Meat Board to buy beef if export prices drop further

Press, 29 March 1980, Page 3

Meat Board to buy beef if export prices drop further

The Meat Board will buy beef from exporters if they fail to match minimum prices set by the Meat Export Prices Committee,. Mr G. T. Harrison, the board’s assistant general manager (marketing), told farmers at the Canterbury beef and beef-cuts competition at Belfast yesterday that if exporters lowered their prices further (they are now at floor-price levels) the board would issue its own schedule and would buy the beef itself. This scheme would be kept under constant review.

The board expected earnings from beef exported to the United States in the weeks ahead to reflect more accurately the total beefmarket situation. ■

“We expect that by the time traders take stock of, the situation imported-beef prices will improve quite markedly,” said Mr Harrison.

While many reasons had been put forward for the price collapse in the United States, including ample supplies of relatively cheap pork and poultry, poor enduser demand, and high interest rates, American traders appeared to be responding to the same uncertainties that were besetting the United States generally. A drop in the return for hides had also contributed to lower beef prices. However, since about the

middle of this week there had been some indications that end-user interest was starting to quicken. Although it might be too soon to presume that the market had staged a turn-round there had. been reports of spot sales by end-users.

Other encouraging signs had also begun to appear in the last week or so. Big American stores in their weekly newspapers were featuring beef quite strongly. This was a good sign after almost total emphasis on pork and poultry in recent months.

The United States Department of Agriculture in its latest report on cattle on feed had said’ that in seven states surveyed the number of cattle and calves on feed were down 9 per cent on last year’s total, that marketings of cattle on feed in February had been down 5 per cent, and that placements of cattle on feed during Febuary had been down by 8 per cent. A meat industry source in Christchurch said yesterday that unlike the board he felt

that the present situation could be a long-term one, not just a short-term hiccough. “It seems that new factors in the situation have been completely ignored;’-’ he said. “Certainly if you look at all the normal indicators, other things being equal, the market in the United States should be buoyant but the situation is not equal. “There are abnormally high stocks and production of cheap pork and chicken, there is a prime interest rate of 19 per cent, there ' are anti-inflationary measures by the Government' that are contributing to a tightening in the economy and a reduction in consumer spending. They all add up a situation where beef cannot be considered in’ isolation of these other factors.” Of the upward movement in the American market this week, the source said it was a short-lived flurry. From about USIOOc a pound c.i.f. the price had gone up on Thursday to 109 c but had then fallen back to 103 c. It was now back to about where it had started and might go lower.

The situation was that some people who had sold forward had had to cover their orders and could well have decided that at even 109 c they would be showing a good profit on their sale. But it was only a short-term situation. At present realisations they could afford to pay only 73,5 c a kilogram for manufacturing cows of - between 170.5 kilograms and 195 kilograms for which the minimum price was 103 c. The source was critical of the board’s decision to buy beef if necessary when the mechanism existed to supplement lt only needed updating, Mr Harrison told, the farmers at Belfast that it was accepted that on present market prices sizeable losses would be incurred by exporters of manufacturing grades of beef, particularly cow, but not bull if they were selling forward at present levels. “However I am bound to say that the board considers that the present downturn is of a temporary nature.” he said.