Factors at work in meat markets

Press, Volume CXIV, Issue 33513, 19 April 1974, Page 8

Factors at work in meat markets

A leader of a farming- organisation has suggested recently that farmers should be given only sound information on markets and rather than be confused by conflicting opinions of so called experts should be left to sift the evidence themselves.

Speaking to the electoral committee of the Meat Board late last month the chairman of the Meat Board. Mr Hilgendorf, said that there were very good reasons for the board’s general policy of not indulging in market forecasting, but he added that it was nevertheless reasonable for farmers to expect some guidance from the board in very broad terms as to the market outlook generally and prospects for particular classes of meat. Some local meat industry sources have also expressed the view lately that farmers should be brought up to date with the state of markets and the outlook for their products. Because of the big drop in export beef prices in the last few months — from 19c to 26c per kilogram since the beginning of the year — this is the commodity that is currently concerning farmers most. Because of a very big increase in Australian cattle numbers, which between

1968 and last year rose by 10m head or 52 per cent, Mr Hilgendorf said that Australia’s export production had increased enormously.

Likewise in the United States cattle numbers had increased and there were indications that later this year this would be reflected in higher production. Much the same was also happening in Europe.

These trends were now being seen in pressure on beef prices. According to another source, in the United States where stocks are high, pressure was being brought to bear on importers by banks to sell beef in order to reduce overdrafts, and by late last month prices for boneless beef had declined by 20 per cent over the preceding three or four months, and with consumer resistance still showing up. In Europe Mr Hilgendorf said that prices had dropped to the extent that official market intervention had been necessary.

The Japanese had also not imported their full beef quota for the six months ended on March 31, the shortfall being some 40,000 tons, he said. Again drawing on another source, there has been marked consumer resistance in Japan, too, and as a consequence stocks have increased to a point where frozen beef has been hard to sell at levels which would allow importing merchants to clear at realistic levels, and there is even talk of some of the smaller Japanese merchants going into bankruptcy. And Mr Hilgendorf also noted that the effect of the oil crisis, particularly in higher costs resulting from increased oil prices and some slackening of economic activity was likely to have some bearing on demand for what was still a luxury food in most countries.

On top of that anti-infla-tionary policies and tight money situations are also affecting demand and contributing to the build up of stocks.

But Mr Hilgendorf and also the Minister of Agriculture. Mr Moyle, have gone on record as expecting some recovery in prices in the not too distant future, perhaps in the spring, although on exactly what grounds their optimism is based is not clear.

However, even now there is some grounds for believing that the market may have reached bottom. Mr Hilgendorf has long been a man with a lot of faith in the long term future for lamb. He told the electoral committee last month that the board had at times been criticised by scientists and some academics for counselling a measure of caution about prospects for beef and for emphasising that sheep meat, and particularly lamb, had a well deserved place in the market. At present, he said, they could do with more 1 lambs. However on the other hand a meat industry representative said this week ehat he still believed that I there was a shortage of red

meat in the world and that on an international basis beef was a more favoured product than lamb.

And Jamb is also not without its troubles. Apparently demand for lamb from one of this country’s ■ most important outlets —: Greece — has virtually; come to a standstill. In the : year to the end of Septem-i ber last year Greece im-j ported almost 25,000 tons of New Zealand lamb and; was the biggest single mar- : ket for the meat outside i the United Kingdom. The present troubles are connected with a Govern-; ment price freeze that makes it impossible to im-j port profitably and there j has been talk of importers! repudiating orders, but it isi still felt that the demand for; a high quality product like New Zealand’s remains, so that the present problem will probably be only a passing phase. And while producers have done fairly well out of lamb this season, the exporters have taken something of a hiding and there has been talk of one firm losing up to $2 per head on early purchases and of an-1 other company being in the j red to the extent of sl.smj at the end of last year. It is also going to be one of those seasons when re- ' suits of pools and selling I on own account are not | going to look very good ' alongside schedule. But Mr Hilgendorf said that while the Greek market was not as buoyant as they would like and the Japanese market was still going to require a good deal of development. more lambs would be sold to North America arid even more could be sold there this year if they could be procured, and Middle East countries were showing interest in lamb as well as mutton.

Mutton has lately been in the doldrums with stores full of the product and little business being transacted, but there is now a ray of hope for better things around the corner. A; development that could set off a revival of interest in mutton is the report that there is an inquiry for 12.000 tons from the Middle East. This is a sizeable quantity and could bring ■Japan back into the picture, with the availability of mutton in Australia much lower this season. It is understood that about 2000 tons of mutton have been sold recently to Peru. Rather surprisingly after the big kill last season, eweslaughterings this season I are turning out to be higher' than had been expected. On the local scene the effects i of years of drought on sheeps’ teeth could be a factor in ewes having to be; sent off to the works earlier ’ than usual.

A little surprisingly markets for edible offals like livers and brains have held up reasonably well, but recently there has been some sign of an easing here and any drastic reduction in these values, which are used to offset processing costs, increases in which have lately been absorbed by the industry, could lead to an early review of processing charges and anv increase in thwe would, of course, reduce farmers’ returns.