Hon Jim Sutton Speech Notes

Pork Industry Board AGM, Wellington

Chairman Neil Managh, chief executive Angus Davidson, ladies and gentlemen: thank you for inviting me to speak to you today.

I'm particularly pleased to be here today, because I believe that your industry is at a crossroads now. The decisions you take at this annual general meeting will have repercussions for the future.

I believe it is time for you to take a good, long, hard look at yourselves. In the words of the younger generation: To get real.

Yours is an industry under pressure - in 1984, there were 1600 registered pig farms. In 1998, there were 567 registered farms. Today, there are only 410.

There are a variety of reasons for that. Some farmers have retired from the industry when they've reached a certain age. Others have been forced out as local councils change their district plans and land use rules or when Resource Management Act requirements have made it uneconomic to operate the way they want to.

The boom in other areas of farming - such as dairying - has meant that other farmers have abandoned the pig farming they used to do on the side to concentrate on more immediate areas of profit.

Others have left pig farming when their farm buildings were ruled as not being up to scratch and they have not wanted to invest in bringing them up to standard.

However, for those farmers still in the business, you've made remarkable productivity gains. The volume of meat produced per pig has gone up as farms got bigger and made use of economies of scale and technological advances.

I note that the industry seems to be concentrating in the South Island. 54 per cent of registered pig farms are now in the Mainland.

Pork consumption has increased during the past couple of years, but now seems to have plateaued in New Zealand at 17.1 kilograms a person. You have a fair way to go to rival chicken - the most popular meat on New Zealand dining tables. Last year, chicken consumption increased by 7.6 per cent a head, up to 27.9 kilograms a person, while total poultry consumption was up 7.9 per cent, up to 29.1 kilograms a person. The year before, poultry accounted for 30.6 per cent of total meat consumption.

Much of the increase in pork consumption in the past few years has been driven by cheap imports of pig meat driving down the price.

Your industry has approached both this Government and the previous one about a safeguard measure for protection against those imports. Ironically, there is now no impetus to push for such a measure because you no longer have enough capacity in the industry to supply domestic demand for pork and other pig meat products.

Prices have stabilised recently and seem to be on the climb again. More than a third of all pig meat on the market is imported, and most of it from Canada. I am told that almost all the bacon and other processed pig meat product on sale here is foreign meat.

I am disappointed that there appears to have been no progress on differentiating your product from imported meat, or in highlighting products from farms which use farming techniques that even animal welfare activists approve of.

Last year, I told you that differentiation was critical. The top-end of the market, which is the most lucrative, is extremely sensitive to animal welfare concerns, and if you want them to buy your meat, you need to make sure you're using the most modern, enlightened animal management techniques.

Emphasise the fact that that there are no growth promotants used in pigs in New Zealand and very little (if any) antibiotic is used for purely growth promotion purposes. These are positives to today's picky consumers.

Why can't your meat be labelled and presented as "New Zealand grown free range" product? Or in certain cases as "organic"? Venison, lamb, and beef do it already, as do some egg producers - another group that feels the wrath of animal welfare groups regularly.

This will enable the sector of the market concerned about such issues - usually the more well-off part of the market - free to choose it. They won't feel they have to snub all pigmeat products.

As you know, the Animal Welfare Act 1999 came into force on 1 January 2000 and provides for the preparation of codes of welfare for different species of animals and different farming practices. Your Board is leading the drafting of the Code of Welfare for Pigs.

I believe you will be asked to ratify that draft code at your meeting here, and it will then be forwarded to the National Animal Welfare Advisory Committee, for their consideration. I do not want to interfere in that process. It would be improper to do so.

But I do want to raise several concerns.

I believe the process for forming this code has taken too long, although I do acknowledge a significant reason for that.

I understand that drafting was delayed when the European Union recently proposed a phase out of dry sow stalls by 2012. You are now proposing a similar phase out by 2012, although there are indications that you would like to seek an extension of the EU restriction of 4 weeks individual confinement post mating to 6 weeks.

I'm sure you know about the fight that will buy with groups such as Royal New Zealand Society for the Prevention of Cruelty to Animals, let alone from less responsible animal welfare groups.

An industry survey in 1998 showed that fewer than 50 per cent of pig farmers used sow stalls. That is continuing to decrease. And that by 2006, it is predicted that 80 per cent of the industry won't be using them.

So what's holding up the remaining 20 per cent? If 80 per cent of producers can do it - why can't the remainder?

As I see it, you have a real opportunity here to take the initiative, to take the high ground. Stop letting other people lecture you about your industry and demonstrate your ability to lead. I cannot believe that phasing out sow crates by 2006 is an impossible target for you to achieve.

I imagine you've heard enough on animal welfare now.

There is a bill before the House - the Statutes Amendment Bill - which includes two substantive amendments to the Pork Industry Board Act 1997. The first reduces the number of board directors. Those elected by producers will be reduced from 5 to 4 and the number of directors appointed on the recommendation of the Board will be reduced from 2 to 4 directors to 1 to 2 directors. The quorum for board meetings and telephone or video conferences will be reduced from 5 to 4 directors.

As a consequence of that bill passing, an amendment to the Pork Industry Board Regulations will be necessary by 31 March next year before the Board's director election process commences. The changes required would be to reduce from 2 to 1 the directors to represent the electoral district consisting of the top half of the North Island and alterations to voting entitlements and the weighting of votes according to herd size for board director elections.

Now, your industry has come to the view that you no longer want to have a statutory producer board but rather have an incorporated society, representing pig farmers, undertaking similar activities to the Board and funded by a commodity levy under the Commodity Levies Act 1990.

I do not see this as a controversial matter and passage of a bill repealing the Pork Industry Board Act next year could be relatively quick. It might be possible, with the support of my colleagues, to get that repeal into force by the end of September next year - depending on Government priorities at the time.

Ladies and Gentlemen: this has been a tough speech. I hold high hopes for your industry. You produce a good product, which has a place in New Zealand families' lives. I want you to focus on the issues so you don't lose that place.

Thank you for your time. I look forward to answering any questions you might have.

Office of Hon Jim Sutton

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