24 Jan 2013

Restructuring in meat industry predicted this year

12:52 pm on 24 January 2013

Federated Farmers national president Bruce Wills predicts some major restructuring in the meat industry this year, as companies try to recover from the financial hammering they took last year.

A significant factor was the losses companies suffered by paying above market prices for lamb earlier in the season.

Silver Fern Farms, the biggest meat company, reported a net after tax operating loss of more than $31 million last year and the Alliance Group, the largest sheepmeat processor and exporter, lost $50 million and closed processing of sheep at its Mataura plant.

Blue Sky Meats, another southern meat company, reduced wages and cut jobs after recording a loss of $600,000.

Some other private companies have not published their results but Mr Wills said farmers understand no company did well last year.

Farmers are suffering the consequences now, as prices at lamb and ewe sales fall by 40% or more at sales around the country.

Mr Wills said he has sent more than 300 sheep to the ewe fair at Stortfort Lodge in Hastings on Friday.

But with falling meat company schedules, combined with dry conditions in Hawke's Bay, he's been warned to expect a sharp drop in prices.

''It's a bit of a kick in the guts how quickly prices have come back compared to 12 months ago,'' he said.

As a consequence, Mr Wills said the industry may be heading for the rationalisation that's been talked about for years and which was well overdue.