Weak sellers’ effect on meat returns

Press, Volume CXI, Issue 32588, 23 April 1971, Page 12

Weak sellers’ effect on meat returns

New Zealand may have too many sellers of meat in the view of Mr A. F. Wright, chairman of the meat and wool section of North Canterbury Federated Farmers, and because at times these may be weak sellers he believes that this is an obstacle to farmers receiving additional returns.

Speaking at a meat marketing forum held by the meat and wool section of Mid-Canterbury Federated Farmers last week, Mr Wright said that this meant that schedule prices received by producers were based on a market set by the so-called weak sellers While he would be the last last to recommend dispensing with the individual right of the fanner to sell his meat on “owner's account,” Mr Wright said that when farmers were arguing for higher returns it was obvious to him that it was necessary to look at farmers, who through owner account shipping, could be the weakest sellers on the United Kingdom market However, he noted that this also applied to some companies at times A case in point was lamb for which a premium was paid early in the season—the trend was to sell this as soon as it reached the market Internal and external monetary policies could bring extreme pressure on a seller, which could lead to a very substantial drop, at times, in lamb returns on world markets. Companies had come together to market lamb in Japan and he felt that in the future interests of producers it was essential that the same policy be introduced in the United Kingdom to eliminate the main reason, in his opinion, why producers were at times not receiving a just return for some of their meat

However, Mr Wright said that at no stage could he accept the principle of Government participation in any selling scheme. It was essential, at all costs, to retain and extend producer control, with the absolute minimum of Government interference.

Farmers attending the forum might not agree with him, “but I am quite sure that if we could get some co-ordination of and cooperation between our sellers returns to the fanner could improve,” said Mr Wright.

A former member of the Meat Board, Mr C. F. Jones, discussed some alternatives to the present system of handling meat in this country.

One of these was central control of all processing and possibly standardised killing charges, with the present level of control over exporters’ operations. Mr Jones said that the problem of the adequacy of capacity to cope with the kill would not be made much easier with more central control, although a greater degree of movement

of stock between regions might assist This, of course, already happened between Southland and Canterbury.

On the question of processing charges, he said that some economies through central processing of by-products might be possible through central

control, but this was already happening through the freezing companies themselves. Mr Jones noted that in the dairy industry all processing factories operated independently.

A further alternative was the central control of all marketing, with either central control of processing as well or with the current system of processing. This was the most controversial area of all and certainly it had its proponents. Planning would be easier, promotion could be more precisely tied to the supply of produce and new markets could be developed without a public outcry about losses being made because, unlike the Meat Export Development Company’s operation in North America, regional accounting would presumably not be made public. This was certainly so with the Dairy Board’s operations. Arguments against such a proposal were that meat was such a complex material, consisting of so many classes and grades, that one organisation would get so bogged down in detail that it could grind to a halt. The current expertise built up by exporters could be lost and the element of competition would disappear and perhaps, because of this, potential sales could be lost.

The New Zealand manager of Borthwicks, Mr P. T. Norman, noted that the competitive nature of the industry tended to maximise returns to producers because of the pressure on the companies to sell in the highest possible market so that they could reflect this in their buying price to the farmer and thus increase their turnover.

Obviously the tendency vas to try and get more and more of the product for which they could obtain the highest price and for this reason he was never averse to seeing butchers in other countries making good profits on New Zealand meat because they would come back to buy again the item on which they could make the largest mark up.

Referring to the various systems of selling that there were open to the producer, Mr Norman said that one or other of these methods would at any given time return the maximum to the producer. The difficulty was, of course, to pick the correct system at the right moment However, Mr Norman said that if a farmer was doing one of these things he was probably right to do it all of the time.

Of the private enterprise operations of the meat exporting companies, Mr Norman said it would be foolish to claim that they were perfect as it was patently impossible to pick a market correctly all of the time, but what they tried to do was to judge the trend and reflect the trend in their pricing to the farmer. It was not an exact science.