June 8, 2015

The New Zealand-based meat industry reform group, Meat Industry Excellence (MIE) has gained the backing of a major bank and is establishing NewCo, a new meat cooperative in the country.

The MIE was established two years ago by New Zealand cattle producers concerned about poor returns. The cooperative, which will be open to all New Zealand beef and sheep farmers is still in its infancy, but is being created to help producers struggling to cover the cost of production, despite the total industry, including meat, skins, wool and co-products being worth $8 billion in 2014 according to the Ministry for Primary Industries.

In March of this year, the MIE issued a report on the New Zealand meat industry stating that processing over capacity, too much investment in animal procurement and not enough in marketing were creating inefficiencies beyond the farm gate that were costing the industry $450 million per year, and in effect costing the country’s farmers money at the farm gate to subsidize a destructive business model. The report goes on to recommend consolidation within the country’s meat processing sector, the closure of plants, and long-term supply contracts.

Currently, New Zealand has more than 30 separate meat exporters competing for small slices of the market. MIE chairman, John McCarthy believes that NewCo, which will require farmers to commit livestock supplies for a minimum of three years, has the potential to realize $4 billion in turnover within three to four years, utilizing a plan to export 95% of production under a re-invented, customer-driven branding program.

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