There is a proposal to close the Alliance Group's Smithfields meat processing plant in Timaru with the potential for more than 600 staff to be affected. Photo: RNZ / Tim Brown
This story has been updated to include NZ Forest Owners' comment
Falling stock numbers and a shift in land use from farming to forestry are being cited as the reasons behind the proposed closure of the Alliance Group's meatworks in Timaru.
At a meeting in the Caroline Bay Hall on Friday, workers at the Smithfield plant learned the company planned to fully close its Timaru processing plant, affecting about 600 staff.
Federated Farmers said land use change was to blame for the proposed closure.
Research from Beef + Lamb in 2022 found farms were being converted into carbon forests at "alarming rates".
In 2017, 7000 hectares of sheep and beef farmland was sold with the intention of being converted into forestry. That had increased 36 percent two years later, with more than 52,000 hectares of farmland purchased by forestry interests in 2021.
The New Zealand Forest Owners Association has disputed that afforestation is to blame for the proposed closure of the Smithfield meatworks.
Data from Te Uru Rākau - New Zealand Forest Service shows there was 1,696,604 hectares of forestry across the country in 2019. The total area had grown from 1,176,614 in 1990 peaking at 1,827,339 hectares in 2003 and had fallen since then, with the same trend observed in Canterbury.
The association said agricultural and horticultural land use data from Statistics NZ shows while the area devoted to sheep farming nationally had decreased over time (5,779,173 hectares in 2002 to 4,101,801 hectares in 2019), it remained higher than the total production area of forestry. Meanwhile the area of land devoted to dairy in the region, had increased over the same period (1,230,484 hectares in 2002 to 2,221,459 hectares in 2019).
It said these statistics did not highlight forestry as being responsible for a reduction in sheep farming, nor the closure of regional meat works.
Federated Farmers meat and wool chair Toby Williams said the prospect of the 139-year-old Smithfield plant closing and the loss of such a major employer in Timaru was a huge blow to South Canterbury.
The proposed closure was a symptom of broader issues that would continue to undermine the primary sector until they were addressed, he said.
For the last decade, policy had favoured forestry over farming and incentivised planting pine trees for carbon revenue, he said.
"On top of that, excessive red tape and layers of impractical and poorly consulted-on regulation have strangled farming confidence and investment."
This year's stock count showed sheep numbers slumped by another million or so in the last year, to 23 million.
"Federated Farmers had always highlighted that when poor regulations stifle farming, the impacts were felt throughout our rural communities and broader national economy.
"This is sadly coming to play today, and it is the people of South Canterbury who will feel this the hardest."
Meatworkers Union national secretary Daryl Carran said there was a two-week consultation period before a final decision would be made on Smithfield's closure on 18 October, but he was not hopeful the plant would remain open.
"Inevitably, the forces that have led to this announcement today are still there and will probably only get worse as time goes on."
He said there had been a gradual decline in sheep breeding numbers as other ways of using land became more attractive, like planting trees to offset emissions or international buyers acquiring big stations.
Now, Carran said there simply were not the stock numbers to support the number of meat processing plants in operation across the country.
In the 1990s, the Alliance Group had 36 lamb processing plants and now it had seven.
"I would have hoped companies would get together and share in any managed rationalisation that needs to be done across the country in the very near future, instead of sitting back waiting on someone else to do it."
He said the government were contemplating resuming live exports, which would not help the processing sector.
"We hoped this government would have put some parameters around where you can plant trees and not plant them on arable, farming land.
"But they just don't seem to be doing anything, except promoting a faster demise of the meat processing sector by suggesting that we can ship live animals out of New Zealand, which I am hoping still won't go ahead."
Associate Minister for Agriculture Andrew Hoggard said recent changes in land use from farming to forestry had led to surplus capacity in meet processing plants, which meant companies were looking to rationalise.
Beef and venison numbers had remained strong, but the sheep sector had been the hardest hit due to a number of factors.
"You've got a combination of ETS driving desire for more forestry, you've got lamb returns being quite weak in the last couple of years and over a sustained period, the return for wool has also been really weak, which has added to that land-use change to forestry."
He said for some sheep farmers, the cost of shearing was higher than what the wool was worth.
"Which is absolutely ridiculous to think about when it is a brilliant, sustainable, natural fibre and it just can't pay its way when everyone is talking about the need for natural, sustainable fibres."
The government was working to support the sheep sector by not incentivising the shift to forestry, Hoggard said.
Minister for Rural Communities Mark Patterson said it was "pretty foreboding" for Timaru and the surrounding districts, given Smithfield was a significant employer with a long history in the area.
"It's really concerning; it's a wake-up call. We as a government have got to take this seriously."
Patterson said it was well-known within the industry there was surplus processing capacity in the industry, so the announcement was not a complete surprise.
"There's a million less lambs out there this year. It's been coming - in some regards, it is just where it was going to happen and it looks like the poor people of Timaru and the workers at Smithfield are the ones that have copped it."
It all came back to a change in land use - in large part, increasing afforestation - and the government planned to introduce restrictions on afforestation to address this, he said.
"We need a balance in our rural communities and it had swung too far with the carbon price creeping up. We do not want to see more of this; we do not want to see the de-industrialisation of New Zealand."
The news came on the back of Winstone Pulp International's mill closures, other major industries being under pressure and increasing energy prices.
"We've really got to get our arms around this because we don't want to see regional New Zealand hollowed out."
The proposed closure was not only sad for the workers but the wider community, including Alliance's farmer shareholders, Patterson said.
"As a co-operative, it is one big family so we will all be feeling it today - including myself, actually, as a shareholder."