War coverage hits NZ meat exports

By PHILIPPA STEVENSON agriculture editor

War watching has proved more damaging to New Zealand's meat export trade than any other consequence of the conflict in Iraq.

PPCS group marketing manager Glenn Tyrrell said a decline in the US restaurant trade had affected beef, lamb and venison demand.

"As one customer put it, people would rather go home to watch and worry about the war than eat out," he said. "It very much mirrors what we saw in the USA after September 11."

North America is New Zealand's pre-eminent beef market, taking just under 75 per cent, or 250,000 tonnes, of the country's $2 billion beef exports last year.

In the Middle East, demand for lamb was steady and disruption to the trade had been minimal, said Dunedin-based Tyrrell.

"However, we face potential logistical problems maintaining deliveries, with the removal of insurance cover to some areas such as Kuwait, and the possibility of reduced freight services to "at risk" areas."

Elsewhere the lamb business - worth $3 billion a year - was largely unaffected by the war, he said.

Demand and consumption in the valuable European Union market, including Britain, matched expectations.

"Easter is traditionally a strong period for lamb sales in Europe and most supermarkets have already purchased for promotions over the next two to three weeks. Customers are being cautious about post-Easter business, but this is more a reflection of the European economies than effects of the conflict in Iraq. There is some slight downturn in business in areas such as Cyprus and Greece due to the reduced tourist trade overall, but this could recover quickly if the conflict reaches an early conclusion."

MeatNZ analyst Nick Beeby said exporters he canvassed were more concerned about the impact of the killer illness severe acute respiratory syndrome (Sars) than the war in Iraq.

"A lot of the beef we send to the Asian region is aimed at mid-level restaurants, hotels and institutions and people aren't going out. The places we sell beef to are being directly affected."

In the Middle East, since the buildup and the start of the war some exporters described "a few slack weeks" but they were confident the conflict's outcome was a foregone conclusion - victory for the Anglo-American forces, Beeby said.

Beeby was in the region for two weeks in March visiting Saudi Arabia, Bahrain, and attending the Gulf Food Trade show in Dubai.

"They can't get enough of New Zealand lamb in particular."

Exports of lamb and beef to the region from October to February were 13.3 per cent up on the same period a year earlier.

"Everyone's buying. There's no real worry or stockpiling going on. No one's fleeing places or not eating."

In the US, however, the beef trade had experienced sharply lower future prices as a result of concerns of eroding beef demand, high energy costs and the war.

That had encouraged US feedlot operators to sell, reducing opportunities for exporters like New Zealand. The effect had been "just enough to be noticeable", Beeby said.

The beef demand outlook was positive but he said the high New Zealand dollar against the US currency was affecting returns.