$110M for Meat Board in lieu of S.M.P.S

Press, 26 October 1984, Page 2

$110M for Meat Board in lieu of S.M.P.S

Wellington reporter The lump sum amount to be paid to the Meat Board in lieu of supplementary minimum prices on lamb and mutton for the 1984-85 season will be $llO million. The Minister of Finance, Mr Douglas, said the amount had been calculated in accordance with the method set out in the exchange of letters between the previous Government and the Meat Board.

This method had had as its basis the intention to pay the board the estimated amount that would have been paid as S.M.P.S if that scheme had continued.

Mr Douglas said that given the complexities of the international meat markets the task of calculating the lump sum for lamb and mutton had been difficult. Even after three weeks of intensive discussions between officials of the Ministry of Agriculture, the Treasury (representing the Government), and the Meat Board there had still been a difference of views.

“As provided for in the exchange of letters, the Minister of Finance then determined the amount off the lump sum ($llO million),” Mr Douglas said.

This would be reviewed in March, 1985, however, to take account of any changes in the forecast levels of lamb and mutton production for the season.

The first part of the lump sum, being about 65 per cent of the total, had already been paid to the Meat Board, he said. It was expected that the fixed sum approach would give the Meat Board an incentive to improve, market returns.

This, and the possibility of risks to the board and the Government, had been inherent in the agreement the board had made with the previous Government, Mr Douglas said.

Whereas under the S.M.P. scheme any increase in net market returns had simply resulted in the cost of S.M.P.S to the Government being reduced, under the lump sum approach any increases in -net market returns would accrue to sheepmeat producers.