Devalue, urges Meat Board chairman

Press, 9 March 1984, Page 13

Devalue, urges Meat Board chairman

By

Michael Hannah,

Parliamentary reporter A devaluation with “belttightening” limits on subsequent cost-of-living increases, is favoured by the chairman of the Meat Board, Mr Adam Begg, to improve export returns and farmers’ incomes.

Mr Begg picks some time between July and September as a favourable time to devalue or refloat the currency, but he said in an interview that any inflationary effect from a devaluation must be reduced by limiting subsequent wage movements. He also said that the Meat Board was considering asking the Reserve Bank to “freeze” the $340 million debt it has incurred through the meat income stabilisation account.

Radical restructuring of the meat-processing industry was also proposed by Mr Begg as a goal for the meat industry for 1990. He said that a realignment of the currency “sooner or later” was “inevitable” and was needed to redress imbalances that had occurred before the wageprice freeze was imposed in 1982.

The freeze had halted a “pretty dramatic” climb in costs, and freezing company executives had told him recently that they expected they could hold costs for the present season, although that would be the limit of their endurance. The freeze had not been complete, however, Mr Begg said. “The farmers’ situation is

worse now than it was when it first came on, because costs on farms have continued to increase whereas the prices received have remained static.”

Mr Begg said that support schemes such as supplementary minimum prices and export incentives had been a means of avoiding a devaluation, and he questioned why the Govememnt had not devalued in 1978 rather than raise S.M.Ps. He also called for a reduction of internal costs in the transport, killing, processing, and particularly port areas. “Quite clearly our problems stem from internal inflation more than anything else. The Prime Minister suddenly discovered that and put on the price freeze, and we certainly welcome it. But what has been changed? What has been cured?” he said.

“I might as well say it: Quite frankly, I believe as a country we’ve been living beyond our income. So we’ve either got to earn more or spend less.” Although he conceded that some groups had suffered lower living standards during he freeze, Mr Begg said that for most people in employment, there was no noticeable reduction in living standards.

He also said that it was very hard for a politician to talk about lowering living standards, but speculated that whoever was Prime Minister after the General Election in November might find it easier to hold back cost-of-living increases next

year, because the next election would be three years away.

The Meat Board’s present debt to the Reserve Bank through its own price-stabil-isation scheme may also have to be suspended for a period, to allow the industry to get its marketing programmes off the ground, according to Mr Begg. “We have talked about possibly freezing it for a three-year, four-year, or five-year period. I think that is something which we will have to consider. “Without committing ourselves at all, I think that is an area we might pursue.” Mr Begg said it was not inevitable that the industry would accumulate further debt while its present debt was frozen. There was a significant improvement appearing in the market, particularly in lamb sales.

He also believed that savings could be made on internal costs. At least two full shifts could be required in freezing works, he believed, to help the industry compete with white meats such as turkey and chicken, which were processed in two or three shifts, often seven days a week. New works would be required to run such a system, and old works would have to be closed.

“The implications of it are almost for a revolution in the industry. What I am saying is, this is what the industry, including the unions, should be looking at and saying, by 1990, ‘this is the way we are going to have to go’,” he said.