Strong start all round for Meat and Wool NZ

Meat and Wool New Zealand has had a strong start reporting an annual operating surplus, significant savings and a jump in exports.

The levy-funded organisation posted a $5.5 million operating surplus and savings of $1 million for the year ending September 30.

However, the annual report covers only the first three months, since the organisation was created last July. Chief executive Mark Jeffries said a $10 million cash transfer from the New Zealand Meat Board included $5.8 million for industry-good activities and $4.2 million from capital reserves to cover biotechnology commitments and establishment costs.

In addition to this, $6.1 million worth of industry-good assets were transferred from the Meat Board.

Savings were achieved through the consolidation of activities under one organisation. "We are on target to achieve ongoing savings of $1.8 million a year by bringing the meat and wool activities to one organisation as opposed to the alternative of having two separate entities for meat and wool," he said.

Total meat and co-product export value for the year was up 9.3 per cent to $4 billion. Total exports by volume increased from 791,532 tonnes in 2003 to 849,472 tonnes in 2004.

Utilisation of the EU sheepmeat and goatmeat quota to December 31 was down more than 5 per cent on 2003 at 94.3 per cent. The fall was attributed to lower lamb production in 2004. Jeffries is not anticipating such concerns this year with about two million more lambs available.

The growth in total export value was attributed to the quality of New Zealand meat and a bumper year for beef exports. "Lamb, in particular, has been positioned throughout the world as a premium red meat and we're commanding strong prices driven by food service and retail."

Beef exports were up 24.8 per cent to $2.1 billion, driven by record exports to north Asia.

The growth was largely because of bans on US beef after a case of bovine spongiform encephalopathy in 2003. Holding on to the Asian markets will be a key challenge this year as North America fights to regain its share.

But perhaps the biggest challenge is beyond the control of farmers.

"The biggest challenge for the meat and wool trade is the exchange rate against the US dollar. While the dollar is over 70USc, it's hurting exporters and hurting farmer returns," he said.