29 Apr 2013

Farmers back tradeable slaughter rights, says Beef + Lamb

1:50 pm on 29 April 2013

Beef + Lamb New Zealand's chairman says he's had strong farmer feed-back supporting tradeable slaughter rights as one way of helping to rationalise the processing end of the meat industry.

Mike Petersen says the concept was first suggested in a consultants' report 28 years ago, but never picked up.

He thinks it could be a circuit breaker to unlock the challenges of getting farmers and privately owned meat companies to work together.

Mr Petersen says a share of the kill would have to be allocated to each company, and from a set point in time companies would have the right to slaughter that percentage on an annual basis.

He says regular updates on the size of the kill would be needed.

"That would encourage farmers and meat companies to work together so that the meat companies could procure that percentage of the kill that they've been allocated each year."

Mr Petersen says the companies could not get the allocated number of animals, they would have a slaughter right which they could sell on the open market to another company.

He says ironically when the report was written it aimed to introduce more competition to the domestic sector, but it could also act as a transition for companies to restructure and reform.

There are indications that the idea may have some support among meat companies as well.

Commentator and business consultant Allan Barber says companies are under pressure from farmers to change the way they operate.

He says the idea of allocating slaughter quota to companies that they could trade would help deal with the issue of over capacity confronting them once again.

Mr Barber says the industry has about 30% too much capacity and trading quota gives companies an opportunity to receive something in return if they exit the industry.