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Graphic: An Encyclopaedia of New Zealand 1966.

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This information was published in 1966 in An Encyclopaedia of New Zealand, edited by A. H. McLintock. It has not been corrected and will not be updated.

Up-to-date information can be found elsewhere in Te Ara.

MARKETING AND PRICE POLICIES FOR AGRICULTURAL PRODUCTS

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MEAT

The dairy industry has been treated at length because it is highly organised. The meat industry is simpler in these respects, with only a limited amount of cooperative marketing. Most livestock for slaughter are bought by private companies, some of which are associated with large overseas concerns. Social, economic, and technical reasons underlie the relatively slow growth of cooperative marketing. The meat industry, which for all practical purposes is the sheep-farming industry, has been wealthier than dairying, with larger units, more independence, and, perhaps, a certain suspicion of controlled marketing. The industry is extremely complex. The farmer sells not meat but livestock; the export firms have to assess carefully the likely values, not only of the meat, but also of the many by-products which might not be sold until much later. Again, the types and quantities of fat stock that farmers sell vary greatly. Some sell large numbers of fat lambs and sheep and cattle; others depend more on store stock; and all sell wool. Export meat is divided into 70 or 80 grades and types. The meat industry's more limited development of organised marketing is, however, probably due mainly to the early establishment of the present system. Nevertheless, sheep farmers had been dissatisfied, especially after the First World War and the 1921 depression; the Meat Producers' Board resulted from this. Although the Act apparently contemplated control of marketing, the Board only recently considered this step seriously. It has controlled shipping to place supplies; it has advertised widely, especially in Britain; it controls its own system of grading export meat; and it is general spokesman for the industry. The Board ensures that farmers receive a return for their meat which is satisfactory when compared with overseas realisations.

Fat stock are marketed in many ways, but usually “on schedule”. Each week most importers prepare a schedule listing the prices per pound of the various classes of stock. Farmers send in their stock on the understanding that they will receive these prices. The farmer can, if he wishes, sell in the open saleyards by public auction (a system still extensively used for stock for the local market), or he can sell for export on “his own account”. Under this system the freezing companies are obliged to process and export the farmers' stock for standard charges, but do not own the meat or by-products. The farmer himself receives the market price and so takes any market risks. The Board keeps a close watch on the schedule and, if it thinks that the prices offered are too low compared with what the exporters will receive, advises farmers to sell on their own account. The Board does not often do this; but the existence of the provision safeguards farmers. Between 1939 and 1948 the Marketing Department handled the export of meat under bulk purchase. In 1948 the Board took over this work, as agent for the Government, until the termination of bulk purchase in 1954. Private trading was then resumed.

In recent years farmers have become increasingly dissatisfied with the returns for meat. Farmers have been concerned about “middleman's profits” and, more significantly, the need for market expansion. In 1959 the Board had its Act strengthened to give greater control over exports of meat, and in 1960 the Meat Export Development Co. was established. Both the Board and the industry is represented in the company which has statutory authority to control the marketing of mutton and lamb in North America to ensure continuity of supplies, and the gradual building up of a potentially valuable market.

Meat Export Prices

A guaranteed-price scheme for meat has never been developed, although the Primary Products Marketing Act provided for the control of any farm product and it was Labour Government policy at that time to put into force a guaranteed-price scheme if any industry wanted one. There is, however, a system of minimum prices for export meat. This arose from the fact that when bulk purchase expired the Meat Industry Reserve Account stood at £39 million (invested in Government securities) which successive governments agreed should be used for the benefit of the industry. Some has been invested in essential enterprise related to farming, for example, fertiliser works, freezing works, and aerial-topdressing planes; the industry demanded that other funds be used to support prices if they fell. The Government agreed on the condition that if the reserves ran out the Government would not be obliged to finance the scheme.

The Meat Export Prices Act establishes a committee, comprising Meat Board and Government representation with an independent chairman, which each year determines a schedule of minimum prices for export meat. Each week the Meat Board assesses the f.o.b. value of the meat content of the schedule prices offered by meat exporters and, if this should prove less than the Committee's minimum price, the Committee can declare a deficiency payment equivalent to the difference. Meat exporters then pay this amount to the farmer in addition to the schedule price and recover the amount from the Meat Board, which in turn receives the necessary advance from Treasury, as the meat industry reserves are all invested in Government securities.

The Committee establishes its schedule of minimum prices by the following criteria:

In preparing any such table of minimum prices the Committee shall have regard to:

  1. the average of the prices received by the owner for each class of meat exported from New Zealand during the preceding three seasons;

  2. the ruling level of minimum prices under this Act.

In addition to the matters referred to in subsection two of this section, in preparing any such table of minimum prices the Committee shall have regard to:

  1. the trend of prices for meat exported from New Zealand during preceding seasons and during the current season, together with future overseas market prospects for the sale of meat or particular classes of meat;

  2. the ruling level of prices for farm products other than meat;

  3. the general level of costs and prices and wages in New Zealand.

It will be seen that the Committee has considered market prospects and had indicated to farmers the relative trends in demand for beef and lamb. The following relatively small payments have been made under the scheme for the years ended 30 September: 1956, £367,000; 1957, 112,000; 1958, nil; 1959, £79,000; 1960, 935,000; 1961, nil; 1962, £2,412,000; 1963, nil; 1964, nil. The existence of a minimum price has helped to give farmers confidence to invest in farm development. With annual meat exports of £80–90 million, a conservative level of minimum prices is essential if the funds are not to be quickly wiped out by sudden price falls.


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