N.Z. Refrig. chairman hints at loss

Press, Volume CXIV, Issue 33611, 13 August 1974, Page 16

N.Z. Refrig. chairman hints at loss

No-one who has followed the trend of prices on the Smithfield market this year, or the trend in killings and costs in the meat industry closer to home, will be surprised at the hint of a loss for N.Z. Refrigerating Company, Ltd, contained in the company’s half-yearly-report.

With the present uncer-h tainty of the economies of j: many of our customer coun-p tries, and with fluctuating h exchange rates, it is impos-j sible to forecast the results L for the full year. L “It appears certain that! the record results of last! year cannot possibly be repeated this year — indeed,!: it may prove difficult to avoid a loss,” says the! chairman (Mr C. S. Peate). ( The company incurred substantial losses on beef, mutton, and lamb trading, while processing income was affected by a reduced kill. Killing figures to June 30 show that the lamb tally dropped by 15 per cent to 2,873,639, 'the wether and hogget kill dropped 40.3 per cent to 49,720 and the ewe kill was 18.5 per cent lower at 899,936. The cattle kill was 22.4 per cent down at 68,953. Mr Peate says that the declining lamb kill may be due to changes in farming practice by diversification into beef and cereal cropping. “It is to be hoped that in spite of the trend in world markets for lamb over the past seven months, producers do not lose confidence in lamb production,” Mr Peate savs. “We should all appreciate! jthat, because of shortages ini [ supplies, world meat prices, (generally in the latter half jof 1973 reached a fictitiously I high level and were unlikely; 'to be maintained. “It is worthy of note that ' at the end of June this year net c.i.f. realisations of lamb seconds in the United Kingdom were marginally ahead of realisations in the same week in 1973, but the net proceeds to New Zealand would be less because of increased freight charges and other costs, such as import duties.” The reduced kill had an adverse effect on processing income but this was offset to a degree by increased charges, higher average carcass weights and generally satisfactory realisations of by-products. Provided values for unsold edible by-products are maintained, the processing activities should show a reasonable result. However, with increasing

[costs of wages, materials and:< (services a further increase in: 1 [the processing rate will be!’ necessary, Mr Peate says, ii He says that the industry is : in no position to absorb in- i creased costs if it is to develop and modernise its faci- : (lities. i During the first eight < (months of this financial year 1 ithe N.Z. Refrigerating Com- i Ipany expended $1,664,000 on Iworks of a capital nature, [and in the remaining four months this is expected to 1 increase substantially. Commenting on the falling markets for lamb, mutton and beef, Mr Peate says that in retrospect the opening buying schedules were much too high. “The high values for meat last year caused a buyer resistance in consuming countries and people today are eating less meat. Lamb sales volume in the United Kingdom has been most disappointing, and even substantial reductions in wholesale prices have done little to encourage greater consumption. “The presence of the accumulation of an E.E.C. stock- : pile of ‘intervention beef’ has had a depressing effect on all meat values in the E.E.C. countries and, until this accumulation is reduced, it will

(continue to affect the market. (While the tonnage of interI vention beef looks formidable lit really represents only a few days’ consumption in the combined E.E.C. countries. “The recently reported substantial purchases of beef bv Russia must have a beneficial effect on prices in the free markets of the world, and this would be true irrespective of from what sources Russia made the purchase.” The mounting stocks of ewe mutton in store in New Zealand caused concern throughout the season, as Japan was purchasing only token quantities at ever declining prices. “A large sale to Russia in July has certainly relieved the situation, but at a considerable cost to the New Zealand traders. The sale has had the effect of stirring Japanese buyers into activity at prices considerably in excess of their bids prior to the Russian sale. “A reassuring feature is that we can now see our stores reasonably clear of product for the commencement of the new season. We had hoped to clear stores much earlier in order to proceed with the huge task of renovation to meet hygiene regulations,” Mr Peate says.