Companies push for Easter lambs

08-02-2010 | Alan Williams

Processing companies should know early this week if they will have the lamb volumes to meet Easter orders in the United Kingdom and European markets.

Agents were expected to be flat out over the weekend doing deals with farmers so that as many stock as possible can be drafted for processing by next Friday, in time for shipping chilled product the following week.

Companies are paying premiums over the normal schedule to tempt farmers into selling lambs they are mainly happy to keep for the moment to make the most of excellent pasture conditions.

Silver Fern Farms chief executive Keith Cooper said the response was pretty slow.

The premiums are about 20c a kg above what the companies would normally be paying now. Silver Fern has labelled its top-up as an Easter chill premium, which will come off as soon as the time deadline is reached.

Cooper said there was no easy meeting of the opposing factors - farmers wanting to maximise income by making the most of grass availability and overseas customer demand for chilled lamb.

England and France are the big Easter markets and the overall supply situation is exacerbated by their domestic lamb production falling between 3% and 5% year on year. Cooper said New Zealand wouldn't lose markets if it can't meet its obligations this year, as it and Australia supply to a quota and Australia also has falling stock numbers.

However, customers will start looking for other suppliers, with South America an obvious starting point.

One farmer selling lambs into the buying scramble was Federated Farmers Meat and Fibre section chairman Bruce Wills, swayed by the higher prices being offered.

He usually holds lambs into April on his Hawke's Bay hill country farm but AFFCO was offering $4.60/kg (up from the schedule of about $4.35).

"I got a call to see if I would help and I agreed to sell some,'' Wills said. "Price is important and if it had been $4.30 or $4.40 I wouldn't have sold. There's plenty ready to go and I would sell more if they tweak the price a bit more yet. I like to take my lambs through to the heavier weights but cashflow is important.''

Wills said there were some desperate calls being made by processors to get enough stock in to meet Easter export orders. A lot of work had been done to build up the European market and it would not be a good look for NZ if orders couldn't be filled.

"The meat companies could solve it easily though if they really want the lambs, another 20c or so really makes a difference.''

With the meat companies having to pay out more to get stock in now, the risk is that prices might fall further as demand falls off through March and April. Wills admitted that was "the great unknown'' and that the issue for farmers was a finely turned one.

In Southland and Otago where the need for lambs was also urgent, the demand coinciding with what Southland farmer Keith Milne said were the most perfect conditions for increasing lamb weights - warm, sunny days over pastures holding plenty of moisture.

He drafted lambs last week and took advantage of a 15c/kg schedule premium, but admitted he was like many farmers who had been caught out by not realising that Easter was early this year.

"You could say I was a bit dumb that I hadn't thought it through, but there should be some structure to get the message to farmers.''

The problem for farmers was that till about mid-January, conditions had been made difficult by cooler, wetter weather holding back lamb growth.

Milne said the Easter premium from his processor, Alliance Group, meant he would be receiving about  $86 for a 19kg lamb, up from about $80. He didn't see much gain for farmers trying to achieve weights much above that level.

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