“Lamb worth only what market will bear”

Press, Volume CXIV, Issue 33671, 22 October 1974, Page 2

“Lamb worth only what market will bear”

“The fact must be faced that a product is only worth what the market will bear,” said Mr W. M. Cleland, general manager of the New Zealand Refrigerating Company, yesterday, commenting on reaction to his firm’s lamb schedule.

Under this schedule of prices to producers, put out last Friday, a prime with 0.75 kilograms of wool is worth slightly more than $6 at the 301 b lamb with a skin works. In the present circumstances, Mr Cleland said, a strong case could be made for Government support for the New Zealand farmer, in the national interest. The producer must remain confident over the next year or two “because we still believe there will be a world shortage of meat before the end of this decade — perhaps earlier than is now indicated. “We would like to see the highest schedule the market will bear, on the basis that if the farmer is doing well so is the rest of the community,” said Mr Cleland. Firms’ losses But everyone was well aware that in the last season exporting companies had suffered substantial losses in their lamb trading. The producer who sold his stock on schedule had gained the advantage. Exporting companies were not in a position to subsidise the fanner to that extent for two successive years, said Mr Cleland. But his company did not expect to recover the last season’s lamb trading losses in one year. One of the greatest assets for the New Zealand farmer was a progressive, profitable

meat processing and export industry, he said.

In Britain last week New Zealand lamb prices were slightly easier and the volume of sales had also been reduced, said Mr Cleland. British lamb was also easier last week after several weeks when abattoirs concentrated on heavy killings of beef. The exclusion of lamb killing had improved prices for New Zealand lamb for a week or two, but the British lambs which had not been killed in that period had still to come forward. Stocks of lamb in public cold stores in Britain were higher than was desirable, although there was a shortage in one or two grades. Stocks of chicken and turkey at October 4 were almost double those of a year ago. Trade “myth” It was a myth that New Zealand lamb fetched a premium for the Christmas trade, said Mr Cleland. “Our experience has been that the week to 10 days before Christmas are about the lowest selling volume weeks for the year. “Experience has also shown that only minimal quantities of new season’s lamb ever reach the United Kingdom by mid-December—-and this season in New Zealand looks like being even later than usual. “All our information leads us to believe that the outlook for the United Kingdom economy for some considerable time ahead is bleak. One wonders if the British house-

wife will have sufficient in her purse to pay a reasonable price for New Zealand lamb.” Alternatives Where a producer considered that the schedule offered was below his idea of values he had several alternatives, Mr Cleland said. If the draft of lambs was sufficiently large a producer could ship on his own account; he could ship through a nominated vessels system; consign through company pools; put his stock through one of the cooperatives; or take the risk of the market in the saleyards. “I do not know of a producer in any of the other main producing countries, who has this number of alternatives,” said Mr Cleland. But Mr Cleland was not prepared to be drawn on what might happen if other exporters were to take a more optimistic outlook than his company and offer higher schedules, which must be regarded as a possibility. The remarks of the chairman of the Meat Board (Mr C. Hilgendorf) in suggesting that if the board intervened in the lamb market it might not necessarily sell through existing channels as it aid in 1971-72, are seen as a possible stimulus to exporters, and particularly over-seas-based exporters, to raise their offers to ensure control of the product. In the past overseas companies have raised schedules sometimes seemingly against

the trend of the market, and other companies have reluctantly had to follow suit against their better judgment. Whether all would follow such a move on this occasion remains to be seen, but if they do not they face the loss of throughput. Still waiting The general manager of Thomas Borthwicks, (Mr P. T. Norman) said at the weekend his firm liked to keep its options open to the last possible moment before announcing a schedule—and in the North Island it was not yet in the position of having to announce a schedule. A rather slow or delayed opening was expected, and probably not many lambs would be killed before October 29, said Mr Norman. “At the moment we are not looking for stock for export,” said the general manager of the Canterbury Frozen Meat Company (Mr D. Morten) last evening. Next Wednesday “We are not officially opening at Belfast until Wednesday next week, but if any limited number of lambs is offered they will be handled by the normal winter consumption team. In the meantime we will match the schedule offered by the Refrigerating Company or offer entry to our pool scheme.”