PRODUCERS are being urged to hold processors to account on customer feedback and pricing signals and ask, evaluate and act on information they receive about their stock.
Progressive Meats managing director Craig Hickson, New Zealand, said farmers should make their choice on where sheep were sold based on the response to provision of feedback.
“Collectively this is powerful motivation to processors for change,” he said.
Mr Hickson is one of the key speakers at LambEx 2012, a national biennial conference on latest issues and technology in the lamb industry, to be held in Bendigo on Thursday and Friday.
He has 30 years’ experience in meat processing, is a Meat and Wool New Zealand director and farms deer, sheep and cattle on 1200 hectares at Hawkes Bay, NZ.
Mr Hickson said the way in which lamb and skin sales were averaged meant there were some key characteristics of which feedback was not provided to growers. This meant limited capacity for flock improvement.
For example with lamb skins, there was a loss of value because of shearing scar, flystrike, lice damage, fungus or pinhole. Value could change because of differences in area, substance, flatness, rib, tightness, strength and epidermal thickness.
“Any one fault will downgrade a pickled skin … with an approximate $3 loss in value per skin,” he said.
“The incidence of faults in skins will be much the same now as it has always been because we don’t measure, provide feedback and reward farmers with less damage to their pelts. We pay on average. No improvement.”
Mr Hickson said similarly with lamb sales, auction selling and per head buying could only identify liveweight at best and did not account for dressing out yield or measure fat and saleable yield.
“Values are largely determined by carcaseweight, fat content and distribution, yields, age, sex and shape,” he said.
“Animals are all different yet we continue to sell and buy on the basis of averages which hide value differences, precluding the availability of information to optimise decisions regarding future value of production.
There is no measurement, feedback or reinforcement so there is no improvement.
“These value attributes have been implicitly averaged by the buyer to the seller. But the buyer’s customer will pay in accordance with these attributes.”
For wool from skins, Mr Hickson said many companies did not make a separate payment for micron, staple length, colour or vegetable matter and yield, or only paid by weight.
“They all impact on value but because there is no measurement, feedback or reward to the farmer in the sale process we don’t improve wool value other than by weight, if it is reported and paid on.
“The irony is that the next people in the value chain test the wool and adjust their buy price to match the measured result.
"But does that reflect to the farmer and influence a change in behavior to improve future value? No.”
He said focus, teamwork, measurement and feedback were vital to improving stock but the industry often failed on the latter two.
To improve their enterprise, he encouraged farmers to find out from processors:
Who the final customers are for your lamb and its co-products;
What those customers like and are prepared to pay for, or do not like and will discount for, and how they will be measured, and
How, and when, those factors will be reported back in the sale transaction.
Source: Argentine Beef Packers S.A.
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