THE PRESS MONDAY, MAY 9, 1983. Meat storage crisis

Press, 9 May 1983, Page 20

THE PRESS MONDAY, MAY 9, 1983. Meat storage crisis

The crisis in the New Zealand meat industry is reflected in the storage problem for meat. At this stage of the season, the peak has been reached. About five million more lambs have been killed than had been killed at this time last year. The season also began with 50,000 tonnes of lamb and mutton more than is usually carried over. The normal carry-over figure has not been announced. It would certainly exceed 30,000 tonnes. As well as the meat stored in New Zealand, the lamb stored in Britain amounted to 35,300 tonnes at the beginning of this year. This compared with 7000 tonnes stored at the beginning of last year. Not all the lamb stored in Britain is New Zealand lamb, though nearly all of it is. At the New Zealand end of the trade, one way of providing extra storage capacity is to have a number of ships to load early. These have made space for another 22,000 tonnes. This must be one of the more extreme ways of coping with the crisis. The shipping companies have been persuaded to pay some of the costs of loading and remaining in port and the Meat Board will pick up the tab for the remaining extra costs. Another method has been to bone more mutton. This enables a very considerable saving of space. What is not known is whether the Meat Board has sold the mutton now in packed cartons, or whether it is awaiting a buyer. About 40 per cent of the mutton killed this year has been boned and put in cartons; last year the percentage was about 15. The crisis may not be short lived. The options facing the industry make for some hard decisions. The first, obvious, and most positive choice is that the lamb and mutton will have to be sold. Attempts are being made* to enter the catering business in Britain and work is continuing in Middle East markets. Variations are being introduced into the way meat is being cut so that the cooking methods may be more varied. Efforts are being made to find other markets. The main hopes are in the Middle East and Asia. Nevertheless, there is little reason to believe that these markets are suddenly going to take large quantities of meat, sufficient to solve the industry’s problems.

Another decision could be to make the extra lamb and mutton available for food aid. New Zealand has already complained bitterly about the United States doing this in Peru this year by offering surplus dairy products. New Zealand could scarcely put large quantities of lamb and mutton into other areas without upsetting world trade and incurring the very criticism that New Zealand has made. Furthermore, storing, thawing, and cooking our frozen meat would raise problems in some of the areas in which food aid would be welcome. A possible option is to render the meat down, or even to dump it somewhere. The morality of

destroying protein in a world in which so many people suffer a protein shortage has to be taken into account. Yet this may prove to be one of the most practicable solutions. One obvious course is for New Zealand to sell the meat for whatever price it can get on the world market. New Zealand is the biggest producer of lamb in the international trade and pushing on to the market all its lamb would reduce the prices. It would mean that the whole approach of orderly marketing would be sacrificed; protectionist resistance would be raised; dumping charges would probably be laid against New Zealand; the domestic cost in support prices would be high under the present rules.

The support given to the industry by the Meat Board, and the support given by the Government, are designed in part to prevent a disorderly market. The unfortunate aspect of the situation is not that steps have been taken to have orderly marketing, but that so much responsibility rests on the Meat Board, which shields the meat companies and the farmers from the market forces. Its losses last year were nearly ?60 million. Few would be surprised if they double this year. The meat companies, for their part, may well be in a strong financial position in spite of the marketing problems. One option has already been tried. This is that last season’s export lamb be made available on the New Zealand market at prices lower than are normally paid for lamb. This course could be repeated, though it raises the question of support prices to be met by the taxpayer if the producers are to be paid a rate that would recoup their costs. There is also a limit to how much New Zealanders can eat and the question of the effect on alternative foodstuffs. A continuation of the practice, combined with a general encouragement to eat lamb and mutton this year would make more beef available for export. Such a solution would not do much more than ease some short-term problems. The longer-term problems of New Zealand’s biggest export earner will remain to be tackled.

Quitting the present over-supply of lamb and mutton, and hoping that the beef market will remain permanently and sufficiently strong to justify a substantial switch in production, is not a decision to be taken lightly. The meat trade is always likely to have its ups and downs, some of them as serious as this season’s for New Zealand. Adjusting the production pattern in the past has brought benefits; it has not removed all risks. The willingness and the means in markets overseas to buy meat at fair prices remain the main factors determining the welfare of a New Zealand industry that can compete almost anywhere if it is given a chance.