Chairman Mike Petersen told Rural News the average farmer annually sends at least $1 million of livestock to slaughter without enough serious attention to the sale process. “They often do it on a whim based on whether they like or dislike the livestock drafter.
“But it’s important they do some research to understand and have a good knowledge of the meat company they’re doing business with. Are they operating on the philosophy you believe in? Will they create long-term value for your product in the market? Is this the partnership you want and will it grow returns for your farming business? “This is an important piece of work to do.”
Meanwhile, Petersen says though most aspects of the RMSS (red meat sector strategy) are ticking over reasonably well, problems exist in ‘aligned procurement’, caused by a shortage of sheep at the farmgate and over-capacity in processing.
He says the present, highly competitive situation is “unhealthy” for the industry and that in some instances companies have possibly paid too much for stock simply to keep their chains running and meet the demands of customers.
But there had been some good examples of contracts throughout last season, benefiting farmers and companies.
Despite fierce competition, the so-called ‘Sunday auction’ is largely a myth, Petersen says. “There is a proportion of farmers who do operate on a ‘Sunday auction’ basis. But reports indicate that in reality three-quarters of farmers do commit to one company for a season, or a species of stock to a company for a season at least. But there are still a number of animals not committed.”
Petersen says there should be rewards for “committed supply”, applying not only to an annual commitment but also to the timing of stock readiness. This would also benefit companies because they could then guarantee commitments to customers.
Overall, Petersen to date rates the success of the RMSS as six or seven out of ten.
