Strategic thinking urged
22.05.12
Prof Gow said meat processors in New Zealand were as efficient as they could be within their current market structures. However, new business models existed that provided interesting opportunities based on the separation of meat processors (those who run the hooks) and marketers. He said both were driven by different needs and, instead of trying to do both, as most meat companies do, experiences from other industries indicated that potentially they should be run separately.
"Throughput, getting meat on hooks, drives a lot of the meat industry in New Zealand. We've got decreasing lamb numbers and so the fixed costs associated with too many hooks is driving many of the industry's business models." Prof Gow said the more stock a meat processor put through, the lower per head cost, and that had been driving the price.
"People get caught on that treadmill. It is not the meat industry's problem. The rapid expansion of dairy has meant that there are a lot fewer lambs going through meat plants, and processors have been caught with extra capacity." He said processors understood that and plants would have to close, but they were playing a wait-and-see game, to check who would close a meat works.
Source: Interest.co.nz