Support For Development Company Concept

Press, Volume CVIII, Issue 31772, 31 August 1968, Page 9

Support For Development Company Concept

Reports and comment published in Wellington newspapers since last week’s meeting of the electoral committee of the Meat Board would indicate that concern is felt in some quarters at the progress being made by the Meat Ex* port Development Company in the development of a market for New Zealand lamb in North America.

One member of the electoral committee, Mr H. M. Linklater, of Palmerston North, was quoted as saying that until now the Development Company had been an expensive failure He said it appeared the company had placed less than 3 per cent of the country’s lambs on the United States market over the last five years and that while the committee had been told there were hopes of doubling the tonnage of lamb exported to the United States next year it had been told similar stories before. Apparently most of the discussions on the Development Company were taken in committee but Mr Linklater spoke before the meeting went into committee and the chairman of the committee (Mr F. E. Humphreys) was unable to say this week whether many more of the committee’s members were in a similar critical frame of mind about the company. On the face of it, the layman or average farmer might be forgiven for believing that the company has been a failure, or at least a partial failure.

Since its establishment in 1960 to develop the North American market, and in its role as the sole trader in New Zealand lamb in that region, the company has got into the red to the extent of slightly more than sBm—the amount needed from the Meat Industry Reserve Account to keep It solvent—and still the quantities of lamb going on to that market have been comparatively small in relation to the export kilL but It perhaps is unfair to judge the company on these facts alone. The company has had an uphill fight in a market in which lamb is not a favoured item of diet Annual consumption per head of the population is only 3jlb: The American sheep industry is a relatively small one but like all American primary producers it is conscious of overseas exporters intruding into its market In fart, the whole concept of the Development Company has been to get alongside the home producer and if possible to work with him and supplement his production to the mutual benefit of the producers of all the countries concerned.

There is no question that if the 200 m American consumers could be persuaded to eat only a little more lamb each, the New Zealand farmers* concern over prospects for lamb would quickly vanish, but because the stakes are so high and the goal so attractive New Zealand, through the company, has adopted a cautious approach to this market

It is just although progress has been relatively slow, perhaps too alow for the even mildly impatient, this market might be at last coming right In 1964 the company put 625,000 iambs into North America. This year it is expected that the tally will exceed Im. “This year we are going to sell far more lambs than in any previous season and at a better price,” said the deputy chairman of the Meat Board (Mr C. Hilgendorf) in a recent reference to the American market

But quite apart from this it is reasonable to assume that there already may have been some hidden benefits from the operation of the company, although as yet only relatively small numbers of lambs have been channelled into the American market. Some of those in close contact with the meat industry believe that New Zealand lamb has most probably earned an over-all better price in the United Kingdom

because of the easing of the weight of numbers. It should not be forgotten either that in the United States the company is battling in what is probably the most sophisticated meat market in the world and in developing techniques and methods to meet the requirements of the American housewife it is accumulating the “know-how" to service the markets of the future. Developments in ageing and conditioning of meat are a striking example of this sort of thing. It is very proper that the progress of the company should be kept under the closest scrutiny so that in its obviously difficult task it is as efficient and effective as pos slble.

Mr Hiigendorf was himself i in a mildly critical frame of mind when he spoke to the recent reunion conference of Nuffield farming scholars at Palmerston North. “I believe that we can sell lamb in North America and a great deal more, and I think that the reason why we have not sold as many lambs in the past as we might have is that we have not got people selling it there The important thing is that we have no-one selling New Zealand lamb. We have got 10 or 12 consignees. These are the wholesalers and meat packers. And of all of these people in America there is only one lamb salesman.” This year, with more lambs being sold on this market than ever before and at a better price, Mr Hiigendorf said, there seemed to have been a break-through in spite of what he had just said. The electoral committee of the Meat Board recently set up a sub-committee to look into the future of the company—a perfectly prudent course and the more so since the company periodically is the target of criticism. Members of this subcommittee were Messrs W. N. Dunlop, a member of the committee representing Canterbury and Westland, and Messrs M. G Hewitt and B. Dryden. Their report came before last week’s meeting and was unanimously accepted by the committee and handed on to the Meat Board. Because it was confidential he was not able to discuss it at this stage, Mr Dunlop said this week when he was asked to comment on Mr Linklater’s allegations. But speaking with the background of a very detailed Investigation into the operations of the company, Mr Dunlop said: “Personally I can see nothing in the report which would justify the expression that this has been ‘an expensive failure.*”

Mr Dunlop said he was very clear in his own mind that the company was an essential part of the operation of developing market for lamb. New Zealand, he said, could not afford it to be a failure if the lamb industry was to expand. The concept of the company had proved that the Meat Board, the Government, the processors, and traders could work together in a partnership for the benefit of everybody. “It seems that there is no other method of developing an alternative market for lamb in an orderly fashion in North America.” Mr Dunlop’s comments have also been backed up by Mr Humphreys, as chairman of the committee, when he said this week the committee had endorsed the present system for developing a lamb market in the United States. This does not mean there should not be change. A statement issued recently on the company’s operations said there had been some suggestion that the selling, method should be changed.

This was natural, it said, considering the importance of the success of the operation to New Zealand. It was understood that the company was currently looking at various suggestions to see whether a greater trading element could be injected into its operations.

The statement added: “Any sort of constructive criticism is good, but it may be unwise to lose patience with a marketing system which has taken time to develop and which is now showing such promise.”

Mr Linklater has suggested that exporters might be allowed to operate in North America alongside the company.

He made this proposal at the reunion of Nuffield farming scholars. Mr P. S. Plummer, president of Federated Farmers of New Zealand and a director of the company, then commented that this was one of the alternatives which had been proposed. It had merit, but also risks in the relation to supplies and prices in particular areas.

The “New Zealand Meat Producer” has also comment ed that “suggestions that success lies in lowering the price of New Zealand lamb in the United States cannot be supported. In fact, the New Zealand product sells much more cheaply than domestic lamb. The aim must be to narrow this gap, for several reasons—not the least being that if priced too low New Zealand lamb will create suspicion as to its quality, and that too much undercutting of domestic prices will create producer antipathy."