Lamb shining light on meat export future

By Philippa Stevenson

Optimism is running high in the $3 billion meat industry with major companies expected to rebound from poor half-year results on the back of rising beef and lamb export prices.

Meat Industry Association executive director, Bryan Lynch, said the industry was the most positive it had been all decade.

"When the major companies report later in the month, I think we'll see more than adequate returns. They won't be spectacular but they'll definitely be improved results on last year when all up the industry's after tax profit was $40 million to $50 million."

Meat NZ chief executive Neil Taylor said the export lamb market "really is the shining light across most of our primary industry products.

"It is an area where we do have some real international competitive advantage and that's coming through," he said.

Lamb stocks in Europe were low and price improvements were expected to last right through to Easter, instead of declining over the New Year, as millennium celebrations drove demand. The country should fill its 226,700 tonne quota with the volume of carefully self-regulated, higher-priced chilled product possibly rising to 23,000 tonnes. Chilled product is voluntarily restricted to avoid antagonising Europe's fresh lamb producers.

In the United States, even with the 9 per cent tariff on a quota of 15,000 tonnes imposed in July, there was still good demand for New Zealand lamb, Mr Taylor said.

Beef prices have been sluggish in the US since the last cyclical high in 1992-93 but New Zealand is beginning to reap the benefits of a reduced American herd.

Prices of New Zealand manufacturing beef, used in hamburgers, have risen by 20 per cent over the past year and the industry expects to export around 185,000 tonnes of beef to the US this year, about 10,000 tonnes up on 1997/98.

Mr Taylor said the better US prices could be sustained over at least the next two years.

"In fact, the OECD is forecasting prices rising right through to 2004. That's very positive," he said.

He said New Zealand would also be sending more beef to the better markets in Asia, where South Korea and Japan were recovering from economic crisis.

The one uncertainty in the Asian trade was Brazilian beef moving into Hong Kong, and Argentinian product into Taiwan after the removal of foot and mouth disease restrictions on the South American countries.

Farm gate returns are also rising and, thanks to better stock weights, beef production is expected to be up nationwide by 4.3 per cent on a kill likely to lift by 1.4 per cent to 1.45 million head.

However, Economic Service director Rob Davison said there was considerable nervousness about the effects of the forecast dry La Nina summer.

Early season information on sheep farms had indicated some North Island areas had been badly effected by autumn's bad facial eczema outbreak resulting in ewe deaths and low lambing percentages.

Lamb volumes are expected to be down by 8 per cent, or around 32,000 tonnes.