Federated Farmers Meat & Fibre section recently launched a forward thinking campaign. The T150 campaign sets a goal of $150 a lamb for the sheep meat and wool industries to work towards over the next five years. It is a target to aspire to, a “stake in the ground” for where Federated Farmers believes lamb returns need to be to bring profitability and confidence back to sheep farming.

The industry needs this sort of return to halt the rapid decline in sheep numbers and secure a future for New Zealand’s still important sheep meat sector.

Sheep farmers’ profitability has taken a battering over recent years with the 07/08 season now on record as the lowest sheep and beef farm profit in inflation adjusted terms for over 50 years. This combined with wide spread drought and a booming dairy sector has seen sheep numbers fall 4.3 million to just 34.2 million sheep, half the number of sheep New Zealand had 20 years ago.

These poor returns have had a flow-on impact in New Zealand’s towns and cities with job losses at freezing works being an example of this. Lamb exports contribute over $2 billion per annum to the New Zealand economy and it is of grave concern to the country that such an important industry is in crisis.

This downward spiral is potentially terminal and will continue if the value farmers receive for their lambs stays at current low levels. To continue to have viable sheep meat and wool industries, to preserve the tens of thousands of down-stream jobs many communities rely upon and to maintain major overseas earnings for New Zealand, it is essential that farmers get more for their stock.

The meat industry has a history of boom and bust due in large to a lack of long term commitment from producers to processing companies. This has meant that often meat companies have found it difficult to build long term relationships with overseas buyers due to uncertainty of supply.  New Zealand now has too many processing and meat exporting companies fighting to sell an ever reducing supply of lambs to discerning markets. There is a lack of discipline among some of these players and we too often hear stories of New Zealand exporters competing to be the lowest priced in the market in order to move supply. Fundamental change is required.

It was with this particular concern in mind along with the desperate situation that sheep farmers have faced over recent years that Federated Farmers Meat & Fibre section launched the T150 campaign.

Federated Farmers sees extra value coming from efficiencies and rationalisation within the supply chain. Currently farmers receive less than 20% of the retail value of a lamb. Farmers too have their part to play.

Federated Farmers also believes that a recognised target will give farmers a context within which to make decisions about how they farm and a focus on future changes to industry structure. Those proposing change should ask themselves, “How will this initiative help reach the $150 lamb target?”