‘Works costs beat exports’

Press, 28 March 1979, Page 3

‘Works costs beat exports’

Wellington reporter It now costs 31 per cent more to kill and process a lamb in New Zealand freezing works than it did a year ago, and almost 200 per cent more than it did five years ago. The chairman of the Meat Board (Mr Charles Hilgendorf) told the board’s electoral committee at its annual meeting that continuing big increases in on-farm and off-farm costs such as these were seriously undermining the meat export industry’s ability to compete overseas. The board was particularly concerned about the cumulative impact that huge rises in killing and freezing charges over recent years were now having on the returns and profitability of meat producers.

It now cost almost 820 to process, ship, and market a 12.2 kg lamb from a New Zealand farm to Smithfield Market in London, he said.

If the British retail butcher sold that lamb across the counter for $4O, the, New Zealand producer got only 25 per cent of its total market value. Yet in the late 1960 s and early 1970 s the producer could get almost 60 per cent of the market value. If costs continued to increase at or near their present rate, and there was no off-setting rise in market prices, there would be “precious little” net income for lamb producers within a very short time, Mr Hilgendorf said. In the short term, New Zealand could not look to the overseas consumer, especially in the main market of Britain, to offset unfettered cost increases in New Zealand by paying more for lamb.

There were already signs of some consumer resistance to the high price of New Zealand lamb in Britain relative to those of other com-

pettag meats, especially chicken. In 1974 it had cost 17c a kilogram to ship lamb to Britain. Now it cost 37c — an increase of 116 per cent. But even this was less than the increase in killing charges. Iranian market The Meat. Board considers the loss of the Iranian market for New Zealand lamb to be no more than a temporary setback. Representatives of the new Iranian Government were expected in New Zealand very soon to inspect slaughtering facilities and methods, Mr Hilgendorf told the meeting.

In spite of what press reports had suggested at the time, he had not believed that the Ayatollah Khomeiny intended to ban the eating of frozen meat as such, but rather the eating of meat of animals not slaughtered according to Muslim law.

The Iranian Government representatives would be able to tell the Meat Board about the Islamic slaughter and certification procedures that must be observed to ensure that New Zealand lamb was acceptable to them. The sooner New Zealand knew the precise requirements for halal slaughter and certification, the sooner the industry could undertake whatever changes might be necessary to meet them, Mr Hilgendorf said.

The Meat Board wanted Iran to continue as a substantial and valuable market for New Zealand lamb. The Iranians were well aware that New Zealand and Australia were virtually the only reliable sources for the large imports of sheepmeats they needed now and would continue to need. ‘Mouths’ coming Mr Hilgendorf believes that a New Zealand tourist boom lies “just beyond the horizon.” The prospect of cheaper air fares throughout the world might bring New Zealand such a boom, he said, with very important' consequences for the meat industry. To capitalise on this boom, the Government might have to ease the laws relating to the importation of foreign capital and knowhow to clear up bottlenecks in accommodation. To become the Switzerland of the Pacific, New Zealand might have to change its national thinking in many ways. The benefits to the meat industry could be substantial, Mr Hilgendorf said. In effect, it would be “bringing the mouths to the meat” and eliminating at least some of the penalties of distance from export markets. The inflow’ of tourists at present was 400,000 a year. Mr Hilgendorf said. Given the will, this could be

trebled or quadrupled within a decade.

That would be “a lot of mouths,” a lot of meat to be eaten, and a lot of foreign currency. It would mean a much stronger base for the export meat industry. The Meat Board accepted that it must spend much more money on promotion within New Zealand, he said. This would ensure that high standards were maintained and that tourists went back home to North America, Japan, or Europe, with a real taste for New Zealand lamb.