Bd nearly intervened in U.K. market

Press, 29 May 1981, Page 18

Bd nearly intervened in U.K. market

A few weeks ago when the lamb market in the United Kingdom was at a low ebb the Meat Board was close to intervening again to buy in lamb through its subsidiary company there, Meatmark Ltd.

The chairman of the bqard, Mr A. M. Begg, disclosed .this when he was speaking about meat marketing to the annual conference of the meat and wool’ section of North Canterbury Federated Farmers last week.

Mr Begg said that about five weeks ago the market had declined to a low level although lamb stocks in the country amounted to only about 6000 tonnes. At about that time the: Resolution Bay was due in; the country with about 7000 tonnes of lamb aboard and; after hearing about the sort• of prices that were being $. talked about for the sale of ; this meat the board had • contacted major exporters to point out that there was no good reason for this situation. Without saying as much there had been the threat of I a Meatmark operation unless something was done to rec- f tify the situation. After that the price had started to rise. Mr Begg said that it was a question of picking the time to make such moves. — the board should have perhaps acted earlier.

The board’s role, he said, was to use its statutory authority to complement the experience of the meat exporting companies. Earlier he said that its role was to facilitate trade. The board and the Meat Exporters’ Council had been talking about marketing changes. There was general agreement that some further changes would have to be made. However, it should be remembered that important changes had taken place in the last few years. What had been done in the Iranian market would not have been acceptable four or five years ago/

It had only been with the help of some members of the Meat Exporters’ Council that they had been able to obtain agreement to what had been done. The underlying philosophy of the board was to get the best return for the producer, but that might not necessarily be the best spot market price on the day. There had been advocates of a single selling organisation for New Zealand meat but neither he nor the board subscribed to .that view. But private enterprise wasoperating in international markets that were hedged around with restrictions of one sort and another. In stating that the board’s role was to facilitate trade, he said that if this meant it had to be prime contractor in a market like Iran then it would be that. Likewise if they were in part. of the world where a DEVCO (Meat Export Development Company) operation was needed then they would do that also. On the always intriguing subject of the future outlook for meat, Mr Begg had hopeful comments to make. The beef market, he said, had been in a depressed state in the United States for the last two years. The only true prediction about that market had been that' it Was not possible to predict it. One of the most important factors had, however, been the availability of cheap pork and poultry as an alternative to beef, and in fact Mr Begg said that the United States could now be regarded as a cheap meat market. Although there was not likely to be any problems of quotas on the United States market this year or for some little time to come, he said he did see as a problem the general tone of the market and the large volume of exports of European Economic Community beef, which could be as high as 700,000 tonnes or about the equivalent of Australian exports. ’ However, while in the United States recently Mr Begg said he had learned that the freeing of grain sales to the Soviet Union was expected to result in porkr and beef prices going up as a result of higher grain prices, so some improvement .in the beef market might be expected in the next two or three years with, however, some fluctuations, in price levels. - As far as lamb was con-

cerned Mr Begg said that outlook was good. . For the United Kingdom market they were looking at the sort of volumes that they should send in the first six months of the year before Home produced lamb came on the market, although because of the increasing amount of lamb being sold through supermarkets exports had also to be kept up in the latter part of the year too. According to a person with knowledge of the Iranian market, imports now amounting to 240,000 tonnes were expected to rise to as much as 600,000 tonnes by 1990, he said in answer to a question. Ideally he said that there should be a spread of markets and Mr Begg suggested that a third of experts could go to the E.E.C., including Britain, a third to the Middle East and a third to the rest of the world and it would be this latter sector, that would be the most difficult to develop. - Mr Begg, concluded his remarks in this area by saying that he was optimistic about market prospects. The industry also had the potential to grow but that would not happen without enough profits being left in , the hands of farmers. The prime objective then had to be to ensure that marketing opportunities and farmers’ returns were not eroded by the costplus system and inefficiencies in allied industries. . Earlier Mr Begg had referred to how processing and killing costs and on-farm costs were running ahead of farmers’ returns and warned that for too long the costplus system had-, been al-, lowed to persist. There had

to be a change in attitudes in the meat industry and in New Zealand society, he said. It was necessary to ensure that wage increases occurred only as a reflection of improved productivity _• and greater output. An equitable method had to be developed to reward efficiency, expertise and effort. As difficult as it was to achieve those objectives, Mr Begg said he believed that where there was a will something could be done. He described efforts being made in collaboration with the parties involved to identify areas where it might be practicable to make reductions in costs.

He also told the meeting of the board’s plans to have consultants look at shipping options available to it on a world-wide basis in the next 10 years, with the study beginning later in the year and the report being made.to the board by about the middle of next year..