High spot prices likely to deter contract takers

The last time NZ had a 20 million export lamb kill, all of the meat company executives and most of the sheep farmers weren't even born. The NZ sheepmeats sector is going into uncharted territory and meat companies will have no option but to fight tooth and claw for throughput says Country-wide. But farmers are not convinced by contracts when spot prices are high and rising.The meat companies are geared up for the fight, having banked excellent profits from large kills and rising world meat and by-product prices in 2007-08."We have all got customers we need to service, so there is real potential for a procurement war," said Stuart Weston, AFFCO chief executive. Weston takes heart that the NI sheep flock is expected to bounce back after the 2007 drought, whereas the SI's reduction in ewe numbers is an "enduring change". Meat companies will also have to factor in a mutton kill chopped in half. Also unfortunately, ewe hogget numbers fell by 16% to 9.4 million, with all regions having decreases except the East Coast. AFFCO intends to push on with the food group approach, supplying meat and by-products to consignments which include dairy products, fish and vegetables from other companies in the Talleys Foods group. South Pacific Meats at Awarua, Southland, and Malvern, Canterbury are part of the group.  "That food group approach has got real breadth and scale with Open Country Cheese and Dairy Trust as part of Talleys. "It means we are a major primary export earner for NZ, using the model of many international food companies," he said.