Meat Board’s marketing shuffle

Press, 9 August 1985, Page 13

Meat Board’s marketing shuffle

“Companies wishing to develop and market further processed products are to be given easy access to both lamb carcases and overseas markets,” the chairman of the Meat Board, Mr Adam Begg has said this week.

“In recent years there has been a substantial increase in the proportion of lamb leaving New Zealand in further processed form. The board believes that this and the chilled trade, should be encouraged and given every opportunity to succeed. “Accordingly the board intends to greatly simplify the operation of the buyback scheme under which companies can buy lamb carcases for further processing and/or export in chilled form.

“For further processed product we intend moving to a standard price approach for each grade in conjunction with free acess to markets other than North America and Japan,” Mr Begg said. The board intends discussing the future for chilled product in North America with the companies interested in the trade and will not adopt a firm policy until these dis-

cussions have been completed. Virtually all of the growth in the next few years will come from the export of further processed and chilled products and it is conceivable that the proportion of lamb leaving New Zealand in these forms could approach 50 per cent by 1990, said Mr Begg. The changes announced by the board will mean that the meat companies will have the opportunity to assume a greater role in the development of markets for chilled and further processed lamb product. “It is also likely that as this process takes place,, companies will decide to contract direct with producers for livestock to meet their specific requirements. This means that over time producers will have more sales options.” Mr Begg said the changes followed a very careful review of all aspects of board policy, including the need for central control of sheepmeat. “We concluded that because of the importance of the Iranian contract, the implications of the E.E.C. sheepmeat regime, the concentration of buying power

in most markets and the need to manage the transition to further processed product, central control over the commodity trade is necessary. “It is interesting to note that not one New Zealand meat company has told the board it favours an immediate return to free enterprise as operates with beef. Everyone accepts the need for some central control although there are a wide variety of views amongst the companies.” Mr Begg said the board totally rejected the paper sent by the Meat Industry Association to the Meat Industry Council on July 10. The proposals were unworkable and would have resulted in some producers getting nothing for their livestock while others would have got reasonable returns.

“Since then, the association has produced a second paper which was given to the board last week. It did contain some constructive thoughts and had no resemblance to the first paper, however it perpetuated many of the problems that have evolved in recent years. “Like so many industry papers, the proposals were

based on the needs of the companies in New Zealand rather than the marketplace. It also involved companies taking what they wanted for established markets and leaving the balance of the product to the board.”

The board has decided that for the commodity items, some overseas markets should be serviced on a more direct basis. These are Western Continental Europe, the Mediterranean and the Gulf States. As from the new season, the board will sell lamb carcases and primal cuts and mutton, directly into these markets using staff based in the board’s offices in Bahrain, London and Greece.

Mr Begg said these decisions meant the board would be playing a more direct role in handling just 9 per cent of total sales. Some extra staff will be required in the marketplace. “The net result will be a more efficient servicing of the market. The new system will be much more responsive to changes in the marketplace. “While the group system offered some hope that selling could be better co-

ordinated, in effect it only amounted to selling by committee and was a very inefficient use of resources.”

Mr Begg said the changes announced will remain in place for three years with a review during the third year. He said it is important for all parties that there be an end to the continual changing of rules and the resulting uncertainties. The proposals will be put to the M.I.C. and discussed with them, with the Government and farmers over the next two weeks.

He said the next season is going to be very difficult for sheep producers.

“The situation demands a major attack on processing costs. The Meat Industry Council report showed that savings of up to $2OO million per annum could be obtained. The tradeable quota scheme was rejected in favour of competition and it is now up to those involved in managing the meat processing sectors to show that competition does result in improved efficiency, Mr Begg said.

Mr Begg said the road back to prosperity will be long and difficult.