Tuesday, January 17, 2017

Brexit - Pommy Rogernomics? (Corrected)

It appears British PM Theresa May is going for a hard landing.  Cut the ties to the EU and go it alone, right from the word go.

What will this mean for UK fat lamb producers?  What opportunities will this provide for NZ and Australian frozen lamb exporters?

Image result for leg of lamb roast

It seems to me UK farmers will undergo the same shocks that beset NZ farmers when Roger Douglas delivered the much needed coup de grace to the now notorious Supplementary Minimum Prices.

UK cockies have been protected from real world reality by decades of EU subsidies which, overnight, will disappear.    My greatest criticism of Douglas's moves were to do with the inhumane way in which they were implemented, leading to incredible hardship for and many suicides within NZ farming  families.  That was the short term downside.  The long term benefits were a stronger and more resilient farming sector.

UK cockies and politicians should learn from NZ's experience under Douglas and should avoid the short term trauma..

If I were a UK lamb producer, here's what I would do.

1   I would form groups of twenty or so producers and have each group hire a consultant from NZ to introduce new farming practices resulting in a dramatic increase in efficiency of production.  This may well involve changes to the breeding flock to bring about an increase in survival to sale lambing percentage, along with a significant reduction in the farm labour force.  Such changes will require changing the breed of sheep, such as occurred in NZ, where a move away from traditional Romney ewes to breeds such as Perendale and Coopworth achieved huge increases in lambing percentage from large flocks which required little or no care at lambing time.

2   I would ask the UK government to continue an interim subsidy, to allow time for the changes to take place without undue hardship.   It will take three to four years to breed up a new flock and accordingly I suggest the subsidy should start at the current UK level and phase out over five years.

( The current subsidised farm gate price for a 19 kg lamb in the UK is NZ$124 while the NZ equivalent is NZ$100.  Retail UK price is NZ9/kg compared with NZ price of around $13/kg)

Is a $25 per carcase differential enough to get excited about?  If it is, then what a marvelous opportunity there will be for NZ exporters if NZ pulls off a fast track free trade agreement.   Meat companies would be able to sell into the UK initially at EU type prices while the local producers adjust.

Kiwis can expect to pay a  more for their Sunday roast leg of lamb.

7 comments:

Anonymous said...

The biggest restriction on low cost UK lamb production is the winter.

The Pommie winter is always going to be much harsher than the NZ Winter which adds to the annual production costs.

Jimmie

Adolf Fiinkensein said...

Point taken, Jimmie

However, be that as it may, if the poms can learn in five years to produce 150 lambs from land which currently produces 100 lambs then they will be in clover, as ae their NZ counterparts.

My argument is that the EU subsidies took away their incentive to try harder.

Anonymous said...
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Shelldrake said...

Where can I get some of this $NZ6 a kg retail lamb?

Adolf Fiinkensein said...

Shelldrake

https://shop.countdown.co.nz/Shop/SearchProducts?search=eggs+12pk#url=/Shop/SearchProducts%3Fsearch%3Dlamb%2Bleg

Adolf Fiinkensein said...

Shelldrake

As you will see, the price is $12.99/kg not 'each' although it appears to be.

I'll correct the post.

David said...

Egbut, Egbut, wherefore art thou, Egbut? Sin binned again?

So, let me get this straight - Teresa May wants to pull the UK out of the free trade group known as the European Union, and then she wants to negotiate a free trade agreement with the European Union. WTF? What sort of a deal does she think she'll get?

And she wants UK citizens to retain their free travel within the EU. And she will re-write UK legislation to be in sync with EU laws. And all this will be paid for by Turkey I suppose!

Farrage, Le Pen, Hanson, Abbott, Trump are all good at burning down the house but not one of them has a clue about building one.