Currency management in Meat industry called for

Lamb prices are continuing their high levels in overseas markets. So is the NZ dollar. Result - low lamb prices for the NZ farmer this year. All the effort that has gone into marketing lamb, meat company efficiencies, ram breeding and pasture improvements - all wasted because of a high NZ dollar. Yet it doesn't have to be this way. I supply Blue Sky Meats and have contracted 20% of my lambs at $5.30/kg reports Country-wide. Compare that to what the industry is telling us for the season - $4/kg if we are lucky. Blue Sky Meats is able to pay $5.30/kg because presumably earlier in the season it fixed its currency for this contract and sold forward (good luck to them - I bet some other meat company will try to undersell them). The meat industry (through the meat companies) has a turnover of about $5 billion a year. That is huge. It is efficient in its cost structure. Many of the companies are now spending on marketing lamb overseas. But why bother investing money on increasing the value of the product overseas if the end result is less money in the hands of sheep farmers? One whole side of the equation, currency management, has been booted downstairs and put into the "too-hard" basket. If the meat industry got together back in May and said "Look, if we lock in the currency at present, we can pay $5 kilo for lamb this year" - wouldn't that be far better for everyone rather than the "Let's wait and hope" foreign currency policy of present? What has happened to the prospectus which has been due out (seemingly forever) for farmers to acquire shares in Wool Grower Holdings? This is the Meat & Wool company that acquired a half share of the PGG Wrightson wool business now renamed Wool Partners International for the sum of $18.75 million. In a recent farmer publication, it was announced that WPI made a loss of $3.92m. Does this help to explain the non-issue of the prospectus? What it doesn't explain is why did Meat & Wool buy a half interest in a wool business that is losing money? To help Meat & Wool pay for this business, PGG Wrightson lent $10m to Meat & Wool (through Wool Grower Holdings). Further, Meat & Wool recently paid $2.5m into this wool business with a promise of a further $2.5m next year. Presumably this payment will cover Meat & Wool's share of the loss - $2.12m. Further questions need to be answered as to how Meat & Wool can: "¢ Repay the $10 million loan from PGGW. "¢ Complete its agreement to buy half PGGW's wool division now that farmer funding has ceased. Why is Meat & Wool paying $2.5m annually into this deal (above the purchase price) and at the same time saying it can't afford $300,000 for training shearers? Meat & Wool announced early in November that it was pruning $1m off its market development budget for the United Kingdom and Europe (ie generic promotion of lamb) because - wait for this - "of the decision by farmers not to continue paying a levy on wool". No wonder sheep farmers voted against wool levies. How many farmers were aware of this cross-subsidisation?