‘Horrifying’ debt on export lamb

Press, 29 February 1984, Page 1

‘Horrifying’ debt on export lamb

By farm editor and PA The full seriousness of the slump in export sheepmeat prices during the 1982-83 trading year was revealed yesterday in the capital Meat Income Stabilisation Account statement released by the Meat Board. The account, an industry support measure, contributed $2BB million to the prices paid to producers and the accumulated debt in that account now stands at $340 million. The sum of $219 million was required last year for lamb support and $69 million for mutton. Beef trade resulted in a $1.9 million net gain to the account. To estimate the full amount producers were paid above export market returns, the Government’s supplementary minimum price support of about $l6O million must be added to the $2BB million. An export return shortfall of more than 20 per cent in the $2 billion a year indus-

try, which is New Zealand’s biggest export industry, below the guaranteed minimum prices paid to farmers emerges from yesterday’s published figures. This collective shortfall amounts to about $lO per head of sheep exported during the year, a figure called “horrifying” by the Dominion meat and wool chairman of Federated Farmers, Mr Timothy Plummer, yesterday. Near the end of the 19821983 meat trading year, the first full year of Meat Board control of export sheepmeats the chairman of the board, Mr Adam Begg, warned of the expected accumulated debt in the stabilisation account. But the debt announced yesterday of almost $5 per head for 70 million capital stock sheep in New Zealand was considerably more than his August, 1983, estimate.

The M.I.S.A. debt must be seen as debt against future profitable production, warned t Mr Begg and Mr

Plummer. The account at the Reserve Bank pays interest at the rate of 1 per cent a year. The Minister of Agriculture, Mr Maclntyre, said the board’s report showed the seriousness of the situation in the marketing of meat during the world economic downturn. Mr Plummer said that the meat and wool farmers supported the principles of price-moving and recognised that any M.I.S.A. debt was farmers’ money collectively supporting the meat industry. Mr Begg said that while the extent and the cost of price support in 1982-83 might come as a shock to many New Zealanders, the figures were not surprising given the nature of the price-smoothing scheme and the market circumstances that prevailed during the year. He noted that: © The minimum and trigger prices used for the price-smoothing schemes

were set by the independent Meat Export Prices Committee and only administered by the Meat Board. The prices were based on a three-year average which included a forecast for the coming season made before the commencement of the season. © Just before the beginning of the 1982-83 season a crisis existed in the sheepmeat industry that was not fully apparent at the time the Prices Committee established minimum and trigger prices. At the beginning of the season, the exporters, in the face of record carryover stocks, likely record production, and weak demand, could offer schedules of about 90c a kilogram for the benchmark P.M. lamb and then only for about 60 per cent of the product. The board decided after consultation, and with the agreement of the Meat Exporters’ Council and the Government, to buy in all lamb as well as mutton at S.M.P. levels rather than make huge supplementary payments.