PPCS chief executive Keith Cooper has just returned from two weeks spent visiting key international markets and described it as "one of the most encouraging market visits for many years'', which would be reflected in higher lamb supply contracts offered by PPCS for next season.
"It's got to be in the late $3 to $4 a kg; that is likely to be the benchmark price for the peak of the [2008-09] season. It is not guaranteed, but there is some confidence,'' he said.
Last year, the minimum lamb price was about $3 a kg compared with about $3.30 this year, but prices were expected to get higher still as this season comes to an end.
"Right now, we are seeing a cumulative improvement of about 12% or so, but we are still to see where it will end up at the end of the season,'' Mr Cooper said.
His optimism was based on what he called sustainable market improvement, in part because of the realisation there was a pending shortage of New Zealand lamb, greater demand and a general increase in the price of other proteins.
"It's encouraging to see a general restoration of value in relative terms to price increases on other protein source, translating to substantially improved prices for New Zealand product.''
The market for beef in Europe was "incredibly strong'' due to Brazil being unable to export to the European Union, and although that would only be temporary, Mr Cooper said it created an opportunity for New Zealand beef.
Venison was benefiting from four years of marketing initiatives which was reflected in greater demand and strong prices.
While lamb prices were improving, Mr Cooper said New Zealand was competing with fresh lamb from the Middle East, Europe and the United Kingdom.
"Our product is competing with fresh lamb from Pakistan, India, Iran, Uruguay, Spain, Italy, France and the UK,'' he said.
This competition meant New Zealand exporters could not demand prices that were out of step with other lamb suppliers or other sources of protein. Prices have improved.
A year ago, UK farmers were paid 2.66 a kg for lamb but this year they were receiving 3.26.
Mr Cooper said the improved market outlook was despite the structure of the New Zealand meat industry, which was being debated, and he questioned whether changing the structure would increase returns further.
"Returns have been poor and the result of markets and the exchange rate. Now, we are seeing markets improve within the current industry structure.''
He said prices in the United States remained poor, despite the New Zealand Lamb Company, a co-operative of New Zealand and Australian lamb exporters, operating in the market.
"It demonstrates that a structure doesn't necessarily override a market model.''
