Demanding buyers send signals to farmers
How many farmers know what buyers and customers really want, Chris Irons asks.
At the risk of stating the obvious, farmers want the best price for what they produce. But how many of us have an indepth understanding of what buyers and consumers really want?
And are our systems totally geared to their requirements?
Farmers should be trying our best to deliver the best quality product to customers who will pay the most, wherever they are in the world.
To be able to do this, customers with money will put demands on us to prove our products’ credentials and this will mean some extra hoops.
For example, with increasing awareness of the environment, there are consumers willing to pay a premium for meat, wool, milk and other produce where farmers can prove they have a lower environmental footprint.
The same is true of animal welfare considerations.
The key word here is proof. Premium market access may in future hinge on our ability to demonstrate convincingly our environmental and animal care credentials.
Some farmers will be happy to put in extra effort to get through these additional hoops to get the benefits.
There will be others who will think they can ride on the coattails of those doing the hard yards.
The latter will find that in the long run they will not receive the full potential for what they produce, and will be shunned by top-end buyers.
One thing we need is better market intelligence on what users of our products want or need - and are willing to pay for.
The sheep meat industry has possibly been the leader in telling farmers what size carcass they need for their markets, with price incentives.
And there are innovations going on that will help farmers land better prices if they respond.
A recent example is the Te Mana Lamb initiative being pursued by the Headwaters group of farmers, meat processor Alliance Group, and the Ministry for Primary Industries (known now as the Ministry of Agriculture).
A combination of genetics, management and feeding has resulted in lamb meat that has high levels of Omega-3 fatty acids and polyunsaturated fats – the ones that are good for you.
Headwaters is looking for more farmers to get on board as they look to expand their market.
The wool industry seems to be dragging the chain on this front.
There is a lack of information coming from consumers and overseas markets on exactly what is needed.
The coarse wool industry still works on averages; buyers of New Zealand wool should be more demanding of product quality.
Having anything more than 5 per cent waste is a cost.
Some manufacturers have 30 per cent of the wool they buy ending up discarded as it is outside the specs their machines can handle.
You can bet they factor that it in when deciding what to pay at auction.
That affects all wool farmers when it should be only the producers of low-end product who get penalised. The buyers need to step up and demand better.
And with the right signals, farmers will respond.
Merino New Zealand’s W3: Wool Unleashed programme is a step in the right direction for strong wool.
Its stated aims are to ‘‘capture value through the eyes of the consumer’’ and ‘‘…deliver longterm economic benefits by securing a premium for New Zealand strong wool, increasing on-shore processing and lifting the returns of the strong wool sector overall’’.
They’re exactly the aims we need to push for coarse wool too.
In hindsight, it’s a great shame that the wool levy vote in 2014 was lost.
The lack of market intelligence and co-ordinated marketing is hurting us.
It may well be time to re-open those discussions and gear up for another vote on the issue.
❚ Chris Irons is Waikato Federated Farmers meat and fibre chairman.