Sub prime headbutts exports
From the April 2008 edition of Agriculture Today.
The US sub prime lending crisis has for the moment flattened the NSW export goat meat industry.
Those hardest hit by the US meltdown represent the greatest goat meat consumer market on the globe.
Since December, most of the State’s goat exports have hit the wall, with up to 70 per cent of markets lost.
The only advantage goat meat has is that it is lean and consequently can draw a small premium, but America’s working class - many millions of African Americans, Hispanic and muslim consumers - have stopped buying.
NSW exporters have turned to the much smaller alternative customers - for example, Canada, the Caribbean and Taiwan - who never need to pay premiums to ensure supply.
Now fully stocked up, they’re only willing to buy more of the glut at cheaper prices.
Hence the price of meat on the tiny domestic market is affected - but buffered to a degree because Australian consumers want the higher quality Boer cross cuts, whereas the export market want it mainly for stewing.
Lamb and beef exports, which can offload to other markets, have not been as badly affected as goats.
Looking for an upside, everyone is now chasing new markets and new ways to value add to the product.
Middle Eastern countries might one day become customers.
The tough truth - and the principle also applies to the US - is that mutton, a competitor to goat meat, is cheaper.
Middle Eastern countries do not mind fatter carcases and because they are price conscious, will take cheaper mutton before dearer goat.
However, goat is getting down to the lower mutton prices in the Middle East. So considering the potential volume of that untapped market, the cloud may prove to have a silver lining in the long run.
