Alliance: Returns should hold despite trade uncertainty

Uncertainty on the world trade front could translate into lower prices for Alliance Group’s 4000 farmer shareholders this year, but returns should nevertheless remain firm, said its global sales manager, Shane Kingston.

Kingston, who joined New Zealand’s biggest sheepmeat exporter in September after a 10-year stint with international drinks giant Diageo, said Britain’s exit from the European Union was just one of several challenges on trade. Britain remains an important market for New Zealand lamb.

As the 2018/19 lamb kill builds up, Kingston said he expected product prices to remain firm, but that they were unlikely to reach the 2017/18 season’s record highs.

“It’s all crystal ball stuff, but we would be forecasting a slight decrease in returns versus what they have received over the last 12 months.

“Most of that is the driven by the dynamic at play across the world,” he said.

Invercargill-based Alliance would monitor the situation closely with its industry partners here and in the UK.

Brexit and other trade issues, such as the trade friction between the United States and China, were just a couple of challenges on the international scene, he said.

“But we remain positive on the medium to long-term.”

Alliance has been sending chilled lamb, mutton and beef shipments to China by air and sea since the middle of 2017, distributed by Chinese partner Grand Farm. It targets highvalue retail — delicatessens and gourmet butcheries — and the food service sector.

Kingston said chilled exports to China offered significant opportunities for the co-operative because they command a premium over frozen products.

Alliance last week reported a net profit of $6.6 million for the year to September, down from $14.4m a year earlier. Revenue lifted to $1.8 billion.