“Diversion Policy Affected Markets”

Press, Volume CVI, Issue 31256, 31 December 1966, Page 7

“Diversion Policy Affected Markets”

In some meat company offices it was felt that a mistake had been made in “telling the world” the key terms of New Zealand’s lamb marketing diversion policy, according to Mr H. A. Seifert, a spokesman for New Zealandowned meat export freezing companies.

Referring to the 10 per cent to be diverted to markets other than the United Kingdom, with a 3d per lb penalty on any deficiency below that figure, Mr Seifert said that

“A complicating factor, however, was the desire of the fanners to be assured that diversion was to be a reality, in their eyes, a policy, to be a reality, meant that it had ‘teeth’ in it to promote action. So in large measure, the committee’s hand was forced.” Mr Seifert believes that a target of 10 per cent of lamb to be sold outside the United Kingdom is quite practical, for last season 8 per cent was sold elsewhere.

This 8 per cent represented 22,675 tons, of which 14,453 went to North America and 8222 tons to the Pacific area and Europe. Mr Seifert said that there were expectations last winter of a 10 per cent increase in export lamb this season, but this had been reduced to about 5 per cent. Should the forecast prove correct, there would be 21.3 million lambs to ship, and the 10 per cent diversion quota would require 2.13 million to be sold outside the United Kingdom.

This woud be an increase in “outside” sales of 430,000 lambs—an increase of about 25 per cent. At the same time, there would be an additional 570,000 lambs going on to the British market, but this should have no significant influence upon the price level there, said Mr Seifert.

within hours this news spread to every meat market around the world. As a result, shrewd traders in the markets outside Britain saw an opportunity to bargain for lower prices than they had hitherto been prepared to pay. ~ “In the past, trading to these outside markets has been based on Smithfield parity, and in many cases somewhat above that. Now the tendency in these markets is to feel that they should acquire our lamb at 3d per lb discount. “As a consequence some exporters believe that it would have been best for the diversion committee to have laid down ‘guide lines’ only. Alternatively, a maximum penalty could have been stated at the season’s opening, and one perhaps considerably less applied at the end of the season.