“There’s a hell of a lot hinging on the meat industry strategy for New Zealand’s meat farmers,” says Bruce Wills, Federated Farmers Meat & Fibre chairperson.

“The really important thing is that farmers and the marketers are both seeing the highest ever in-market prices for Kiwi lamb, but they’re not benefiting from those prices.

“The meat companies tell me they could sell double the lambs we currently produce and at these record prices too, but that’s where a massive disconnect between ‘there’ and ‘here’ kicks in.

“On-farm, sheep farmers are exiting the industry because there’s little or no profitability. Sheep farmers are voting with their business plans in order to survive.

“We’ve now got a consensus among farmers and the processors that the industry is broken and it needs shape and form to go forward.

“This strategy is about Deloitte delivering a factual objective analysis to solve an industry conundrum of record in-market prices but poor farmgate returns.

“Farmers and the meat companies both need one another especially as Beef+Lamb NZ has revised down its forecast for the current season’s crop of lambs to 21.5 million. That’s a massive two million lambs less than the forecast released last December.

“We’ve spoken about tipping points before but this is it. Productivity improvements can no longer make up for numbers.

“I don’t wish to come across as dire, but I’m being realistic. We need this Strategy to unlock the returns we know overseas markets can easily sustain. Yet meat returns is but one part of the triad.

“On-farm inflation is eroding profit right now and the Government’s obsession with the Emissions Trading Scheme and traceability could be understandable, if we were profitable but is disastrous when our balance sheets drip nothing but red ink.

“There has to be realism that heaping ever more costs onto a struggling industry will only end in tears.

“We need to learn from the dairy industry and combine forces, rather than in ripping into one another. Industry rationalisation should be based on optimisation of plant, than on economic necessity driven by declining stock numbers.

“The final leg is to realise that we can’t have a sustainable sheep industry based on meat alone. Wool is absolutely vital and Federated Farmers is backing that industry’s sincere efforts to change the status quo for the better,” Mr Wills concluded.