The agricultural company PGG Wrightson Ltd signed an agreement today with Silver Fern Farms Ltd for the two companies to join together. Silver Fern Farms is a meat processing company which kills farm animals for meat and sells the meat in NZ and overseas. It is a co-operative company which means that the farmers own it. Now 75% of these farmers have to agree to join with PGG Wrightson. They will vote in September. The farmers are not sure yet whether this will be a good idea.
Sheep farmers have been in trouble in recent years. Wool and sheep meat prices have been low. Not so long ago, NZ had 60 million sheep but this is down to 40 million now, partly because of poor wool and meat prices but also because of the increase in dairy farms. Prices for milk and milk products are now so high that many sheep farmers have switched to dairy farming.
There could be a change now though. Food throughout the world is becoming more expensive and NZ meat could have a good future. In the last year lamb prices in Britain have increased 34% and beef prices in the US are up by 21%. PGG Wrightson would like to include the other big meat processing company, Alliance, in the agreement. They say that if the companies work together, they can market overseas more successfully.
Economists say that lamb prices could average around $5 a kg for the next 5 years. Since lambs can weigh around 15kg, this would bring the farmer $75 for one lamb. However, costs are going up. Fertiliser, winter feed and transport are all more expensive.
The big question for consumers is: Will we pay more for meat in NZ? Some say no. On the other hand, if farmers can get good prices overseas, they will want the same from the NZ consumer. That is what has happened with milk prices. We now pay more. |