U.S. dairy scheme bites into beef prices

Press, 18 April 1986, Page 20

U.S. dairy scheme bites into beef prices

NZPA staff correspondent Tom BHdgman Beef prices in the United States are falling as the Government’s dairy herd reduction scheme takes effect. Three groups representing domestic producers have launched suits against the Agriculture Department asking that the new subsidised dairy cattle slaughter programme be halted because it is depressing beef prices.

The National Cattlemen’s Association and two other groups said the department’s failure to spread out the slaughter of dairy herds evenly over the life of the 18month programme had resulted in heavy oversupply and plummeting prices in both live cattle and futures markets.

Mr Barry Saunders, the New Zealand Meat Board’s North American representative, said from New York the lower domestic prices were also affecting imported beef

and forcing prices lower. “It’s certainly having a depressing effect on imported beef,” he said. Cow beef was now around 6c a pound cheaper than in January and bull beef nearly 10c a pound cheaper. “Those are pretty significant drops and very low prices by the standards of recent years.” Mr Saunders said that although New Zealand was not exporting beef at present because of the meatworkers strike, the future was not good. The delay in exports combined with a drought in Australia which had increased slaughtering there meant that New Zealand exports when they came on stream would clash with the Australian beef being sent to the United States. “It is not realistic in this environment to expect any real improvement in price. "There are no counterbalancing positive factors at present,” he said.

Under the United States

dairy herd buy-out scheme, which took effect on April 1, the United States Government will spend SUSI.B US billion over the next 18 months to pay dairy farmers to slaughter about 10 per cent of the nation's dairy herds in an effort to reduce dairy surpluses.

Mr Chuck Ball, a spokesman for the Cattlemen’s Association, said the beef cattle producers who sold animals during a recent week had estimated losses of $25 million because of price drops averaging $2 to $3 per 100 pounds.

The U.S. Farm Bureau has also called on the Agriculture Secretary, Mr Richard Lyng, to take immediate steps to limit the adverse effects the herd buy-out programme is having. The U.S. Department of Agriculture is authorised to buy up extra quantities of red meat that became available because of the slaughter to hold the market up. The meat will eventually be sold domestically through food programmes and in export markets. The U.S.D.A. said the surplus beef could be used to help fill the cur-

rent European Community quota of 10,000 tonnes for U.S. high-quality beef. Meanwhile, the American Sheep Producers Council said the high level of imports of New Zealand and Australian lamb in March were the main reason prices did not rise to normal high levels at Easter.

“For instance, in the New York market three of the five leading chains (representing around 25 per cent of the market) featured imported lamb prior to Easter,” it said. "In Los Angeles, considerable import activity was also seen, particularly from New Zealand.” The council accused New Zealand of taking advantage of a meat cutters strike in California which affected local producers. "While New Zealand’s presence in the Los Angeles market has been felt in the past, recent increases in activity resulted after retail meat cutters went on strike last November. "Several other areas of the country also experienced increases in import activity, resulting in lower demand for domestic products," the council said.