MARKETING AND PRICE POLICIES FOR AGRICULTURAL PRODUCTS
In 1954 the United States Department of Agriculture, in its Year Book, defined marketing simply and briefly as “getting the product to the consumer”. This is, however, not a simple thing to do, especially for farm products, the marketing of which is influenced by four special factors:
Farm products are usually produced by many producers, in greatly varying amounts, kinds, and qualities, and over wide areas of the country;
Most farm products are seasonally produced and are perishable (milk, for example). Storage, even where practicable, is costly and needs complex organisation;
Products are marketed in widely variable forms. For example, wheat can be sold for stock feed or as bread; milk can be sold as milk, or turned, by complex processes, into butter, cheese, or milk powder; and
Demand and supply for most farm products is fairly rigid, making it impossible to expand production quickly, as animals have to be reared before this can be done, or crops grown, or trees planted and nurtured. (Conversely, no producer will readily reduce herds or flocks or destroy trees because of a – perhaps temporary – drop in prices.) Further, people will not necessarily buy very much more food because the price has fallen.
New Zealand farm products are affected by one other factor – that most of them are exported to the other side of the world. Even locally consumed crops, such as grains, potatoes, most fruits and vegetables, suffer a similar transport difficulty. The crop may be grain in one island: the grain demand may be in the other, which adds to the cost and risk of loss of perishables.
The marketing and pricing system for New Zealand farm products, though it has varied considerably according to the product or the times, has, in general, developed from a laissez-faire free-enterprise philosophy towards one of centralised control and some measure of price fixing or stabilisation. This has been a world-wide trend which has been carried to very great lengths in the bigger industrial countries, often to the detriment of countries, such as New Zealand, which depend on exporting farm products.
Any form of price stabilisation or control was never seriously considered in the early days of organised markets. Such an idea would have seemed revolutionary, politically and economically. And, more concretely, the market prices of export products could not be controlled, nor did the community have the money to subsidise them. Politicians and administrators before the First World War would scarcely have entertained the idea of withholding part of the receipts when prices were good to cushion later price falls (a method which then could have applied to wool). It is likely, however, that, as taxes then were relatively low, New Zealand gained through the ploughing back of profits into farm improvement and land development. But farmers were sometimes most dissatisfied with the violent fluctuations in the prices of farm products (just as they are today) and whenever prices fell, they tended to blame the middleman. The dairy industry was especially dissatisfied; and it is worth noting that organised marketing has developed most fully with dairy produce, with pip fruit next, and wheat, the latter being practically under State control.