Rural delivery: Meat sector on a roll thanks to alert marketing

By BRIAN LYNCH*

This year has been memorable for New Zealand livestock growers and meat companies.

Stock prices have been at an all-time high; overseas earnings passed $5 billion for the first time; companies reported record turnovers and profits; and our reputation abroad for quality meat products hasn't been better.

Can the good times last?

Meat processors and exporters are clear: they want to lock in and leverage off the benefits from their long, costly commitment to added-value production, advanced technology, operational efficiencies, and a better-skilled workforce.

There is an excellent springboard in the closer business relationship most meat companies now have with their core suppliers, such as swapping up-to-date information on marketplace dynamics for a secure flow of animals with the most desired attributes.

Rivalry for first-rate livestock is always present, particularly when stock supply is tight, as it was in some regions and between the two islands during the year, and may be at times next year.

Now the prospect of half-a-million fewer lambs for slaughter will focus the minds of many marketing managers. There is relief that beef and sheep numbers are expected to edge upwards. The good returns should help keep at bay encroaching alternative land uses.

Some special factors helped to sustain the high level of overseas receipts. Not all will persist. The New Zealand dollar is forecast to come off the floor, where it has lain for six months, making exporters less competitive.

The European market will be altered by the anticipated resumption of British exports, which will want to contest New Zealand's expanded presence in chilled lamb.

We've benefited in markets such as Canada and North Asia from some South American meat producers' struggles with foot and mouth. They are likely to return aggressively.

But there could be less competition from American product now that their herd liquidation phase appears to be ending.

The collapse in October of the Japanese beef market after a single BSE scare, was a stark warning of how sensitive and uncompromising modern food consumers are.

During the year, in markets as different as Saudi Arabia, Switzerland and South Korea, our officials argued that the proven robustness of New Zealand's food safety regime had to be recognised.

Concerns about safe food are an indisputable reality in today's marketing environment.

A range of other factors is beyond New Zealand's ability to influence. We're a niche player in global trading terms. There's no captive constituency for our meat products. We can't modify daily weather - or global trading patterns, price levels and the ebb and flow of what the consumer fancies.

At least a new round of international trade negotiations is underway. It took a determined effort by negotiators at Doha this month to achieve the launch. It will take another sterling effort by New Zealand officials to ensure our existing market access is not eroded in the haggling ahead. They have to gnaw away at other Governments' trade-distorting support mechanisms.

There's much at stake for New Zealand in the coming WTO Round. Consider how some of our key markets have expanded and returns grown since the last (Uruguay Round) negotiations concluded.

In 1994, the US market returned $786 million, but is now worth an estimated $1.55 billion. The UK was worth $394 million in 1994, now $650 million; the rest of the EU, $573 million, now $1400 million; Japan, $190 million, now $210 million; and Canada, $228 million, now $300 million.

Admittedly, our dollar has slipped 30 per cent against other major currencies over the past seven years, but even allowing for that, market growth has been impressive. It reflects the transformation of our meat sector from a production-based "freezing industry" to a market-driven food business.

This has happened because New Zealand meat companies have listened to the mood of the marketplace and adapted to it. As they plan to do in 2002.

* Brian Lynch is executive director of the Meat Industry Association and chairman of the Trade Liberalisation Network.