NZ lamb pleads its case

22 June, 2007

A flying visit from New Zealand has attempted to take some of the heat out of the debate on who is to blame for the state of the lamb market. Ed Bedington went to get the Kiwis' point of view

Greater co-operation and a greater awareness of the wider world market is needed in the UK, according to Meat & Wool New Zealand bosses, who flew halfway round the world on a charm offensive for UK farmers, who are furiously blaming the Kiwis for the recent collapse in the lamb market.

But has the gamble paid off? Did the NZ farmers smooth over a flammable situation that was beginning to combust? "The situation had got a little bit heated in the last few months, but hopefully the talks we've had have managed to simmer some of that down," said Mike Peterson, chairman of Meat & Wool NZ, "We're all in this together."

UK farmers have been accusing the New Zealanders of selling too low and attempting to undercut each other, something Peterson said was not the case. "Farmers in New Zealand are also facing poor prices so we're all in the same boat. I don't think the UK industry realises that our farmers are hurting as much as they are. We have much more in common than we have apart."

He said the meetings with UK representatives, including HCC - Meat Promotion Wales, the National Farmers' Union, National Sheep Association and EBLEX to name a few, had gone well. "The meetings we've had this week have been good. There were clearly some issues they wanted to get across to us. The most crucial is that they felt NZ lamb imports are causing the price fall, but we think it's more complex than that."

He said the world market had changed and the last 12 months had been difficult for anyone in the sheep meat business. "The Australian drought saw large amounts of stock being killed out there. Outlining the overall world market gives us a better understanding of why we are where we are."

He said the sudden drop in demand on the French market was also having an impact, as the UK industry was struggling to export into France too, but added the New Zealand industry was keen to help with any promotional mechanism to encourage greater consumption in France.

Another important factor has been the advanced NZ season. "The lamb kill was up by about 15% in the first part of the year. However, the positive news for the UK is that the second half kill was down by the same amount, so we have less lamb to market for the remainder of the year."

He said there had been suggestions during the meeting of limiting the NZ season to specific dates, but he said that was unlikely. "It's impractical to suggest that we send our final shipment on May 15. If consumers want lamb, it needs to be on the shelf, and if they can't get it from the domestic producers it has to come from us."

He also hinted that an element of the problem was the encroachment of UK producers onto the traditional New Zealand season of January to May, with the UK creeping in at the start of the NZ season with later production, and also earlier UK production arriving at the end.

Supermarkets too, had a role to play, and he said he felt this season had seen an element of the retailers playing one sector off against the other. "There's frustration - we've seen retail volumes and prices increasing. Latest TNS data shows rises in demand and price, but where's the money going?"

At the moment, NZ farmers are being paid less than the cost of production, he said, but they have no choice than to sell, as otherwise they would have no income at all. "All we have is the market," he said. "We export 95% of what we produce. We need to make sure that sheep farming remains viable."

He said New Zealand farmers, much like their UK counterparts, had choices. "We have a buoyant deer industry and people are looking to dairy - we have land-use options, and people will exercise that choice if they aren't getting the returns."

At the end of the day, he said, there needs to be better communication between New Zealand and the UK, but it needs to be a two-way street: "We're happy to come up with suggestions on how to make it better, but we want some from them as well. We want a better partnership."

The long-term signals for the world sheep meat market are strong, he said, but in the short term, there were some serious challenges to overcome.

On the whole, however, he remained optimistic. "I'm confident we've started a better dialogue with the UK and we can look forward to next season with better results for all." l





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