Skin schedule expected to remain firm

Press, 5 July 1985, Page 10

Skin schedule expected to remain firm

By

HUGH STRINGLEMAN

Amid the gathering gloom of next season’s export meat schedule of prices to farmers, one part of the freezing industry has some good news for producers. Lamb and sheep skin prices are expected to hold at their present levels throughout the 1985-86 season, according to people involved in the slipe wool and pelt markets. It has been a nagging worry to many producers that the very high prices paid in the schedule for skins at times this year might be only temporary and a big fall could come on top of the anticipated $5 to $7.50 a head fall in sheep meat prices next season. At $7 or $8 for a woolly lamb skin with Ikg of wool pull, the average skin price this season has been about 30 per cent of the total schedule value of a lamb with a 12kg carcase. At $lO or $ll for a sheep skin with 2kg of wool pull, the sheep skin price this season has been as high as 60 per cent of the value of a cull ewe. The good news is that average skin prices will hold up through next season, at perhaps the schedule levels of today rather than the peaks of March and April. But the bad news is that

the skin prices are going to represent even more of the total value of a works animal, as meat prices fall when supplementary payments are removed. It has led the chief executive of New Zealand’s largest meat company, Waitaki N.Z. Refrigerating, Ltd, Mr Athol Hutton, to suggest that the combined value of the by-products of a lamb or a sheep carcase may be worth more than the meat in many grades.

The by-products total $l5 a head on average, he said recently. In recent speeches to rural groups, Mr Hutton has urged farmers to specialise in sheep production still further; to go for heavy, lean carcases with unmarked skins. Waitaki’s development and diversification manager, Mr Graeme Robinson, expects the company to begin offering incentives to farmers to produce lambs with top-quality skins. He says this will take the form of agreements with farmers to produce lines of stock with skins suitable for the needs of Waitaki’s woolly skin subsidiary, G. L. Bowron and Co, Ltd. Bowren’s is the world’s largest processor of woolly lamb skins and is enjoying a strong and increasing demand mainly from tourists for its top-quality rugs and car seat covers. If Waitaki does get an incentive scheme up and running it will be welcomed by farmers as a significant move away from the heavy “averaging effect” of the present skin system. The system is often criticised by farmers, who complain that it is inaccurate and gives no rewards to farmers who do produce good slipe wool or clean pelts.

An industry inquiry headed by Mr Robert Johnston, the former Wool Board member from Oxford, called for more accountability in slipe wool assessments and payments. But the practical difficulties of identifying slipe wool and pelts by their owners (as farmers do legally retain ownership of skins as they

move through works) have so far prevented any move away from the freezing works yard assessments by experienced employees of wool pull and pelt condition and subsequent payment according to a schedule with pool dividends to follow. The companies are saying, with their skin pools, that they are taking some pains to pass back the full market realisations of wool and pelts, although this has to be done through an averaging system. In the present season, skin pool payments of $1 a head or more have been common. Slipe wool has been bringing 365 c to 490 c a kilogram clean, according to Mr Robinson, and this is up about a dollar on the levels of 12 months ago. He attributed, the rise to the devaluation effect and a firm demand. He expected prices to remain firm next season, particularly with a smaller ex-port-sheep kill. Mr Colin White, the marketing manager of J. L. Crichton and Co, Ltd, a wool exporting company specialising in slipe, said that the full effect of the devaluation had been passed back through the system into prices paid to freezing works. But he said the large production this year from the record lamb kill and the patchy marketing efforts of the large freezing companies which export their jwn slipe had combined to produce an over-supply at present. This was unlike any previous season and was a worrying factor for price levels next season. World demand for slipe was heavily influenced by the fashion industry, said

Mr White, but high prices could lead manufacturers to a greasy wool substitute, perhaps from the finer Australian clip. He also repeated the common complaint of wool exporters that currency fluctuations and how to pick them was now a more critical area than dealing in wool. “My optimism for the new season is greatly affected by the movement in the New Zealand dollar. “If it continues to strengthen then slipe buyers will look elsewhere,” he saiu. Lamb and sheep pelts

have also benefited from the devaluation and prospects for the next season are good, according to traders in these items. In recent years demand has swung away from the suede, or inside surface of the pelt to the nappa or shiny outside surface and considerable technological advances have extended the uses, patterns, colours and “looks” available to fashion designers and clothing manufacturers. A dozen pickled “blue” lamb pelts have been worth up to $9O to $lOO a dozen, an increase of about 80 per cent on the previous season.

Sheep pelts hit a peak of $135 a dozen this season in response to an anticipated decline in the adult sheep kill which didn’t eventuate, according to Mr Knox French-Wright, a director of Booth and Co, Ltd, a Christchurch trader in pelts. He said the inside of the sheep pelts went into

chamois and the outside grain surface went to Italy for slipper and shoe linings and book bindings. He expected that pelts would sell well again next year and said that the sale of all this season’s production at the good prices was quite an achievement for the pelt industry.