THE PRESS MONDAY, MARCH 19, 1984. Lamb market under threat

Press, 19 March 1984, Page 18

THE PRESS MONDAY, MARCH 19, 1984. Lamb market under threat

Thirty-eight Japanese trading companies have threatened to boycott New Zealand lamb and mutton on the Japanese market. Between them, the companies handle almost 90 per cent of all of Japan’s sheepmeat imports. They are a powerful force in a trade in which New Zealand has been a dominant supplier. In lamb, for instance, New Zealand supplies about 17,000 tonnes a year in a total Japanese market of 20,000 tonnes. Australia supplies most of the rest and has been increasing its share steadily. The Japanese market is significant for New Zealand and was worth about $77 million last year. Japan is consistently among the top five markets for New Zealand lamb and accounts for 7 per cent of New Zealand’s lamb exports. The threat of a boycott cannot be dismissed lightly; its consequences would be grave. The cause of Japanese disgruntlement is the New Zealand Meat Producers’ Board decision to ban the companies from the direct import of New Zealand lamb. The Meat Board’s action is open to argument; the manner in which it was foisted on the members of the Japan A.A. Meat Traders’ Association — all of whom have contributed to the expansion and promotion of New Zealand lamb and mutton in the Japanese market — has caused deep resentment. The Japanese companies, not without justification, regard it as high-handed and discourteous. The Meat Board is attempting now to mend the fences, but will not find the task easy. By virtue of its powers under law, the Meat Board owns and controls all exports of sheepmeats from New Zealand. By virtue of the large share New Zealand has. of the United Kingdom lamb market, the board has been able to dictate which companies in Britain may import New Zealand sheepmeat. This has meant that the board has determined which companies in Britain can import sheepmeats from other than E.E.C. countries. The board attempted to enforce similar constraints on Japanese meat importers. Unlike Britain, Japan can look to countries other than New Zealand for supplies of

Unlike Britain, Japan can look to countries other than New Zealand for supplies of

sheepmeats and is doing so. Unlike British companies, the Japanese do not have investments in the New Zealand meat industry that make Meat Board intervention in overseas markets tolerable. Australia stands poised to take advantage of the inroads it has made already on New Zealand’s trade; two Japanese companies have opened discussions with Irish interests for alternative sheepmeat supplies. Control of the volume of lamb on the British market was an integral part of the board’s pricing strategy in the United Kingdom; the board has sought to control the price at which the designated importers may sell to their own depots or to other wholesalers. A developing market, such as Japan, needs to be treated differently from an established market like the United Kingdom where other considerations — quotas and relationships with the E.E.C. among them — must be taken into consideration. This is not a novel idea; the premise that the Japanese market needs special handling is the Meat Board’s own and was part of the argument used by the board when it designated Japan a development market for export lamb late in 1982. One way in which the board chose to treat the two markets differently was in the way it announced its plans. The obvious danger that meat importers who were not among the chosen few might feel aggrieved was recognised when the arrangements were made in Britain. The board’s chairman, Mr Adam Begg, flew to Britain to meet all importers before announcements were made. He explained the new mechanism as best he could, told the successful appointees that they would be able to import New Zealand lamb, and tried to mollify those who subsequently were required to buy New Zealand lamb from the chosen importers. According to the Japanese companies, the board did not send them so much as a circular in Japanese to announce the new arrangement in Japan. From the Japanese, the Meat Board is likely to receive a painful reminder of the Golden Rule of business: “The customer is always right.”