S.M.P.S on mutton may be replaced

Press, 2 May 1984, Page 2

S.M.P.S on mutton may be replaced

By NZPA chief political reporter Peter O’Hara Wellington Government price support for mutton may be chopped soon but officials and industry sources expect compensating incentives for fanners. Departmental officers say the Government is looking at the possibility of ditching supplementary minimum prices for the ailing mutton trade. Last year’s Budget, however, commits the Government to keeping 1984-85 S.M.P. prices no lower than the previous year, with a review after that Officials have said that moves canvassed with the Meat Board this week focused on reductions in S.M.P. payments, “tit-for-tat" compensation, and the removal of distortions in the mutton scheme. The board has been talking with the Government about S.M.P.S and specifically about mutton. • Culling some 10 to 20 per cent of mutton before it goes through costly process-

ing at export works is one area the industry and the Government are examining. The Prime Minister, Sir Robert Muldoon, said this week that there were “all kinds of difficulties which to some extent impinge on the attitude of the freezing works union.” “There is an alternative which sees a good deal of it not going through the works at all — the S.MP. aspect is only peripheral,” he said. Concern in Government quarters centres on farmers getting an incorrect picture of what the market wants, because of the S.MP. payments. “If the S.M.P. for mutton was much less they might be doing something different — culling earlier, changing to different sorts of breeds, it might even entail going into dry stock, and farming more for wool,” one top official said. The Government paid out an estimated SSO million in mutton S.MPs in 1983-84, compared with $11.56 million the previous year. The rise was largely attributed to the decision by

the Meat Export Price Committee to lower the statutory minimum price for mutton from the benchmark 42c a kilogram to 12c. The Government now pays out the full difference up to 51c. Officials and industry spokesman have agreed that it is not the cost of the scheme that is crucial, but the distortions caused by the payments. Meat Board sources hope the scheme can be made more flexible this year, particularly on paying S.M.P.S if the product is not exported. S.MPs are paid on stock slaughtered for export, and have to be repaid if it is sold within New Zealand, for, say, petfood. Officials say “good” mutton carcases are costing the country a net $2 loss each and “bad ones” are losing $6 each. “It is costing the taxpayer heaps,” one departmental officer said. Culled mutton could either be shot on the farm, sent to a rendering plant (where carcases are broken

down), or rendered at the freezing works. If they were slaughtered at the works the pelt could be taken and the carcase not saved for meat export.

Sir Robert said the Government was faced with a “very big issue as to what we do about mutton.” No final decisions had been made. “I’m rather keen to see the mutton processed so that we don’t lose any more jobs in the (freezing works) industry in the later part of the season,” he said. “It’s the whole question of what we do with this mutton in its various forms and grades — how it’s processed, and indeed whether it’s processed in some cases. “It’s a complex issue and we are not at the position yet where we can make any positive statements on it” Asked if the Government was willing to consider the possibility of paying S.MP.S for mutton that was not slaughtered for export, Sir Robert said, “That’s an issue that hasn’t arisen as far as the Government is concerned.”