Bum steer for beef prices

The impact of the global recession and the weak US dollar could continue to hit NZ sheep and beef farmers in their wallets for another two years, according to Affco chief executive Stuart Weston.  He told about 30 farmers at a market update meeting in Winton last week that foreign exchange remained a constant nightmare for the company, which operates as South Pacific Meats in the South Island reports The Southland Times. Success for the meat industry over the next 24 months would depend on the weak US dollar but there would be no short-term relief, he said. That uncertainty would continue to affect returns to farmers, with another 50 cents likely to come off beef schedules before Christmas, Mr Weston said. At the same time last year, the industry had appeared to be in a good position. With the price of grain increasing, grass-fed animals were more affordable and demand was high. Demand evaporated almost overnight across various markets and sectors and the company was being careful about what it sold and to who, to ensure payment would be made. The near-death of the US car manufacturing industry killed interest in skins for car seats, while a decline in consumer spending hurt demand from the fashion industry. The demand for beef began declining and global beef prices plummeted when companies tried to clear buffer stocks. The company was trying to retain high-value lamb products to fulfil European quotas to achieve highest returns, and was responding to changes in market demand by developing smaller portioned cuts. Demand for lower-value lamb products, such as breasts and flaps, was running "red hot" in China because Mongolian flocks were shrinking, and that would increase, he said. Europe had been more affected by the recession than NZ and a "wave of frugality" had swept the continent, waking people up to their lifestyle and free way of spending.