Export lamb schedule cuts disappoint farming leader

Press, 29 January 1988, Page 12

Export lamb schedule cuts disappoint farming leader

This week’s sudden drop in the lamb export schedules will hit farmers hard, particularly those who slaughter lambs late in the season, believes Mr David Petersen, chairman of the Meat and Wool Council of Federated Farmers.

The cuts will be a big blow to later-lambing South Island farmers, said Mr Petersen, in Christchurch this week during a tour of South Island meat companies. Unless there was a dramatic improvement in prices, farmers would have to start considering seriously the future of lamb production, he said.

Meat companies have blamed the high value of the New Zealand dollar for the decline in prices to farmers. The reduction in processing premiums and schedule prices was a reflection of the value of the Kiwi dollar against a

basket of currencies, led by the United States dollar.

A meat company spokesman suggested that if the dollar continued to remain strong further reductions were likely. Mr Petersen said it was a tragedy that the exchange rate led to such disastrous prices to farmers when overseas markets looked good and there was less reliance on “disposal” markets for lamb than in earlier years. The fact that the schedules of the various companies all moved down in the same week indicated a sudden lack of competition among meat companies, said Mr Petersen.

The Minister of Agriculture, Mr Moyle, was either hopelessly out of touch with the present farming scene or he had been poorly advised, said Mr Petersen, commenting

on Mr Moyle’s prediction of a “market improvement” in 1988 for most pastoral farmers. The meat and wool industry was in serious trouble and the drop in lamb prices had made the situation far worse than even dreamed of before Christmas.

“I suspect the effect of the price drops has not yet hit fully home with farmers,” said Mr Petersen. Developments in the next three months would be crucial for the meat industry. Although wool prices had been affected by the exchange rate, wool production . still looked brighter for farmers than meat and many farmers would be seriously doing their sums before putting their rams out this season. Mr Petersen’s tour of the meat industry in the South Island was similar to visits he made to meat companies in the North Island before Christmas. He has met also with representatives of the Meat Workers’ Union and explained to the union and companies the fears of farmers of another long work stoppage in the industry. Producers, companies and workers would

all be damaged by a long stoppage as well as overseas markets. Mr Petersen said meat companies, like most other exporters, had been affected by a lack of profitability caused by the exchange rate. The problem of slaughtering over-capacity in the South Island was most likely to be solved by companies closing killing chains at various works rather than a full-scale closure similar to that at Whakatu in Hawke’s Bay. He welcomed the initiative of organisations setting up single-chain processing works throughout New Zealand, although some would probably fail and in other cases larger, existing plants would find they could not compete with the new plants. Whatever the outcome, there was sure to be some capital written off in the industry, he said.