‘U.S. meat buyers trying to force down prices’

Press, Volume CXIV, Issue 33653, 1 October 1974, Page 11

‘U.S. meat buyers trying to force down prices’

If New Zealand is to pet the full benefit of the devaluation announced this week overseas buyers must continue to pay the prices they were paying for this country’s produce before the currency change. But there are already signs that in the United States buyers of manufacturing beef are trying to reduce their prices, and to the full extent of the 9 per cent devaluation. A representative of a meat exhorting company said yesterday that in the face of this situation, with no substantial volume of product still to sell, they had suspended trading and would wait and see until the market found its own level. Most similar companies were also likely to be following this course, he said. The company spokesman said that business with the United States was done on the basis of a contract arid shipment in the next vessel, and in any situation like the present one buyers would be looking for adjustments in prices for a part, if not all of the devaluation. WEAK MARKET The American beef market was weak at present and under these conditions buyers had a chance to further depress prices. “If we had a strong market we could get the benefit from devaluation, but unfortunately we are on the back foot with the Americans,” he said. But there could be a different story on the United Kingdom market for lamb, where there was a system of spot trading from stocks held there in store. It was not expected that prices would be adjusted there, so that this could help lamb. The spokesman added that

it was, however, too early I yet to obtain a clear picture ! of the impact of devaluation on meat markets. WOOL RISE According to some wool- ; buying interests there is not I likely to be more than a 5 per cent appreciation in I wool prices in response to i the devaluation. They say that the situation is different to that in 11967 when prices rose sharply after devaluation. “Money is tight everywhere and it is costly,” sa’d a representative of one buying company. Another representative isaid that whereas once people in the manufacturing • industry tried to keep their ; machines running at all (costs, in Europe at present more people were shutting down machinery than were 'trying to keep it going or i running it at a loss. After high prices for wool in the last two seasons some users have also organised (their programmes to use more synthetics and it may be some time before this I situation can be altered again. On the other hand while I the market has recently been in the doldrums there has been a flow of inquiries from overseas at much lower than market prices, but it is not known how genuine these inquiries have been and (whether business would have ■ resulted had wool been available at those prices. However not all orders for ‘wool have been covered and 'a local short-supply situation resulting from weather holding up shearing could help the market. Professor W. O. McCarthy, professor of marketing at I Lincoln College, sees devaluation performing a “social (justice” function in tending to redress the balance between the farming sector and the rest of the community. Probably from the point of view of the relationship of farmers with the rest of the

community it was overdue, he said. •SOCIAL JUSTICE’ The effect of the wage stabilisation programme was that the non-farming sector had had a guaranteed income and rises in wages in the last two years and in effect this had been transferring income from the farming sector to the rest of the community, so devaluation went some way towards “social justice.” Looking at the position of primary produce exports Professor McCarthy said it was expected that meat, and. in particular beef, “would come right in any case.” Dairy products did not constitute any problem and it was not foreseen that there would be a really low average price this season for wool — “we thought that it would tend upwards towards the end of the season anyway.” On a longer term basis, Professor McCarthy said, the benefits of devaluation would be whittled away unless prol duction of exports was increased and firm restraints placed on imports. That New Zealand had devalued automatically with Australia implied that the New Zealand Government, considered that this country’s destiny was more closely bound up with Australia than the rest of the world and that the best market for New Zealand, manufactured products was there, he said.