Meat holding up; lamb shows gains

Meat appears to have so far missed the worst of the international economic crisis.

Meat companies remain upbeat about prospects for lamb especially, with in-market prices 15% to 18% higher than at the same time last year because of lower volumes, along with an exchange rate more sympathetic to exporters.

Silver Fern Farms chief executive Keith Cooper told farmers at a suppliers' meeting at Finegand this week that he remained confident lamb would not be affected by the economic meltdown.

"It is hard to see on the back of less supply and steady growth in demand."

While the restaurant and food service sectors were struggling, with fewer diners, that had been offset by an increase in retail sales as more food was bought to be cooked at home.

In the United States, there had been a "material decline"in the food service sector, but the retail sector had grown.

"We're not seeing a tapering off in retail demand anywhere around the world. We sense we may escape any impact in in-market returns on lamb," he said.

There had been a correction in beef prices, but that was related to unsustainably high prices reached for grinding beef and not the credit crunch.

Prices hit US200c a pound ((NZ370c/0.45kg) before it overcorrected and slumped to US130c a pound.

Mr Cooper expected prices to stabilise at US140 to US150c a pound.

Issues over access of Brazilian beef into Europe had driven up the price of quality beef, which had benefited New Zealand, but Mr Cooper expected a price correction.

The credit crunch was affecting some beef markets, with Russian banks unable to secure access to funds, rendering beef importers unable to fund the "trade lane".

"By default, the supply chain is interrupted because no-one can finance the middle."

Returns from venison had also shown material gains on the back of falling supply, but Mr Cooper said while there could be some reaction to the high pricing, he expected values to settle down.

Heavy-weight lambs could be the way of the future if Silver Fern Farms had its way.

Mr Cooper said that as the company reduced its reliance on the United Kingdom, it needed lambs heavier than 17.5kg to satisfy new markets.

The goal was to get lamb legs of sufficient size to be boned out into 300g packs that could be cooked with the minimum of preparation.

State-of-the-art carcass imaging equipment was being trialled at Pareora this season, and once the technology was perfected, it would be installed in all the company's plants.

Carcass information would be available to farmers and yield payments could be possible within 18 months, Mr Cooper said.

Alliance Group provides similar carcass information, and through a progeny programme also provides information on ideal sheep genetics.

Main Points
What will happen to prices (peak price for the first half of the season)?

• Lamb: $4.50 to $4.70 a kg.

• Beef: $3.50 to $3.70 a kg.

• Venison: $7.50 to $9.50 a kg (peak price autumn chilled season).