PGP formula will put acid on Sunday night trade

30-08-2010 | Tim Fulton

Farmers' love of the Sunday night spot-price auction will test the formula promoted in the red meat sector's Primary Growth Partnership.

"I think that old culture will still be there but we're hoping that over time we'll get more and more of the sector into long-term partnership relationships, rather than that short-term Sunday night ring-around," Silver Fern Farms' integrated category manager Grant Howie told The New Zealand Farmers Weekly.

It would need all of the PGP components to change the tradition but the major factor in delivering true market premiums was a long-term commitment from the farmer, he said.

He acknowledged a chicken and egg scenario, whereby processors needed to get farmer commitment to go to the market and get the value, but equally they need to get the value to get the farmer loyalty.

"I guess our role is trying to orchestrate that, so that we are connecting farmers with the market - and the market premium feeds back to those new, innovative, leading farmers ... and that then starts spilling over."

A shift to widespread contracting wouldn't take flight immediately but it needed to happen "otherwise farmers are going to stay in that Sunday night ring-around".

Contracts could be tailored to smaller family-owned farms just as well as for larger corporate operations, Howie said.

"It's not size, it's more the business philosophy of the farm. There are a number of small farms (and corporate) that have got a long term view of their world. And it's those ones that we can sit down and have a good long-term discussion with."

Silver Ferns' supply contract with Marks and Spencer was "sort of the embryo" for how more advanced contracting could work.

In addition to existing components such as animal genetics or Backbone supply programmes the PGP would start consumer research into forage systems, asking how this changed the taste of the Marks and Spencer lamb, for instance. "It takes it to another level."

Last week's PGP launch revealed much of the project would be geared toward improving farm productivity, but this was not the same as saying farming practices were the problem, Howie said.

"Probably the top 5-10% of farmers now are getting very, very good productivity on farm, but there's a big wide gap to those in the middle and lower tiers."

He predicted a lot of the gains would ultimately come from the middle group, as they got better lambing percentages and growth rates, for example.

Howie says current lambing percentages may average 120% but there was clearly "a whole bunch out there getting 150-160% ... and there's a whole lot getting 80%.

"So there's already a big wide gap. If we can get these farming systems in place it just brings the rest of them up."

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