Lamb-marketing system ‘restoring confidence’

Press, 23 April 1984, Page 8

Lamb-marketing system ‘restoring confidence’

NZPA staff correspondent London

The New Zealand Meat Board’s new marketing system is restoring confidence in the long-term future of New Zealand lamb in Britain, says the board’s European director, Mr Erik Trautmann.

Continued wholesale price stability was essential to maintain and increase returns to farmers, he said. Mr Trautmann, who was speaking after his first three months as European director, said that there had been 13 months of unbroken wholesale price stability in Britain.

This was because the board, which had taken over ownership of lamb, had been able to influence the price for the 1982-83 season’s product.

Since then the wholesale price had stood 15 to 20 per cent higher than before board ownership, varying by only 4.5 pence a pound. “That is a remarkable achievement compared with the fluctuations of domestic lamb price levels during the same period which have

been two or three times as much,” Mr Trautmann said. “Perhaps more importantly, it compares with the fluctuations in New Zealand lamb prices in previous years which cost producers so dear.” New Zealand lamb was selling in Britain at 62.5 pence a pound wholesale this week and firming, compared with 59 pence a pound and falling this time last year.

“All the remaining oldseason lamb is in the shops and sales are on target for the new season,” Mr Trautmann said.

During the last 14 weeks, 50,000 tonnes of lamb, including . old and new season’s, had been sold. The wholesale price now allowed the meat trade to improve its profit margins, he said.

“At this level they can draw a realistic return and not have to rely on volume to make a profit. Previously there were often periods when they shaved margins too low to sell as much as they could — the classic commodity trading response,” he said.

It invariably succeeded only in exerting even greater downward pressure on prices. The new arrangement offered a more satisfactory alternative. Mr Trautmann said that the oversupply in British domestic lamb last northern autumn would almost certainly have dragged New Zealand lamb prices down had the new system not been adopted.

“As it turned out, New Zealand lamb was selling for a higher price than domestic lamb, and in reasonable quantities for the time of the year,” he said.

The board now sells all its lamb through eight agents.

The stability of the new system offered New Zealand the most reliable market for lamb in the world, Mr Trautmann said.

“The era of shipping 250,000 tonnes and more to the United Kingdom is obviously over and everyone recognises that,” he said.

“But there remains a tendency to harp back to the good old days which only obscures the real issue - which is the price the lamb realises.”

Britain could continue to pay that price on a volume this year of about 150,000 to 160,000 tonnes, he said.

British mutton and lamb production had risen from 220,000 tonnes in 1970 to almost 290,000 tonnes last year.

But the British Meat and Livestock Commission had revealed growing evidence that the breeding flock would level out to yield about 300,000 tonnes a year in the next four to five years, Mr Trautmann said.

That left a clear market for New Zealand to supply. The British market was also a springboard for Europe. “There is unrealised potential in countries such as West Germany and Scandinavia where the population is used to paying high prices for meat.

“They will only pay for quality of meat and cut. If we can discipline ourselves to sending them only what they want, we will start to see a regular increase in returns and a greater development of these markets,” Mr Trautmann said.