Spotlight On Disposal Of Lamb

Press, Volume CV, Issue 30959, 15 January 1966, Page 8

Spotlight On Disposal Of Lamb

A great deal of thought has been given lately to the marketing of lamb which could be in excess of the requirements of the United Kingdom market in the future, and it is likely that in the early part of this year agreement between producer representatives, the Government and meat exporters on an equitable plan for the continued development of alternative markets to take this lamb will be a matter of top importance.

One of the reasons for these deliberations is the intention of the Government not to continue to allow the Meat Industry Reserve Account to be drawn on to finance all of the cost or loss involved in the development of the North American market. On the surface it is difficult to follow the Government’s thinking in this matter. The money in this fund is farmer money very prudenty put aside after the war—the surplus from war-time bulk trading in meat—to help to stabilise meat prices to the farmer and also to be used on projects for the benefit of the meat producer and meat industry. The only possible reason why the Government should be reluctant to see the funds used for market development is that the so-called losses might involve the selling of some of the Government stock in which the money in the fund is largely invested. At September 30. 1964. the fund stood at almost f4sm and of this about f37.5m was invested in Government stock. In all fairness it must, however. be mentioned here that there is also a feeling in producer circles that it is not desirable to run these funds down on market development when their primary purpose must be to give some stability to prices to farmers.

To describe the f3m spent on the North American lamb market as a loss is something of a misnomer. It is a loss only in the sense that lamb bought in New Zealand on a schedule based on the United Kingdom market has earned, after the extra costs involved in selling on the American market, something less than what has been paid I out.

Sir John Ormond, chairman of the Meat Board, has been quick to point out that the sale of this lamb in North America, returning 30m dolj lars in the last four years. : has been a factor in the (Strength ofi the United KingI dom market as a result of the drawing off of supplies from I that market.

But as well there is every evidence that useful progress is being made in the development of the American mari ket which has tremendous potential for reason of the isize of the population and the 'standard of living in the region. The market is taking 'more lamb—a promising deI velopment is that lamb is now I going into the supermarkets : or chain stores —and the ■ price is rising: in the last i year it is reported to have I risen about 30 per cent in I the United States and Canada. ! It has been stated that if ■ the duty of 10s a head on lamb was removed the sale

of New Zealand lamb in America would be on an economic basis.

It looks as though the efforts being made are bearing fruit, but of course it would be unwise to underestimate the continuing efforts of certain American States to keep New Zealand meat out of their areas for short-term gains, but so far the American Federal authorities have frequently proved to be more far-sighted than some of their local counterparts. The day may not be far off when the so-called losses in the North American market disappear or are very largely reduced. There is, however, another consideration that is giving urgency to current talks and discussions on lamb marketing. It is the attitude of the United Kingdom Government to expansion of its own agri-1 culture and to imports of meat. When he was in this country recently the United Kingdom Minister of Agriculture. Mr Peart, made it clear in press interviews that New Zealand need have no fears about not having a continued market for lamb in the United Kingdom—the general trend of his remarks was that there would be a continuing place for present quantities of lamb and as well New Zealand could expect to share, to some extent, in the further growth of demand there, although United Kingdom producers are expecting to produce a substantial part of this increase. The British Government’s recently published national economic plan has made it clear to the New Zealand Government and producers that part of any further expansion in lamb production will in all probability have to be absorbed in markets other than the United Kingdom, and this has given a new urgency to plans for selling lamb in other markets. This naturally is a problem of some complexity for the New Zealand Government and other authorities currently backing the programme for agricultural development and expansion of production to help to maintain and expand living standards. This programme could well founder on the rocks of marketing, and obviously the situation on the United Kingdom market and in alternative markets requires some careful handling if the impetus of the agricultural development programme is not to be lost. Farmers cannot be expected to go on increasing lamb production, as it seems they are well capable of doing, if lambs cannot be sold readily and profitably. The possibility clearly

seems to be that in the near future there could be substantial numbers of New Zealand lambs to be sold on markets outside the United Kingdom. How this can be done without seriously affecting the return to the farmer is obviously the key problem confronting the authorities.

The Government is apparently not prepared to allow the Consolidated Fund to be drawn on to finance market development, although a very good case could be made out for it. The Government has a convenient loophole here in contending that it would be a breach of New Zealand’s obligations under G.A.T.T. and would also make it difficult for this country to maintain its opposition to the use of subsidies for the support of agriculture overseas.

But the Government is also not agreeable to the Meat Industry Reserve Account being used to meet all these charges, although it is apparently agreeable to the fund being used to find half of the cost. Obviously a levy on all export lamb could be used to meet the remainder of the cost, but there is some feeling that this would not have the desired effect of stimulating the development of alternative markets for lamb, and there may be another answer to this particular problem.

A Point An interesting point was raised by Mr H. A. Seifert, a spokesman for New Zea-land-owned meat export freezing companies, in a statement on these pages last week. It was that marketing problems created by increasing lamb production might be better met by some adjustment in the pattern of New Zealand meat production to meet more nearly the requirements of world markets than by trying to develop diversionary markets for a product not now in wide demand. One conceivable result of any United Kingdom restriction of lamb imports, could be to put up the price of lamb in the Home market, and this seems likely to be an objective of the United Kingdom Government to ease the pressure of subsidies to Home farmers and to set the stage for the day when the United Kingdom must enter the European Economic Community and then must drop all subsidy or support schemes for its farmers. This could conceivably result in a boost to returns from New Zealand meat in the United Kingdom—at the expense of the British housewife, of course.

The whole meat marketing pattern thus becomes a pretty intricate web, and justifies the continuing urgent attention of the Government, producers, and exporters.