them; it could be ½  Romney, ¾ Romney etc.  If it has a double copy it would have to of had a Texel put through the flock at least twice.   Good luck to anyone who wants to do this, but be aware of what you are buying.  If you buy any rams with a myomax gene, then check that the breeder is also testing for the blind gene that is associated with Texels to ensure you don’t bring that into your flock.   One other point about myomax is that one copy gives you roughly a 10% gain in the eye muscle area, but what needs to remembered if you buy a ram with a lousy eye muscle, 10% more of a crap eye muscle may not be as good as a ram with a good eye muscle and no myomax gene. 

Worm Star test:  This is approximately 80% about growth and 20% about worms.  So I personally consider the name of this to be somewhat misleading as it’s principally about growth rates, simplistically it could be renamed the growth star test. A scientist has advised me on more than one occasion, if a sheep does have good growth rates then logically it is probably handling any worm burden better than those that don’t.  The most reliable data you get from SIL is in fact ebvs on growth rates (young stock at least), so this test adds little, if not nothing, in my view. 

CT Scanning:   For CT Scanning to add genetic value to the rams you buy, the breeder needs to be scanning a sufficient sample size of each sire they use, say 20 to 25 sons (some may argue a few less) and if they do, then they are providing you with good information.  However I am personally unaware of anyone scanning these sorts of numbers per sire.  The reason being is because of cost, but unfortunately CT scanning only a few rams simply provides you with phenotypic information, i.e. what the animal looks like as opposed to genotypic information (the genetic makeup of the animal).  In other words genetically you don’t know whether the ram at issue has the genes to provide you with more meat or not, it may do but it may not. You need to find out how many rams per sire the breeder is scanning before assessing whether it adds any genetic value to the rams you are considering buying. 

We only keep twin ewes and use twin rams:  Where you have a stud breeder who records all the information they should do and are on SIL, then this is just a crap marketing statement that adds no value to the rams you buy, in particular in terms of fecundity.  Simplistically the easiest way to demonstrate why is:  you have two rams, one a single, the other a twin, the single is out of ewe that has had 6 sets of twins and then this single ram, while the twin is out of ewe that has had 6 singles in a row, then has this set of twins (note in reality I would hope that most breeders would have culled such a ewe after two singles in a row, if it’s not a terminal breed).   Accordingly if you are looking for the ram that is likely to provide you with most fecund progeny (i.e. more multiples), then clearly the single ram is the one you would take hands down.   SIL’s ebvs for number of lambs of born would also back this up.  Accordingly such a policy in a stud programme is likely limiting that stud’s progress.   Note hypothetically  if two rams are exactly the same with one being a twin, the other a single, then I too would take the twin every time. 

All rams for sale from top 35% born, or 25% born:  This always makes me laugh, without more information how is this impressive!.  In reality on its own this simply means they have retained 25 or 35% of what was born, for sale.  If from top 25%, then  based on what: that their still alive, which makes them better than the others or top 35% on SIL which means that they will be selling some awful rams that have good figures.  I don’t know anyone who is culling their best ones and selling their bottom 25%.   Personally I would be more impressed with someone selling 50% of their rams born, if when you go and look at them, they are impressive with good consistent figures, which would suggest to me such rams are more likely to pass on the characteristics and performance I am looking for because of the depth of quality in the stud.

We only retain ewe hoggets that get in lamb:  On the surface this sounds impressive, but you need to ask how long is the ram put out with them.  I, for instance, only put ram lambs out with them for 17/18 days and usually get around 60% in lamb, if I put them out for two rounds I am pretty confident a very high percentage would get in lamb.  I don’t, because I don’t want to lamb for months and I want to wean my hogget lambs the same time as the ewes.  Accordingly you need to ask more questions about this before determining whether this is something that is impressive and is of value to you. 

Sheep 50k and sheep 5K:  I don’t intend to go into the merits and economics of these genetic tests in this article, however please note the fact someone advertises that they have or are using such tests means nothing on its own.  If they have, then ask to see the results of these tests to see that they are using sires or selling rams that are coming up well on the traits and performance that you are looking to improve on in your flock.   The cynic in me is of the opinion that there are some breeders using science to market their rams as opposed to improving their genetics.  
There are a lot more things I could talk about but this is supposed to be an article not a book.

Wednesday, August 28, 2013

Agresearch: Should I stay or should I go?

I have been reading the various articles on the pros and cons of the proposed AgResearch restructuring which intends to centralise most of it’s’ capabilities to Lincoln and Palmerston North.

Centralisation and then decentralisation is something that seems to go in cycles, governments, banks and significant businesses have all done it.  You get someone new at the top and they want to make a change.  Centralisation tends to be economically rationalised by lower admin costs, more cost effective use of physical assets (in theory at least), scale efficiencies and so on.   Then 10 years later decentralisation is rationalised and justified on better client service, we need to be where our customers are, personal contact is what makes the difference, I am sure there are many more ways of justifying both actions.

 The reality for me is I deal with people, if you deal with someone you like and trust, and they shift to another entity in the same business then I find I tend to follow them.   My loyalty is to the person and not the business, so if they leave the industry I am looking for someone else who I trust to deal with.   Most business is all about relationships.  I would suggest the importance of this is being overlooked at the moment and/or immensely undervalued in the proposed restructure.   

 These relationships are even more important when carrying out industry good research as you need to have good solid direct working relationship with those you are in theory developing the science for, you need people with a foot in both camps who understand the practicalities of what is happening and what the industry is wanting. 

 What do I mean by this, two people I deal with at AgResearch at Invermay with regards to sheep genetics, are both married to farmers and live on farms, they understand the challenges and the realities of what is going on and I would suggest empathise with the industry.  Will they relocate, the odds must be against it.  People like them are important to ensure research is followed to its logical conclusion or further developed if required.    The cynic in me believes that sometimes funding is sort for projects which is more about keeping someone in paid employment than attaining industry good objectives, because when the funding runs out, the project is shelved and they move onto something else.  

 It’s important to have people in all regions that are easily accessible to the farmer, the better the relationship I suggest the better the science being undertaken and of course the better the buy in to the research by the farmer.  Centralising AgResearch’s capabilities will severely impact on this as it would be inevitable that there would be many more scientists undertaking research who would have little or no contact with the actual farmer themselves.  In other words centralising scientists at Lincoln and Palmerston North I believe will create a greater disconnect with the farmer.  I often cheekily say when describing a scientist I have some time for, they could probably almost succeed as a farmer if they wanted to (this is because they understand the practicalities and realities facing farmers, not all scientists do, they only way they can get an inkling is by forming good relationships with farmers and similarly for farmers to understand the science). 

 On top of this to create the relationships I am talking about you need to be where the subject of the research is: if it’s about sheep then pick an area where there are considerable sheep, Canterbury as we all know has a huge dairy presence now, so centralising to Lincoln, doesn’t really stack up that well for sheep research.



Thursday, August 1, 2013

Closed door talks insult Farmer suppliers

Who decides the future of the sheep industry?
I didn’t want to write about this anymore, but the recent article in the farmers weekly “Meat talks near end” incensed me to write about it again.  

I know I can only speak for myself but I have to say I have been disgusted with the arrogance, I guess you would call it (perhaps even ignorance, or condescension or all these things) of the meat companies.  They are treating us as if we are kids who should be seen and not heard: you just wait there and we shall talk amongst ourselves and once we have agreed on what is best for you and us, we shall then tell you what is going to change!!!!!.  No, it’s alright farmers and shareholder suppliers we don’t want your input as to how things should change or care exactly what you want, we are the experts, we know!!!!   I am afraid this is how I feel and especially so about the two cooperatives, all of them must answer to their shareholders, but the cooperative shareholders are also their suppliers, who in theory they are supposed to work in the best interests of.  Private companies can do what they like, but cooperatives?

At the very least you would think that you would invite the current executives of the Meat Industry Excellence Group “MIEG” to partake in the discussions given their recent road show meetings around the country, but from what I have read they are not part of it and have no idea of what the Meat companies have been talking about.

The stock response for justifying private, confidential closed door discussions is the information is commercially sensitive, which occasionally rings true, but more often than not in my experience it’s simply an excuse to exclude the public or other interested parties.   I doubt very much they are discussing balance sheets, debt loadings etc, most of which is freely available anyway.   I am sure if there was some commercial sensitivity (which I doubt) they could have had the MIEG involved on the basis that all such discussions are to remain confidential, at least you would then have some input from our defacto representation.

The reason I write these articles is to hopefully make others think seriously about it all and perhaps do something, not sure if I am succeeding in this regard!  But I also believe that expressing your ideas in public as opposed to a mate or neighbour provides more chance of someone developing that idea or tweaking it or coming up with something altogether better because they have turned their mind to it.  Who knows what might come from it, but this is a lot less likely with private closed door discussions.

One final thing; the tradable slaughter rights that people keep talking about was an idea developed decades ago to address capacity issues.  I have the original 70 or 80 page report and have admittedly only read the executive summary, but its purpose was to address and discourage the development of excess processing capacity, it does not address procurement issues at all, in fact the report actually promotes competition at the gate.    Deciding the correct level is apparently incredibly difficult, if too high or too low it has no effect whatsoever and as I said moreover it does nothing to solve the procurement problem we have.   Procurement and in particular the way it is done is admittedly just one problem we have, but I believe it is the first one that must be remedied if we are to turn things around, the eternal optimist (which incidentally is not me at the moment) would like to think that if we can sort out the meat industry, we actually may grow sheep numbers again as it will be profitable and accordingly in years to come we may need the current excess capacity!

Friday, June 7, 2013

Whats the purpose of Landcorp?

Meat industry editorial, no I too have had a gutsful of these, it seems these have been done to death the last month; unfortunately my reading of it all simply reinforces to me is that not much is going to happen. The only thing I would say is any meat company spokesperson, who continues to waffle on about the importance of farmer loyalty without also saying in the same breath all shareholders will be paid the same on any given day, won’t get too much bloody loyalty!!!!
This leads me to Landcorp, what is the purpose of Landcorp? My view is that more often than not these days it is undermining every other farmer in New Zealand It’s government owned, which in theory means its owned by all of us, it realistically doesn’t face the same financial pressures as the rest of us, just look at Solid energy as an example, millions of dollars of book debt, but still operating.
I am sure that there are a lot of farmers in this country who with the same access to capital it does, could do a much better job. One reason being that private farmers do face the financial pressures to make it work, I somewhat doubt that there is any state run business that operates more efficiently than a top privately run business. A second reason that flows from the first is that most people that are passionate and very good at what they do, don’t want to do it for wages only for too long, they generally want to do it for a business that they own.
Chris Kelly negotiates a premium for his works lambs; he does this simply because of the sheer numbers it can supply. But who is paying for this, all the rest of us, yes the shareholder suppliers, subsidise Landcorp, how farcical is that. Kelly’s response is that we as farmers should band together and do the same, firstly it’s much more difficult to coordinate many different farmers as opposed to one entity under the control of Kelly, but secondly should we have to worry about state owned farm undermining the rest of us? Thirdly even if it was possible it doesn’t make it the right action to take, it should not be “if you can’t beat them join them attitude”.

Recently I attended an Agresearch presentation to Romney New Zealand (“RNZ”), with whom we collaborating on a number of research projects for industry good traits. It was advised that Focus Genetics, which is some sort of venture between what was Rissington (an entity that seems to have more lives than a cat) and Landcorp, had received $600000 from the government for research. RNZ a private organisation needs to provide dollar for every dollar we get from Agresearch, what we could do with $600000. I am not sure if they are providing dollar for dollar, but even if they are then that would also be coming from government wouldn’t it? Again should a state owned farm be able to do this. While I have read articles saying that Focus are leading New Zealand genetics, I suspect these have probably been written by Focus themselves as I can assure you there are plenty of sheep and cattle in this country that are every bit as good and realistically in my opinion a helluva lot better!

These are just two examples of Landcorp undermining the rest of us; I know there is many more, look at the purchase of land, crafar farms management etc. In my view Landcorp should go back to what I understand it was originally set up for, assisting younger people into farms of their own. This is a big issue for farming in this country and should be its principle focus, if it’s not going to be, then the government should sell it off and build some hospitals and schools!!!

Sunday, April 21, 2013

Meat industry reform: where to now?

I attended the meeting organised by the Meat Industry Excellence Group (“MIEG”) in Christchurch last week, which was to outline their principles and “gain a mandate from farmers for industry change”

I commend all those involved with Mieg for the time and effort they are putting into this and seriously believe that they are well intentioned as to their goal.  They did get a mandate for change, but unfortunately I am not sure if they got a mandate as to how to go about it.

However while I don’t want to be the pessimist in the room, I am afraid it feels like déjà vous to me.   A few years ago a group known as the Meat Industry Action Group (“MIAG”) was trying to achieve a similar goal and unfortunately we all know how that turned out. 

I was optimistic after reading the media reports after the Gore meeting, but less so before I attended the Christchurch meeting because:
  • I read that two members of the MIEG executive had already resigned, because essentially they disagreed as to the way of going about obtaining industry reform, to which I shared similar reservations; and
  • MIEG's first principle of 6 outlined by them is “Up to 80% of red meat processed and marketed by one “coalition of the willing” structure”  Note the two coops only account for around 50% as I understand it, so we are talking about convincing private companies owned by non farmers to be part of this big entity; and
  • I spoke with a member of the now defunct MIAG who agreed with me and echoed my concerns that MIEG with this 80% goal are biting off something they cant chew and as such are unlikely to achieve anything (at least not for a long time) and that we need to focus on the coops, where farmers have some control and can force reform.  We have no influence over Anzco, Affco etc who are privately owned companies, (who incidentally had no representatives at the meeting, one because they never had enough notice apparently and another would not attend).  

At the meeting there were a number of speakers, mostly talking about business models, target and niche marketing etc which is all well and good but probably more matters for any final entity that one day might be formed.  For me personally the “on the money” speaker was Professor Woodford of Lincoln University who basically said “sort out procurement and it will all flow from there”.    I am have been banging on about this for years now.

We need to change this immediately, along the lines that we all get paid the same on any given day (equitable and fair), and receive say 60 to 70% of what they budget and get the rest at the end of the season if they achieve budget, in return we as farmers must contract to commit all our lambs to them.    We as shareholders need to unite and make the coops do this (we need everyone as the traders, Landcorp etc won’t be keen on it).   This procurement question was put to Mr Garden of SFF and he didn’t answer it.

A merger of the two coops in name and administratively wise only (no restructuring or consolidation in the first instance) which is all I advocate initially, is not the panacea,  but I believe it’s a start which would assist in changing the way they procure lambs and hopefully achieve MIEG's ultimate goal.  I put this to the executive at the meeting, who did not agree which is why I felt somewhat pessimistic about change as I just cant see how you force private companies who have a responsibility to make as much money as it can, probably at the expense of the grower as opposed to cooperatives who in theory have an obligation to make as much as it can for its supplier shareholders (the growers).!

Finally a video presentation given posed the question: if a man in the woods gives his opinion and his wife is not there to hear it, is he in fact wrong?

Tuesday, March 12, 2013

Should meat companies merge

Should the Meat Cooperatives merge?
I used to be rather ambivalent as to whether the two main cooperative meat companies, at least, should merge or not. I accepted the line that we were fed, namely the economic advantages were not that significant unless we could get some magic figure of say 90% of the industry.

We are still being fed this line: Eoin Garden claims that “Aggregation or consolidation must be wider than the two co-operatives otherwise only the coop shareholders would carry the cost? Well Mr Garden I have some news for you, the shareholders are and have been carrying the cost of this mickey mouse run meat industry for years now; we are all getting paid buggerall this year so they can recover last year losses. (I might add not all of us received ridiculous prices for our lambs last year either, if you killed before February you did alright, but after that!).

I believe the arguments for merging the two coops is not about rationalising capacity issues or indeed any apparent economic advantages that may be gained from being bigger and one entity (which may or may not be a bonus), but more about eliminating the major economic disadvantages of the coops continually competing against each other through: firstly the ridiculous procurement model that we have been operating under for years and secondly the undercutting of each other in overseas markets to get rid of the product (which is generally a direct consequence of the ridiculous procurement model).

If the two coops merged tomorrow, my thoughts as to what should happen are:
• you would put a schedule in place for the whole season that would be conservative and considerably less than what it budgets or expects to get in the next financial year; and
• It would be a schedule that would be slightly higher at the beginning of the season (a sufficient amount to encourage those farmers who can, to lamb early) and then taper off a bit, but not drastically so; and
• A schedule that would not miraculously drop because of adverse economic events i.e. a drought. Why does a cooperative reduce the schedule when farmers have to get rid of their lambs, its supposed to be a cooperative and look after shareholders, not screw them; and
• the schedule price in any one week would be the same for everyone who have lambs killed that week, no special prices for lamb traders or big players e.g. landcorp. Traders should make their money from a numbers game, not getting a better per kg price than the breeder. We all get the same, yes what a concept “equity and fairness”; and
• When the coop later sells the lamb at a price that is budget or better, then as the original schedule price paid to farmers was under that figure, it would pay all shareholders an additional payment per kg of lamb supplied; If for some reason, it was sold for less than what was paid originally to the farmer, then as it’s a fair and equitable system for all shareholders, the next year’s schedule would be adjusted accordingly; and
• As shareholders we would sign contracts to supply lambs on this basis, as it would be fair and equitable and reliable and we would back the coop to do its job over and above the schedule price it had already paid and get the balance at the end. You would have certainty of supply; and
• As the two main players had merged, you would keep out of the store lamb market altogether and allow the market to decide the price not meat companies and
• You would pay on yield, but unlike Alliance at present you would pay a price per kg for the shoulder based on the value of that cut, similarly a price for loin and a price for hindquarter, all of which are paid independently of each other, not contingent on meeting the a threshold in all three. I was assured 2 years ago that this indeed would happen after raising it with the hierarchy, only to find nothing has been done. Such a payment system would ensure the breeding operation focused on the valuable cuts of the animal.
• Clearly as one entity SFF and Alliance would no longer be able to undercut each other in overseas markets.

I would assume to make this happen special general meetings would need to held; whereby the shareholders would demand the resignation of Mr Poole, Mr Garden and Mr Cooper (possible Mr Cuff also), this would remove the EGOs which I feel has become the main obstacle to making this happen. Shareholders need to make this happen, not just sit back and moan.
Incidentally if we got the two merged, I feel this would also become the logical primary vehicle to advance WOOL, the majority of us would already own it, it would just require some thought and expertise as to how we go about it.

Saturday, February 9, 2013

Meat companies researching crossing sheep with dairy cows?

No they are not, at least I hope not, but hopefully this got your attention. I like most farmers have become incredibly disillusioned with the competency of our meat companies. Things have to change, but will they? I have had many private conversations with many farmers about the problems and what perhaps should be done, but I am not sure if this achieves anything. I believe we need to take the debate public and get everyone’s attention and input and perhaps again (MIAG) get momentum for change. If we keep going like we are with wildly fluctuating prices from year to year, sheep numbers will continue to decline, even though simply because of falling numbers I believe the prices will be better next year or the year after.

I have been a staunch supplier of alliance, I believe in loyalty, but after last year’s debacle, who are you to have any faith in? I went to some bank presentation towards the latter end of 2011, where a rural economist from wellington presented a graph showing how the price of lamb had increased at a rate very disproportionate to its substitute products like beef, chicken, pork etc: in other words you did not have to be a genius to realise the price was unsustainable, this was well before the new year of 2012. Surely a prudent well managed company would act conservative in the wake of such information; yet the meat companies continued to pay ridiculous money for lambs well into the New Year and even more ridiculous money for store lambs, these cooperatives are supposed to be acting in our best interests. The standard line we have been fed for the losses is the drop was so fast and so unexpected, but essentially they were caught with their pants down, should they have been, I don’t believe so (at least not all the way down) and have heads rolled over it, NO.
Lamb prices are and were particularly last year fuelled by procurement battles for the lambs from farmers between the companies, not by overseas market demand, we all know this. What business determines prices by procurement, surely its demand? If the meat companies kept out of the Store lamb market all together, then we may be getting paid more this year, as instead of all cooperative shareholders having to cover their losses by getting paid less for lambs, it would only be those farmers who bought lambs suffering now, not all of the shareholders. It’s still happening, a farmer told me recently if sells his own lambs to lamb plan, he reckons he will make around $10 a head more than keeping and killing them himself, that figure is probably increasing giving the rate the schedule is dropping, how farcical. Alliance is just as much to blame in this regard as their schedule is more based on what SFF pay than anything else. You even get an email these days from them that shows you if x% of lambs meat the yield requirements, then you will receive this amount, i.e. to essentially show you that their price is competitive with its main rival SFF. It’s not a yield premium at all; it sets its schedule to take account of what its average yield payment may be to ensure that their price is on a par with SFF.
Alliance this year announced its $20 upfront payment through the media, the first I knew about it was reading the farming magazines. Wouldn’t a well run company inform it shareholders first before the media, and in writing and in sufficient time to make an informed choice, not days before the cut off date to make the decision (when I received it), this again just smacks of incompetency.
I submitted a query in writing about some lines of lambs that were killed in January and February last year, to date I have had no response at all, what sort of company treats a shareholder like this, an incompetent one I would suggest. I can single out Alliance as I have been dealing with them, but I doubt if the others are any better.
All of the above are simply signs of poorly run businesses. I have a lot more to say, but limited copy space precludes me from elaborating on it now.  Note I wrote this to go in local farmer periodical.