One such piece is a divergence in financial performance between top farmers and the rest of the industry. From an industry-wide perspective the potential to increase on-farm performance is immense, with the top performers in the sector returning at least three times average levels.
Demand is not an issue. Asia wants more New Zealand red meat, a lot more. Rather growth will come from building on-farm supply side capacity through improving profitability and increasing investment.
This will be supported by emerging market demand, modernisation of the food chain in new markets, the westernisation of emerging Asian (and particularly Chinese) consumer preferences, opening up of new cultural segments, preferential access to a wide range of markets and strengthening business relationships between New Zealand and key multinational foodservices and retailers.
As Chinese President Xi Jinping mentioned on his trip to New Zealand in November, “New Zealand will have to worry about the fact that there is more Chinese demand than you can possibly supply".
A key part of lifting on-farm performance in the sector is New Zealand’s Red Meat Profit Partnership (RMPP).
The RMPP was formed through a consortium of agribusinesses and the government in a bid to build sustainable, long-term profits in the red meat sector. Its purpose was to provide an umbrella framework those within the red meat sector could utilise for growth and improvement.
The program is the first substantial step-up in industry investment focused on lifting on-farm performance.
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For the red meat sector to reach its ambitious targets what needs to be looked at is on-farm performance and what sets the top farmers apart from the rest.
The first part of the RMPP has been aimed at better understanding what top performance looks like and its key drivers. In-depth interviews of top farmers found some key attributes. The main ones include:
- Vision and drive: well-defined personal and business goals
- Having the right skill set and a talented team, as well as using specialist advice when required
- Above-average execution of key farm management practices and mitigation of risks
- Passion and confidence in the sector, which drives investment and effort