14 Oct 2009

Meat industry seen as being in time warp

1:55 pm on 14 October 2009

An independent treasury and risk management adviser, says the New Zealand lamb industry is trapped in a time warp of short term thinking, which is threatening the industry's viability.

Bancorp Treasury Services senior client advisor Peter Cavanaugh says the short term approach and fragmented nature of the industry are making it more vulnerable that it needs to be, to the challenges it's facing.

These include the exchange rate, with a high New Zealand dollar, the recession's impact on demand in export markets, and falling lamb supply.

Mr Cavanaugh says farmers and meat companies can reduce their risks by taking a long-term, strategic approach.

For farmers, he says that means being more willing to sign longer term supply contracts.

Mr Cavanaugh also says meat companies should also make better use of currency hedging.

Meat Industry Action Group chair John Gregan agrees that there's still too much short-term thinking.

He says meat companies, especially co-operatives, have been trying to move to longer term supply contracts and more integrated marketing.

But he says they're still hampered by the present structure of the industry and consolidation is needed.