Thursday, 9 October 2008

Money Crisis Warning To Meat Industry

SOURCE: The Dominion Post

The meat industry should be wary of the flow-on effects of the international financial crisis, says Silver Fern Farms chief executive Keith Cooper.

Diminished spending power in the lucrative European and United States markets could hurt the sales of premium products, he said. "That describes most of our products."

The initial impact on meat exports was beneficial, with a fall in exchange rates, but Mr Cooper said he also had "caution rather than pessimism" about the possible flow- on effects.

"If banks are not lending money, what does this mean for small to medium-sized businesses?

"I use the analogy of a small printing business. They want money to buy a new press but can't get it. That means they don't employ an extra couple of people.

"What has this got to do with meat? Ultimately, if there's less money in the economy, less discretionary spending, people spend less on premium products."

One way of lessening this risk was to move away from reliance on traditional markets in Europe and the United States.

"And if you look at the financial scene, that's where the pressure is coming on. It's not on banks in the Middle East, or India or other emerging markets and that's where we should be diversifying to."

Those concerns aside, the market for lamb and beef in Europe and the US looked promising this coming year, he said.

Marketing manager Glenn Tyrrell had returned from Britain and France with good news.
Customers in France wanted increased chilled lamb and in Britain he expected to sell as much chilled lamb as last year. This meant a bigger proportion of this year's reduced kill would be sent in the more expensive chilled form while at the same time, prices would lift for the reduced portion of frozen lamb.

Mr Cooper said it was interesting to note that while lamb prices stayed high, its rivals – pork, chicken and beef – were lifting to meet it.

But New Zealand beef prices had eased from their peaks of a few months ago because of consumer resistance to high steak prices. Grinding beef in the US had also slipped back.
The Russian market had come under pressure from an influx of supplies from South America and Australia. Falling exchange rates had largely offset this and he expected prices to pick up again later in the year.


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