Livestock Production Policies and Meat Processing Margins: The Case of New Zealand, 1967‐1988*

Abstract

The New Zeaiand export meat industry has been through a considerable number ofchanges in the 1980s.Thederqulation ofcxportslaughterfacilitics, Supplementary Minimum Prices, Producer Board intervention, declining livestock numbers and domestic cost prcssurcs have all affected the performance of the domcstically based processing scctor. Major changes in market access and dc mand have influenced off-shore marketing operations, particularly for shccpmeats. Additionally, there has bcen a change in the type of meat exported with a greater proportion of further processed product shipped in recent years. As an example of the impact of thcse developments on livestock producers, the producer share of the United Kingdom wholesale market return for a representative prime lamb carcase has fallen from 40 per cent in 1978 to 25 per cent in 1988.In this article the pattern of intervcntion in the New Zealand pastoral meat industries from the mid-1960s is detailed, ernphasising the different environments of the beef and sheepmeat enterprises. Then the principal factors influencing domestic processing margins for these products are empirically examincd. Altcrnative model specifications and alternative estimation tcchniques arc compared and contrasted. The results o f thcse analyses are discussed in terms of the historical patterns of assistance and structural change, and in terms of current rationalisation prcssurcs on the meat proccssing sector.The New Zealand meat industry is a major contributor to foreign exchange earni:Igs with the value of meat and byproducts comprising over 25 per cent of total merchandise export value. The marketing of meat destined for export is usually performed by private companies or

The long run, market power and retail pricing

“…It is, however, important to distinguish between the two types of long-run relationships -static equilibrium where the variables are assumed to be unchanging between periods, and stable equilibrium where all variables are changing at some constant rate. Most previous studies concerning long-run relationships between producer and retail prices are based on static equilibrium models of firm behaviour (e.g., Gardner 1975, Wohlgenant 1989, Griffith and Moore, 1991McCorriston and Rayner, 1998). These studies assume equality of supply and demand in the respective producer, retail and marketing-input markets.…”