A CONSIDERATION OF MOVEMENTS IN MEAT PRICES A PAPER SUBMllTED TO THE JOINT PARLIAMENTARY COMMITTEE ON PRICES

Occasional Paper No. 16

~ B : ~ ~ BUREAU OF AGRICULTURAL ECONOMICS, CANBERRA

[lB:ue] BUREAU OF AGRICULTURAL ECONOMICS, CANBERRA

A CONSIDERATION OF MOVEMENTS

IN MEAT PRICES A PAPER SUBMITTED TO THE JOINT PARLIAMENTARY COMMITTEE ON PRICES

Occasional Paper No. 16 JUNE 1973

AUSTRALIAN GOVERNMENT PUBLISHING SERVICE CANBERRA 1975

Ci 1

CONTENTS

INTRODUCTION

PART I:

PART 11:

FORMATION OF MEAT PRICES

Analysis of Lamb Price Formation Analysis of Movements in Beef Cattle Auction Prices Mutton, Pigmeat and Poultry Meat

GENESIS OF CURRENT MEAT PRICE SITUATION AND LIKELIHOOD OF ITS CONTINUANCE

Beef Lamb hfutton Changes in Australian Meat Supplies Recent Developments in Major Overseas Markets for Australian Meat Future Prospects

PART 111: MARKET STRUCTURE, CONDUCT AND EFFICIENCY CONSIDERATIONS

PART Iv: STABILISATION MEASURES

A. Adjustment of Supply-Demand Balance (a) Quantitative Controls (b) Export Tax Flow on Effects - Supply Response and Consumer Substitution between Meats

B. Price Controls

C. Consumer Subsidy

General Implications of Stabilisation Measures

Page

1

3

(ii)

Page

APPENDIX TABLES

VIII

IX

Production and Disposal of Meat: Australia

Apparent Per Head Consumption: Australia

Australian Exports of Meat: By Variety and Principal Destination

Movements in Saleyard and Retail Prices: Australia

Prices for Australian Meat on Principal Overseas Markets

USA Meat Industry: Prices

United States: Supply and Consumption of Meat

United Kingdom: Supply and Consumption of Meat

Percentage Change in Quantity Demanded for a 1% Change in Price

A CONSIDERATION OF MOVEMENTS I N AUSTRALIAN MEAT PRICES

Submission to the Joint Parliamentary Comnittee on Prices

This statement has been prepared by the Bureau o f

AgricuZturat Economics i n response t o an invitation by Sub-

C o d t t e e 'B' of the Joint Parlicunentary C o d t t e e on Prices

for submissions retevmzt t o i t s inquiry into the

'stabiZisation of meat prices, with particukr reference t o

the report of the AustmZiun !.feat BOQFd on this subject '. As part of i t s generat study of the markets for

crgricultuml comnodities, the BAE maintuins a continuous

investigation of developments ad p~ospects i n the markets

for AustmtiQn mats . This work has inctuded studies of the

rmrketing of tivestock cmd meat with particukr emplms'is

being pkced upon anatyses of the economic factors which

influence prices for tivestock a t the sateyard tevet of the

marketing chain d, most recently, a investigations into

the arrmrgements for marketing livestock and meat, including

those retating t o ~Zassif ication or gmding.

This submissh draws upon the resutts of the

research which has been carried out under th i s progmm t o

date, mrd other relevant resemch avaiihbte to tke Bureau, i n

a considemtion of issue8 similar to those dealt with i n the

Austm Lian Meat Board report.

The paper conmences with a stmnvrry o f the findings

of analyses of the economic factors influencing price

formatia i n the Australian meat market. I t next considers

the geneeds of the present tocat and wortd meat p i c e

situation a d azpbree the Likelihood of i t s c a t i n w e .

Relevant aspect8 of the 8tPtcotuPe and conduot of meat

marketing ore then briefly reviewed. Against the background

of these three 8 e Q t ~ n 8 , the finat pt of the subnieswn

appraises i n gensrat terma some of the economic implications

of various meohanism which could be used t o influenos pricea.

The submsaia i s not intended t o provide a

prescription for influencing meat prices. Nor does it attsmpt

to reach any judgment as t o whether or not aotwn to influence

meat prices i s required; mther it aims to interpret the

findings of economic research into the meat market i n or& to

identi& the major etements undsrtying the recent rises i n

meat prices and to c h i & some of the ecomndd impZiccctions

of atternutive methods of influencing the market. Limltsd

attention i s given to commmity wetfars iesuee, iwome

transference, and the iqticatias for A ~ 8 t m t k ' 8 tmde

rek t ions . I t i s understood that some of t h e c o n o m w i t 2

be given more detcrited caeideratwn GI other sutnriseiona.

I: FORMATION OF MEAT PRICES

The following sect ion discusses i n general terms the major

factors influencing the movements o f r e t a i l meat pr ices i n Australia and

the pr ices paid t o the producer for h i s livestock. Its aim is t o provide

an out l ine based on the r e s u l t s of research i n the BAE and elsewhere of

the process of pr ice formation i n the meat market, and t o give t h e

necessary background t o an examination of recent meat pr ice movements and

t o an economic evaluation of a number of pr ice s t ab i l i s a t ion proposals

which a re considered l a t e r i n t h i s submission.

Although t h e re la t ionship between pr ices of l ivestock at the

saleyard level and t h e r e t a i l p r i c e f o r t h e related meat i n Australia may

be affected by changes i n marketing arrangements and marketing cos ts (as

discussed on page 6 and i n Part 111) movements i n pr ices at both ends o f

the marketing chain a r e primarily determined by:

(a) t h e level o f demand including, where relevant, t h e level

of export demand, and domestic consumer demand fac tors

such as prices of subs t i tu t e meats, movements i n incomes,

population and changes i n t a s t e s ; and

@) t he level of supplies.

The r e l a t i v e importance of the various demand and supply f ac to r s

var ies subs tant ia l ly between d i f f e ren t meats. The influence of export

demand i s par t icu lar ly marked f o r beef and mutton a s about one ha l f o r

more of the output o f each of these meats has been so ld overseas i n recent

years.(l) Thus, demand f o r these meats i n the major importing countries

r e l a t ive t o local supply has a s igni f icant impact upon the level of pr ices

on the Australian market. For chicken meat and pigmeat where only very -

(1) See Appendix Table I.

small proportions of output a r e exported, local pr ices a re largely

unaffected by changes i n world t r ade pr ices . For Zmnb, where the re i s a

seasonal peak o f exports, local pr ices are , during t h i s peak, heavily

influenced by export prices; f o r the remainder of the year, when exports

are r e l a t ive ly minor. world t rade pr ices have a grea t ly reduced impact on

domestic pr ices .

The r e l a t i v e impact of pr ices of subs t i tu t e meats upon demand

for a pa r t i cu la r meat var ies with the importance of tha t meat i n t h e

overall Australian meat consumption pa t te rn (see Appendix Table II).(2)

For beef, which is t h e major meat i n the Australian d ie t , movements i n

prices of other meats have a r e l a t ive ly l e s s s ign i f i can t impact on demand

than for the minor meats, such as chicken meat and pigmeat. There is some

evidence t h a t , t h e demand fo r sheepmeats is influenced subs tant ia l ly by

changes i n beef p r i ces but is not strongly affected by changes i n pr ices

for pigmeats and chicken meats.

Population growth has had a f a i r l y consis tent posi t ive influence

on t h e t o t a l demand f o r meat. However, Australian per caput consumption,

which is high by world levels, has shown l i t t l e t rend f o r over a decade

and is considered unl ikely t o r i s e s ign i f i can t ly i n association with

fur ther increases i n incomes. Expenditure on t h e preferred cuts and on

marketing serv ices such a s packaging may expand without any overall

increase i n consumption. Changes i n t a s t e s which a l t e r the r e l a t i v e

(2) This is supported, for example, by the findings of Pender and Emood, who estimated t h a t the level of supplies of meat other than pigmeat, s ign i f i can t ly affected pigmeat consumption and prices , while pigmeat supplies had v i r tua l ly no influence on domestic consumption of other meats (R.W. Pender and Vivienne Erwood, 'Developments in the Pig Industry1, $tmterZy Review of AgricuZtauuZ Ec~t~)mics, BAE, Vol.XXII1, No. 1, January 1970, p. 32). Also Gruen e t a1 estimated t h a t the pr ice of beef had a s igni f icant impact on the domestic consumption of both lamb and mutton but did not e s t ab l i sh a s igni f icant re la t ionship between the l a t t e r and beef consumption (F.H. Gmen and others, Long Tenn Projectiom of AgricuZktmZ Supply and ~entznd, Monash University, 1967, pp. 4-49).

s t rength of demand f o r d i f f e r en t meats may occur through changes i n l i v ing

pa t te rns and i n t h e e thnic or ig ins of t h e population. Ilowever, t h i s group

of fac tors - income, population and t a s t e s - have an e s sen t i a l l y long term impact and a re not c losely r e l a t ed t o t h e shor t term pr ice movements

observed i n t h e market.

Total supplies of meat i n Austral ia a r e determined by domestic

production. Only i n exceptional circumstances is meat imported i n t o

Australia. The p r i ce s of a l l meats a r e affected by changes i n t h e leve ls

of t h e i r respective supplies. In addi t ion, due t o t h e subs t i t u t ion

e f f ec t s already discussed, t he leve l of suppl ies of beef and sheepmeats

a f f ec t s t h e demand f o r pigmeat and poul t ry meat.

Changes i n the level of domestic supplies of meats are , i n turn,

influenced by a wide range of fac tors , including the p r i ce for t h e meat

i t s e l f , seasonal conditions and r e l a t i v e re turns t o producers from

a l te rna t ive products. In t h e case of mutton and lamb a complementary

re la t ionsh ip e x i s t s with wool production. Factors a f fec t ing cos t s and t h e

general p r o f i t a b i l i t y of production (e.g. t h e leve l of feed gra in cos t s a s

they influence output of pigmeat and poultry meat) a l so have an impact on

supplies.

One major pa r t of t he present BAE research program is aimed a t

measuring t h e impact of changes i n these main fac tors on t h e pr ices f o r

meat on t h e Australian market. Studies have been designed t o provide an

estimate of t he change i n pr ice which follows a given change i n one of t h e

pr ice determining var iables , such a s export pr ices , and t o ind ica te t he

r e l a t i ve importance of each of t h e var iab les influencing pr ice movements

f o r each meat. A l l meats have been the suhject of investigation, h u t the

bulk of the work thus fa r completed r e l a t e s t o factors a f fec t ing saLeycrpd

prices f o r lambs and c a t t l e .

Preliminary analysis suggested t h a t although saleyard pr ices f o r

l ivestock and r e t a i l p r i c e s f o r t h e relevant meat tended t o move together

over time, there were su f f i c i en t d i f fe rences i n t h e p r i ce formation

process a t t h e respect ive leve ls i n t h e market t o warrant separate

ana ly t ica l treatment.

The reasonably c lose r e l a t i onsh ip noted between major movements

i n r e t a i l p r i c e s and saleyard p r i ce s i nd ica t e s t h a t many of t h e f a c t o r s

which a f f e c t changes i n the l a t t e r a l so p lay an important r o l e i n

influencing va r i a t i ons i n r e t a i l pr ices . Re ta i l p r ices a r e believed t o be

lnore s ens i t i ve t o f a c t o r s a f fec t ing consumer demand ( t a s t e s , etc.) than

saleyard pr ices . Also, it is claimed t h a t they a r e affected by r e t a i l e r s '

p r ic ing p rac t i ce s , which a re f requent ly s a id t o include varying t h e . wholesale t o r e t a i l margins f o r d i f f e r en t meats t o maintain more s t a b l e

re la t ionsh ips between pr ices of t he var ious meats than occurs a t t h e

wholesale leve l . (3) However, t h e r e l a t i onsh ip over a longer period

between t h e l eve l s o f saleyard and r e t a i l p r i ce s indicates t h a t such

measures a r e not able t o counteract i n d e f i n i t e l y t he basic demand/supply

pressures on pr ices , and suggests t h a t t h e f ac to r s discussed below i n

r e l a t i o n t o l ivestock pr ices a t the saleyard leve l a l so determine much of

t h e movement i n r e t a i l meat pr ices . Some addi t iona l aspects of market

s t ruc ture , conduct and eff ic iency a r e considered fur ther i n Part 111.

Analysis o f Lamb P r i c e Formation

Production, p r i ce s and exports o f lamb show a very d i s t i n c t

seasonal pat tern. (4) Production and exports reach a marked peak i n t h e

(3) This i s sue was discussed on a number of occasions during the Brewer Committee Inquiry (Parliament of !

October-December period, while producer pr ices a re a t t h e i r highest level

i n the winter months and f a l l t o a trough i n t h e peak production period.

Thus, f o r nine months of the year lamb is produced principal ly fo r the

home market while overseas markets tend t o increase substant ial ly i n

importance i n the spring and ea r ly summer.

The r e su l t s of an econometric analysis of pr ice movements ON

the Victorian lamb market fo r the period 1955 t o 1970 a re summarised i n

t h e following table . A d i s t inc t ion was made between t h e pr ice formation

Table No. 1 PERCENTAGE CHANGE I N SALEYARD PRICE OF LAMB

ASSOCIATED WITH A 1% CHANGE I N THE SPECIFIEO VARIABLE -

Variable Export Period Off-season (October-December) (January- Sept ember)

Supplies of lamb - 0.34** Supplies of mutton - 0.07 Export pr ice + 1.00*** Per caput consumption of lamb i n Victor ia - 0.26

Significance levels: *** 1%; ** 5%; * 10% Source: R. Bain 'The Influence of Timing of Production on Total Revenue

t o t h e Australian Prime Lamb Industryt, &uar te r t y Ratiew of Agri~ut tu . t?~Z E007101&8, ME, July 1972, pp. 223 - 230.

processes i n the export season and the off-season and movements i n the

variables considered were found t o be associated with over 90% of t h e

observed movements i n lamb pr ices during the period considered. The

resu l t s supported t h e hypotheses tha t :

( i ) export pr ices play a dominant ro le in determining pr ice

movements i n the flush spring production season and

( i i ) i n the off-season, domestic market influences, par t icu lar ly

the supplies o f lamb and the level of domestic preference fo r

lamb (as measured by consumption) have a r e l a t ive ly more

important impact on pr ice movements.

Analysis o f Movements i n Beef C a t t l e Auction Pr ices

Factors a f fec t ing auction pr ices fo r beef c a t t l e i n the period

1962 t o 1971 have been analysed for a l l S ta tes except Western

Australia.(S) Although there is some seasonality i n the beef industry(6)

it was not su f f i c i en t t o warrant separate analyses by season a s was

required for lamb prices i n Victoria.

This analysis ident i f ied three major influences on beef c a t t l e

pr ices ; namely the pr ice of Australian beef on the main export markets,

t he level of Australian supplies of beef, and the pr ices of sheepmeats.

Over the period of t h e study 80% o r more of t h e observed var ia t ion i n beef

c a t t l e p r i ces i n each State was found t o be d i r ec t ly o r indi rec t ly

associated with movements i n these factors .

Throughout most of t h e 1960s the United States market was t h e

major export market f o r Australian beef, followed by t h e United Kingdom

(Appendix Table 111). In general it was shown tha t a lc per l b movement

i n the U.S. pr ice f o r imports of beef f r o m Austral ia was associated with a

change of approximately 0 . k per l b i n the saleyard p r i ce of c a t t l e i n a l l

States . The United Kingdom pr ice was also shown t o be important but its

impact was l e s s than tha t of t h e U.S. price.(7)

m e second major fac tor ident i f ied as influencing pr ice was the

level o f Australian production of beef. The percentage changes i n

(5) C.Papadopculos, 'Factors Determining Australian Saleyard Prices f o r Beef Cat t le1 , BAE, Quarterly Review of AgricuZtwal Economics, July 1973 ( a t press).

(6) BAE, Seasonality in the AustmZicn Beef Industry, Beef Research Report No. 7, May 1970.

(7) Over most of the period taken f o r t h i s analysis the Japanese market had only a minor influence on Australian prices. In recent years Japan has become more s igni f icant i n Austral ia 's beef t rade and its impact has been considered in the analysis of market prospects l a t e r in t h i s submission.

saleyard pr ices f o r beef c a t t l e i n a th ree month period associated with a

1% increase i n supply of c a t t l e i n t h i s period fo r eacfi. o f t h e States: were . , - . . ' ? , ,.. , i ,

estimated a s follows:

New South Wales - 0.41 Victoria - 0.44 Queensland - 0.05 South Austral ia - 0.26 Tasmania - 0.39 The low f igure fo r Queensland ind ica tes t h a t i n t h i s important

producing Sta te , saleyard pr ices were affected only very marginally by

changes i n t h e volume of c a t t l e being sen t f o r slaughter. A r e l a t i v e l y

large proportion of Queensland's production i s exported t o t h e United

States and t h e major fac tor determining pr ice was t h e level of export

prices, par t icu lar ly t o t h e U.S. In o ther States , while t h e impact of

export p r ices was no l e s s than i n Queensland, t h e e f f e c t s of loca l supply

changes were noticeably higher and a l l . o f approximately t h e same

magnitude. I t is in te res t ing t o note t h a t t h e supply e f f e c t f o r Victorian

lamb w a s very much the same during t h e export season but was much grea te r

i n t h e January-September off-season, when exports were seasonally very

low.

Competitive fac tors on t h e domestic market, a s re f lec ted i n

changes i n sheepmeat prices, were also shown t o have some influence on

beef auction prices. For s t a t i s t i c a l reasons it w a s not possible t o

measure separately t h e e f fec t o f t h e domestic demand fac tors (such as

incomes and population movements) upon beef c a t t l e p r i ce movements.

Generally, however, it is believed t h a t they have exerted a steady upward

pressure on pr ices over the past decade, although t o a much lesser extent

than the r i s i n g export prices.

Mut ton , Pigmeat and Poultry Meat

There is l e s s empirical evidence concerning the r e l a t ive impact

of the various supply and demand fac tors affect ing the pr ices of mutton,

pigmeats and poultry meats. The information ava i lab le suggests (and is

given added credence by the analyses of beef and lamb prices) tha t ,

because o f t h e consis tent ly high proportion of mutton output which is

exported, t h e major f ac to r determining movement i n the saleyard pr ice of

adult sheep is t h e export pr ice f o r mutton. However, changes i n the

domestic supply of adul t sheep f o r s laughter a re also believed t o be

important, par t icu lar ly i n recent years when numbers have fluctuated

sharply i n response t o changing wool p r i ces and seasonal conditions.

Relative pr ice movements fo r beef and lamb a r e also believed t o influence

domestic demand fo r mutton but t h e i r e f fec t is probably l e s s marked than

the export pr ice o r supply effects .

By contrast , t h e high level of dependence on the domestic market

of both pigmeat and poultry meat suggests t h a t local supply would be a

major factor influencing t h e i r pr ices , a t l e a s t t o t h e degree estimated

f o r off-season lamb. The r e l a t ive ly small share of the t o t a l domestic

market f o r meat held by these two meats suggests fur ther t h a t t h e pr ices

of other meats could also be an important pr ice determining influence.(8)

(8) See, f o r example, Pender and Erwood, op. cit. and S.J. Paton. 'A Study of the Demand for Chicken Meat in Australia1, Research Seminar Paper, University of New England, October 1970.

11: GENESIS OF THE CURRENT I4EAT PRICE

SITUATION AND LIKELIHOOD OF ITS CONTINUANCE

The aim of this part of the submission is two-fold; firstly,

to utilise the information already presented on the price formation

process in an examination of the recent upsurge in Australian meat

prices, and, secondly, to consider the likely future trend in meat

prices, as this has direct relevance to any stabilisation measures that

might be considered. The discussion is confined to beef, lamb and mutton

as these meats have shown the most dramatic increases in prices recently

and it is felt that they will be of particular interest to the Committee,

Movements in retail and saleyard prices for these meats since

the mid-1960s are illustrated in Appendix Table IV.(9) As indicated in

the Australian Meat Board Report, meat prices did not increase at a

noticeably faster rate than the costs of other goods and services over

the period as a whole; in fact, retail prices for sheepmeats did not

rise over the years to 1971-72. The really substantial increases which

have stimulated attention occurred in the March quarter of this year.

Retail prices rose by up to 23% from the level in the December quarter,

with sheepmeats showing the greatest rises. The increases at the

saleyard level were even more marked, with particularly sharp rises

occurring between January and Piarch (88% for mutton, 41% for lamb and 33%

for beef). Saleyard prices of beef and mutton eased in April, but were

still at high levels, while lamb prices continued to rise.

(9) Detailed statistics on meat prices were presented on pages 2 and 3 and in Appendix No. 3 of the Australian Meat Board Report, and further details are contained in the Bureau's StatisticaZ Handbook of the Meat Industry. 1973.

With t h e a i d of t h e econometric s tudies of the Australian

market described i n Part I, it is possible t o make estimates of the

r e l a t ive importance of the various fac tors influencing the recent pr ice

changes a t t he saleyard level.

Beef - The quar te r ly econometric model of the beef market deals with

each S ta t e individual ly but it was decided t o confine the discussion i n

t h i s submission t o an analysis of the N.S.W. market. A l l S ta tes

cqnsidered i n the or ig ina l study, except Queensland, demonstrated

reasonably similar responses i n p r i ces t o causal fac tors and so the

conclusions reached f o r New South )Vales should apply i n the main t o most

of Australia. Saleyard pr ices i n Queensland a r e much l e s s influenced by

variat ions i n loca l supplies and the fac tors discussed i n re la t ion t o

recent pr ice r i s e s on overseas markets apply with even greater force t o

t h i s State .

The estimates below r e f e r t o pr ice increases i n the March 1973

quarter compared with the previous 'quarter. The hiarch quarter includes

the months when the upswing in pr ices w a s most pronounced, February and

March. However, t he average increase f o r t h e whole quarter was not as

marked because of lower pr ices i n January. The s e r i e s used fo r saleyard

pr ices i n N.S.W. i n t h e model (which is s l igh t ly d i f fe rent from the

s e r i e s shown i n Appendix Table I V ) recorded an increase of 2c per l b or

6%% i n the March quarter. Vir tual ly a l l of t h i s change is 'explained' by

the model as follows:

- a 13% r i s e in beef which is estimated t o have had a negative e f fec t on saleyard pr ices of

2 . 8 ~ per lb ;

- a 28% increase in tcunb prices which is estimated t o have tiad a posi t ive e f f e c t of I .2c per lb;

- a 11% r i s e in e m r t p i c e s for beef which had a pos i t ive e f f ec t of 3 . 5 ~ per lb.

In summary, t he depressing e f f e c t of increased supplies was

more than o f f s e t by increased export p r ices and higher saleyard pr ices

f o r lamb.

Preliminary estimates, which compare pr ice developments i n the

. ~ e b r u a r y - h i 1 quar ter with those i n t he previous three months, show t h a t

the influence of p r ices paid fo r beef i n overseas markets, although

posit ive, was considerably decreased and was overshadowed by t h e stronger

influence i n domestic saleyard pr ices f o r lambs which, a s mentioned

e a r l i e r , continued t o rise.

Lamb - The econometric model f o r t he lamb market re fe r red t o e a r l i e r

i s designed t o dis t inguish between two periods i n t he year corresponding

t o the export season (taken a s t h e December quar ter) and the off-season

period (January-September). Recent p r i ce increases have occurred i n t h e

f i r s t few months of t h e off-season period and no estimates of the various

e f f ec t s can be provided using t h i s model u n t i l data a r e ava i lab le f o r t he

e n t i r e nine .month period ending September 1973. I n general terms,

however, t he r i s e of about 48% i n saleyard pr ices f o r lamb i n t he three

month period t o April over t h e previous th ree months (see Appendix Table

I V ) i s believed t o be largely due t o t h e following:

- a reduction i n Australian Zmnb supplies of 31%; - a drop of 18% i n Australian mutton supplies;

- a r i s e o f 2% i n export pr ices f o r lamb (as indicated by the Australian currency equivalent of quotations on the

major U.K. market).

These supply variat ions a re considerably grea ter than the

normal seasonal var ia t ions a t t h i s time of t h e year. When they a r e

considered i n r e l a t ion t o the various estimated influences on lamb pr ices

during the off-season given i n Table No. 1 - par t i cu la r ly t h e high response t o var ia t ions i n lamb supplies - it may be concluded t h a t t h e marked decl ine i n lamb production over the period considered was the

major f ac to r contributing t o the increase i n lamb prices a t auction and

a l s o a t t h e retail level. A reduction i n suppl ies of mutton and a s l i g h t

rise i n export pr ices f o r lamb a l so had a pr ice increasing ef fec t .

Mutton - Prices f o r slaughter sheep a t pr inc ipa l saleyards i n Austral ia

increased by 68% in the quarter ended April 1973 compared with t h e

previous three months (see Appendix Table I V ) . Although no su i tab le

econometric model i s avai lable t o ahalyse t h i s marked change, it was

indicated i n Part I t h a t t he major f ac to r determining variat ions i n

saleyard p r i ces of adul t sheep fo r slaughter is the export pr ice f o r

mutton. In t h i s respect, pr ices paid f o r mutton i n Japan. Austral ia 's

most important overseas market f o r mutton, during February and March were

over 60% higher than i n t h e f i r s t two months of t h e quarter ending

January. Pr ice r i s e s i n Australia were fu r the r stimulated by the 188

decl ine i n mutton production - i n response t o continued nigh wool pr ices and an improvement i n seasonal conditions - and increases in beef and lamb prices.

The preceding discussion has emphasised the importance of

reduced production of sheepmeats in Australia and improved overseas

demand in influencing the recent sharp upsurge in prices of the three /

major meats. It is pertinent, therefore, that consideration be given at

this stage to underlying causes of these developments, before an

assessment is made of possible future movements in prices.

Changes in Australian Sheemeat Supplies

Consistently high prices received for slaughter cattle cormpared

with generally declining returns from wool have attracted resources into

beef production in Australia for some time and in particular .since the

mid-1960s. Although wool prices were at depressed levels in the latter

part of the 19605, sheep numbers continued to rise to a record 180m in

March 1970 and declined only slightly from this level in the following

year. The drop in the wool market which was most marked in 1971.

together with deteriorating seasonal conditions, triggered off a severe

reduction in sheep numbers and caased major movement of resources out of

sheep and wool production into expansion of the cattle herd.

A dramatic recovery in the wool market occurred in the later

months of 1972 but widespread drought continued to prevail and as a

result slaughter rates remained high(l0) and Iambings for the season were

very much below average. The sheep flock is estimated to have fallen to

142m at the March 1973 census, the lowest level since 1956.

In February and March 1973 drought relieving rains over most of

the continent encouraged many producers to withhold stock from the market

(10) In the nine months ended March 1973 adult sheep slaughterings were 17% below a year earlier and lamb slaughterings %ere down by 14%. However, slaughter rates, i.e. slaughterings as a percentage of flock numbers were down only marginally from the previous year and were, in fact, above average slaughter rates observed over the past decade.

and stimulated a strong demand for store and breeding stock. This

resulted in the sharp declines in sheep and lamb slaughterings previously

noted and some easing in the previous marked rise in the turn-off of

cattle for slaughter. (11)

Recent Developments in Major overseas Markets for

Austral ian Meat

The major markets for Australia's meat exports have been the

United States, the United Kingdom and Japan (see Appendix Table 111). A

coincidence of very strong demand from all three markets has resulted in

the buoyant export situation for Australian meat.

In the United States prices for all meats rose markedly in the

March 1973 quarter compared with the previous December quarter. Saleyard

prices for fed steers and hogs showed the greatest increase over this

period. A rise of 148 in the retail price of beef following steady

increases over a long period prompted the U.S. Administration into a

series of measures to control meat prices:

- In June 1972 the President suspended the meat import quota then in force; this suspension was extended into

1973;

- In March 1973 a ceiling was placed on retail prices of beef, pork and lamb.

In addition to these two measures a nationwide boycott of meat in the

first week in April was called for by various consumer organisations.

Retail and saleyard prices have since eased.(l2)

The reasons for the price increases are, in part, associated

with increased consumer demand reflecting the upturn in economic (11) Production of beef and veal in 1972-73 is expected to be up by 26%

on 1971-72. - -

(12) A more detailed presentation of the recent price increases is provided in Appendix Tables V and VI.

activity, the effects of welfare programs on income distribution, and a

small growth in population. On the supply side, the quantity of beef

available for civilian consumption was down by 5.6% in the March quarter

compared with the previous December quarter. Not only was domestic

production reduced in the March quarter but imports of beef were also

considerably lower and average levels of stock holdings by firms

increased between the two periods - evidence of the reaction by traders to the developing price situation.(13) Furthermore. production of pork

fell by 7% over the period in question, due largely to a trough in the

U.S. hog cycle. The resulting dramatic increase in hog prices had a

marked effect on further stimulating the demand for beef, a close

substitute in the U.S.

Since January 1973 domestic supplies of beef have been affected

by several unusual events such as severe late winter weather followed by

spring flooding which caused a considerable number of deaths in feedlots

and increased marketing difficulties, a ban on the use of DES growth

stimulant for cattle and increases in feed costs. Also, the fact that

cow slaughterings have fallen slightly as ranchers attempt to build up

herds, meant that production of processing beef in the U.S. was down thus

causing increased demand for Australian exports of manufacturing beef.

The increases in prices for Australian lamb and mutton exports

to the U.S. stem primarily from flow-on effects of developments in the

U.S. beef and hog markets.

In Japan rapidly rising incomes approximating 8%-10% per annum

in real terms, changing dietary patterns favouring a rapid increase in

meat consumption, particularly of beef, from currently low levels, and

increases rn population are the basic factors underlying the keen demand (13) Further cvidcnce of this is contained in recent market reports for

prsncipal saleyards in tile :!.S., wiuch state that forward-selling at several centres for as.much as 6 to 7 weeks delivery was a major force in t:ie 'narket.

for beef.(l4) A s Japan's agr icu l tura l Structure prevents large sca le

increases i n beef output from domestic sources, demand f o r imports is

expanding very rapidly. The quota recent ly announced f o r the first half

year of 1973-74 (April-March year) was 70,000 tonnes, almost equal t o the

quota fo r t h e f u l l 1972-73 year (71,500 tonnes). Nevertheless. t o t a l

supplies avai lable t o Japanese consumers have not been su f f i c i en t t o curb

p r i ce r i s e s i n recent months.

In t h e united Kingdom pr ices of Australian beef were 48% higher

i n the f i r s t four months of 1973 compared with t h e corresponding period a

year ea r l i e r . Lamb pr ices were a l s o s ign i f i can t ly greater.( lS)

The main f a c t o r influencing neat p r i ces i n t h e U.K. has been

t h e substant ia l reduction in supplies of beef and lamb avai lable t o U.K.

consumers. Domestic production f e l l considerably and there was a l so a

decline i n ne t imports. Although imports of beef and veal i n t o the U.K.

increased i n the first three months of 1973 compared with 1972, exports

of beef and veal and l i v e c a t t l e , mainly t o more lucra t ive markets on t h e

Continent, rose markedly. Furthermore, l i v e c a t t l e imports from t h e

I r i s h Republic, which usually cant r ibu te s ign i f i can t ly t o U.K. supplies,

decreased by 42%.

Reasons for pr ice increases f o r beef i n the EEC were associated

with r i s i n g demand concurrent wi th .a cyc l ica l decline i n output which was

accentuated by a Common Market Policy i n 1969-70 t o subsidise t h e

slaughter of small dairy herds (10 cows o r fewer). Although discontinued

a f t e r June 1970, t h i s policy had a s izeable impact on subsequent calvings

and beef production. In the second ha l f of 1972 beef and veal supplies

were down by near ly 18% from a year earlier.

(14) A de t a i l ed account of the Japanese market f o r beef i s given in P.B. Prosser, 'The Market f o r Beef i n Japan1, Quarterly Rev iew of A ~ c u z t u m Z Economics, Vol. XXVI, No. 2, April 1973.

(15) See Appendix Table V.

Future Prospects

In assessing future prospects for the meat markets a distinction

is made between the short tern which is defined as the period covering

about a year or so ahead, and the longer term which refers to the period

towards the end of the current decade. Due to the impossibility of

predicting the occurrence of irregular influences in the market, no

assessments have been made of developments in the more inmediate future.

Recent dramatic changes in Australian and world agriculture

make any assessment of future prospects. particularly difficult at this

time. Events such as the general upswing in world economic activity, a

series of currency crises, particularly adverse seasonal conditions in a

number of countries. the enlargement of the EEC, some apparent changes in

consumer behaviour and the increased emphasis on 'consumerism' and

'quality of life issues', have affected the market for a number of

Australian agricultural commodities. The extent to which these events

will bring about fundamental changes in prwiously established long term

trends in the markets for agricultural and, more particularly, livestock

products is extremely difficult to assess. Moreover, as always, the

outlook is very much dependent on such imponderables as the weather and

changes in the production and trade policies pursued by the major trading

countries. Thus, any forecasts or projections of production and prices

for livestock commodities made at this particular time must be qualified

accordingly.

While it is difficult to make an adequate assessment of how long

prices will remain around their current high levels, available evidence

suggests that there is little likelihood of any major reductions in the

short term, apart from nomal seasonal variations such as the'decline in

lamb prices during t h e spring flush. A fur ther large expansion is

expected i n Australian beef production, but sheepmeat output could decline

sharply and the re is no apparent reason why overseas demand for meat

should not remain reasonably firm.

The previous sharp expansion i n t h e c a t t l e herd tapered off

considerably i n 1972-73, and information col lected recent ly from producers

during the BAE Beef Ca t t l e Industry Survey indica tes a continued slower

growth i n c a t t l e numbers i n the coming year with an associated fur ther

sharp increase i n turn-off fo r slaughter. I t is estimated tha t beef

production could r i s e by a s much as 15% i n 1973-74 following a 26% r i s e i n

1972-73.

Sheepmeat production during t h e coming year w i l l have t o be

derived from the smallest national flock s ince 1956. Moreover, with wool

pr ices a t very high leve ls and renewed confidence i n t h e industry,

producers might be expected t o attempt t o rebuild t h e i r flocks, i n which

case slaughter r a t e s would decline considerably from t h e leve ls of recent

years. In these circumstances, it is estimated t h a t t o t a l sheep and lamb

slaughterings could decline in 1973-74 by a s much as 40% from the record

level of 53m head i n 1971-72.

World demand fo r meat w i l l continue t o be strongly influenced by

the s i tua t ion f o r beef, t he preferred meat on most markets. For a decade.

beef pr ices have shown a de f in i t e upward t rend on major world markets.

This has been t h e r e s u l t of world demand, stimulated by population and

income growth and changing tas tes , growing f a s t e r than supplies. Price

increases i n recent months, however, have been well above the long term

trend and, a s discussed previously. have been a t l e a s t pa r t ly influenced

by several essen t ia l ly short term fac to r s such as t he inclement weather i n

t he U.S. and temporarily reduced suppl ies of other meats, and have been

accentuated by t h e react ions of t r ade r s t o t he apparently developing

s i tuat ion.

1 Data inadequacies make shor t term predictions of t h e world beef i I

s i t ua t ion hazardous, pa r t i cu l a r ly i n view of the impact which r e l a t i v e l y J I small changes i n supply/demand balances i n a few major trading countr ies

can have on world t rade because of t h e small proportion of world output

traded internat ional ly . Although it is l i ke ly tha t p r ices w i l l continue

t h e i r general longer term upward trend, t h e extent t o which they might

recede from t h e i r current unusually high leve ls within t he short term is

unclear.

A s regards t he longer t e n t h e sharp reduction i n t h e Australian

sheep flock over t h e past two years w i l l have important implicatipns f o r

supplies of sheepmeat. Should producers attempt t o bui ld up f lock

numbers, supplies of lamb and mutton w i l l be much lower f o r several years

than i n t he l a t e ' s i x t i e s and ear ly 1970s.

On the other hand, a major increase is projected i n Aus t ra l ia ' s

beef production over the next few years and output could be about 2m tons

by 1980. Since the mid-1960s there has been a marked expansion i n t h e

national c a t t l e herd, pa r t i cu l a r ly i n t h e more c l imat ica l ly favourable

southern pa r t s of Australia, t o t a l numbers r i s ing from 1 7 . h i n 1966 t o an

estimated 2% i n March 1973. With grazing pressure being somewhat reduced

by fewer sheep, c a t t l e numbers should continue t o increase a s should

production.

On international markets, demand for beef is likely to continue

to grow strongly in the longer term reflecting both population and income

growth. The effects of rises in personal disposable incomes will

nevertheless differ between countries; in high meat consuming countries

such as the United States, rises in income will tend to have a somewhat

reduced influence on the quantity of meat demanded compared with the

'sixties although the expenditure on meat, particularly on preferred cuts,

may continue to rise strcngly (see Part I p. 4 . The U.S. Department of Agriculture projects a rise of about 151b per person in beef

consumption by the end of the decade. In relatively low beef-consuming

countries, Japan and Europe particularly, rising incomes will have a

considerable effect on the quantity of meat demanded and changing tastes

in these countries too, will be an important factor influencing demand.

A factor which could have an important depressing effect on

demand for beef, however, is the development of synthetic meat

substitutes. The marketing of these commercially is still at a very early

stage and it is almost impossible to make any firm projections of the

likely impact of them on future demand for meat.(l6) Certainly the present

high meat prices are providing added stimulus to the further development

of synthetics. Nuch of the basic technology needed for commercial

production of them is already well established. However, the textures and

flavours.of meats are very difficult things to simulate successfully and

although considerable advances have been made in this field, with some of

the more expensive synthetic meats-being. reported to be quite tasty, the

great majority of consumers still seem to prefer the natural product. For

(16) See J.L. Sault and J.B. Gale, 'A Review of Developments in Synthetic Meats', Quarterly Review of Agr icu l tu~Z Economics, October 1970.

t h i s reason the synthet ics a r e mainly being used as p a r t i a l subs t i t u t e s

f o r meat i n processed meat products where they reduce cos t s s ign i f ican t ly .

They a r e expected t o have t h e i r g rea tes t impact i n t h i s sec tor o f . t h e

market over the next few years. I t is t o t h i s area t h a t a major

proportion of Australian beef and mutton exports is directed.

On t h e supply s ide a number of other countries besides Austral ia

have recently shown signs of herd expansion. New Zealand is current ly in

t he midst of a new expansion phase. In the United S ta t e s during 1972 beef

cow numbers increased by 6%. t he r a t e of he i fe r replacement rose by 7% and

there was a 17% decrease i n veal production. Continuing high beef pr ices

should encourage fur ther herd expansion thus providing the po ten t ia l f o r

future production increases. In Argentina production f e l l markedly i n

1971 but numbers and production rose l a s t year and there a r e several

indications t h a t production could expand considerably i n t h e years ahead.

Domestic demand, however, is very strong and because of t he presence of

foot and mouth disease, supplies from Argentina a r e excluded from

Austral ia ' s major markets - t h e U.S. and Japan. Continuing high beef pr ices should encourage movement of resources in to beef production i n a

number of other countries although in many areas there a r e a l so

considerable r e s t r a i n t s on large sca le expansion i n production; disease

problems, farm st ructure , lack of su i tab le grazing land, inadequate

transport and slaughtering f a c i l i t i e s and, par t icu la r ly in il'estern Europe,

l inks with t he dairy industry which has suffered from pe r s i s t en t surplds

supply problems.

Given the possibIe developments i n synthet ic meats and the

l i ke ly build up i n supplies i n a number of overseas countries it i s

unl ikely t h a t world beef p r i ce s w i l l , over a longer term, be maintained

above the t rend of t h e pas t ten years. This projected trend i n world beef

p r i c e s would have a strong influence on world meat p r ices generally and

w i l l a f f e c t p r i c e s f o r l ivestock i n Austral ia .

Mutton p r i c e s seem unl ikely t o be maintained a t t h e i r current

very high l eve l s over t h e longer term because t h i s meat f inds i t s main

market a s a r e l a t i v e l y cheap meat f o r manufacturing purposes. Continued

very high p r i ce s f o r lamb i n t he off-season could lead t o imports from New

Zealand which would have a moderating e f f e c t on p r i ce levels .

I n swronary, it is unl ikely t h a t t he re w i l l be any major

reduction i n meat p r i c e s i n Austral ia over t h e next year apar t from t h e

normal seasonal var ia t ions . Over the longer term, i.e. t h e period towards

t h e end of t h e decade, Australian saleyard p r i ce s for beef a r e projected

t o increase more i n l i n e with t h e t rend of t h e pas t t en years r a the r than

i n accordance with t h e recent unusually sharp r i s e s . Sheepmeat pr ices ,

p a r t i c u l a r l y those f o r mutton, may well recede from t h e i r current very

high l eve l s over t h e longer term, although it s e a m unl ikely t h a t they

would r e tu rn t o t h e very low leve ls of a year o r so ago.

- 25 .

111: MARKET STRUCTURE, CONDUCT AND EFFICIENCY CONSIDERATIONS

It has been s t a t ed above (p.6 ) t h a t analyses of p r ice movements

i n t he meat and l ivestock markets indicated i n most ins tances a reasonably

c lose associat ion between major changes i n saleyard and r e t a i l prices.

The aim of t h i s P a r t is t o explore t h i s t op i c i n greater d e t a i l

i n an e f f o r t t o determine the r o l e of marketing costs i n t he r e t a i l p r ices

f o r meats i n Australia.

An increasing body of information on the s t ruc tu re of meat

markets has recent ly become ava i lab le from t h e various enquir ies conducted

by S ta t e Governments i n t o meat marketing, and f r o m t h e recent ly

in tens i f ied research invest igat ions of t h e BAE, the Australian Meat Board

and various un ivers i t i es . While t h i s information i s by no means

suf f ic ien t ly rigorous t o provide t h e bas i s f o r firm conclusions on every

aspect of t h e market, it nevertheless o f f e r s r e l i a b l e pointers on a number

of important issues.

It has been c l ea r ly established t h a t marketing cos t s a r e a major

component of t he r e t a i l p r i ce of meat.(l7) This suggests tk't changes i n

costs exer t an important influence on movements i n r e t a i l pr ices . In t he

recent period of sharp pr ice rises,however, there i s l i t t l e evidence t o

suggest t h a t t o t a l marketing cos t s have r i s e n sharply; some sec t ions o f

the t rade i n f a c t a s se r t t h a t margins have generally f a l l en . Although

these claims remain t o be substant ia ted, comparison of t rends i n saleyard

(17) For example, it has been estimated t h a t from about 40% t o 70% of consumers' expenditure on beef and sheepmeats goes t o cover slaughtering, processing, wholesaling, r e t a i l i n g and r e l a t ed costs while the balance i s returned t o t he producer f o r h i s l ivestock. (Parliament of New South Wales, op. cit. Vol. 1 p. 443).

and r e t a i l p r ices provides no evidence t o suggest t h a t t he recent upward

movements have not been primarily the r e s u l t of t h e changing supply/demand

balance f o r meats which has been given close a t t en t ion i n t h i s statement.

There a re no prospective changes i n s t ruc tu re and conduct of the

marketing system which suggest subs tant ia l movements i n the cos ts of

marketing and thus i n r e t a i l p r i ces i n the near future. Over the longer

term, however, developments i n meat marketing w i l l s trongly influence both

the level of meat pr ices , the qual i ty of meat and t h e conditions under

which it is r e t a i l e d t o the consumer. On t h e expectation t h a t t he

Committee may a l so wish t o concern i t s e l f with such issues, t h e following

general comments a re offered.

There i s some evidence which suggests t h a t t he t o t a l costs of

marketing a re tending t o increase i n t h e meat industry. A number of

f ac to r s influence such increases including changes i n cost levels and

increased provision of marketing services; f o r example, prepacking i n

some instances, more precise specif icat ion of meat types and increasingly

r i g i d hygiene requirements.

It is l i k e l y t h a t these fac tors w i l l continue t o have an upward

influence on marketing costs . However, continued research and extension

aimed at a s s i s t i n g i n the development and adoption o f new technology and

methods of market operation can help t o minimise t h e i r e f f ec t s on prices.

The meat t rade consis ts of many firms a t a l l s tages i n the

marketing chain. Most firms adopt a competitive approach t o many of t h e i r

spheres of operation. Co-operation between large numbers of firms is

usual only f o r the purposes of negotiating wage awards, s e t t ing business

houts and s imi lar industry matters.

It has been argued t h a t t he f a i r l y atomist ic s t ruc ture of t h e

industy has hampered standardisation and innovation i n some respects,

such a s es tabl ishing a p rec i se universal def in i t ion of a carcass f o r

weight and grade se l l ing . It has a l so been suggested tha t there have been

impediments t o changes which might have been of benef i t t o t h e industry i n

t he longer run and have resu l ted i n lower marketing costs. The accuracy

of these claims has not been established, nevertheless they have given

encouragement t o current e f f o r t s t o analyse t h e meat marketing system, t o

develop an object ive carcass c l a s s i f i c a t i o n scheme and t o improve market

information. Two of t h e BRE's marketing research projects a r e directed

towards these issues.

A p i l o t study of t he s t ructure , and conduct o f the Tasmanian meat

industry was undertaken i n 1972 and the r e s u l t s of t h i s a r e current ly

being evaluated. The main aim of t h i s study was t o enable a c l ea re r

understanding of the organisation and operation of t he marketing system

and how pr ices a r e determined at various leve ls i n t h e marketing chain.

In additon, t h e Bureau has undertaken t h e economic analysis and

data processing aspects of t he Australian Meat Board's beef c l a s s i f i ca t ion

t r i a l . Meat grading or c l a s s i f i c a t i o n i s currently a largely subject ive

procedure. Grade standards vary over time and between d i f f e r en t

abat toirs . Meat i s not graded through t o the r e t a i l e r o r consumer levels.

Thus, t ransact ions i n meat r e l y heavi ly on personal inspection and on the

knowledge and in t eg r i t y of the people involved.

The aim of t he c l a s s i f i c a t i o n t r i a l is t o evaluate proposals f o r

c lass i fying carcasses on the bas i s o f object ive measurement of such

factors a s weight, dent i t ion, sex and f a t thickness. I f c r i t e r i a can be

established which r e l a t e t o those fea tures of the product which a r e

important t o consumers and t o processors then, provided the cos t s involved

a r e not excessive, they may permit some economies i n marketing. These

would stem from a decrease in the degree of uncertainty concerning carcass

yield and quality. Classification could, for example, reduce handling

costs by minimising the amount of personal inspection required, intensify

price competition in the market and improve the quality of market

information for consumers, livestock producers and the meat trade.

- 29 -

IV: STABILISATION MEASURES

The following paragraphs consider the economic implications of

a number of measures which it has been suggested could s t a b i l i s e the

level of meat pr ices on the domestic market. .Inferences are drawn as t o

1 t he r e l a t i v e merit, on economic grounds, of these as pr ice adjustment

mechanisms assuming tha t policy makers decide t o embark upon such a I

course of action. Brief mention only is made of t h e administrative

requirements of operating these measures.

The measures may be conveniently categorised as follows:

A. Those which 'adjust ' t h e supply/demand balance on the domestic

market and thereby es tab l i sh a new market c lear ing price.

B. Those which impose by decree pr ice controls a t some leve l

on the market.

C. Those measures which, r a the r than attempting t o d i r e c t l y

influence t h e market c lear ing price, cushion consumers from

t he e f f ec t s of higher pr ices by t h e payment of a consumer

subsidy.

A . Adjustment of Supply/Demand B a l a n c e

I t has been shown above t h a t t he recent r i s e s i n pr ices a re

largely the r e s u l t of changes i n t h e supply/demnd balance on t h e market.

For beef, pr ices have increased despi te a very marked expansion i n

supply, because of r i s i n g domestic demand (which is affected by t h e

r i s ing pr ices fo r sheepmeats, pa r t i cu la r ly lamb) and because of r i s i n g

pr ices f o r Australian beef on the export markets. For lamb and mutton,

fal l ing local supplies were a major factor influencing price increases

although strong domestic demand and, particularly fo r mutton, r is ing

export prices were also important.

This suggests, within the f i r s t category of measures, three

main poss ibi l i t ies for counteracting the r ising price trends:

( i ) increase local production, especially lamb;

(ii) import supplies from other exporters; o r

( i i i ) d iver t a larger proportion of supplies of beef

and mutton onto the domestic market, e i ther by

(a) reducing apparent export returns, or

@) imposing quantitative controls.

(i) Measures designed t o encourage a sharp boost i n local

production of beef, mutton or lamb t o counter current high prices would

have longer term implications on the level of supplies. There are

biological constraints on the ra te of growth of livestock production over

an extended period, and there is no possibil i ty of increasing domestic

output o f these meats i n the near future by an extent sufficient t o have

a marked impact on price other than by substantial slaughter of breeding

stock. Such action would cause a supply ' f a l l 1 a t some future time when

prices would thus again tend t o be high.

(ii) Likewise, the alternative of purchasing extra supplies on the

world market (for example lamb from New Zealand) does not offer a

solution t o the current re la t ive supply shortage and i s not likely t o

lead t o any lowering of prices. With the current world price levels for

meat, the price of imports would be a t or above ruling Australian price

levels. The Australian Meat Board Report indicated that commercial

purchases of lamb from New Zealand a t or below ruling Australian price

levels is not possible a t present. Because Australian meat prices are

closely related t o world trade prices a similar situation is likely t o

recur i n any future period of high Australian prices, other than perhaps

in periods of the seasonal peak in lamb prices.

( i i i ) The t h i rd alternative, viz. diverting supplies from export t o

the domestic market. would have a direct effect on domestic price levels.

Exports of beef, mutton and lamb (when they occur) might be restr icted by

either (a) quantitative controls (export limitation) or (b) by imposing

an export tax o r levy. The mechanisms whereby such measures influence

prices, production and trade d i f f e r and are given separate consideration

below.

8umrMtativs Contxvls

Quantitative controls on meat trade could take the form of

ei ther a fixed export quota or a requirement for delivery of a minimum

quantity t o the domestic market. Such measures would imediatelj , reduce

overseas shipments and make available an increased quantity of product

for the domestic market. The average price received for exports could be

expected t o increase as a resul t of the reduction i n shipments. However,

judging from estimates of the nature of import demand i n overseas markets

the proportionate r i s e in average export price would (over a period

longer than a few weeks) be very much less than the proportionate f a l l in

the volume of exports. (18)

Increased supplies on the domestic market would tend t o lower

r e t a i l prices. Estimates of the price e las t i c i ty of demand for meats on

(18) That is, the demand for exports is considered t o be highly elast ic . See R. Bain, op. c i t . and C. Papadopoulos, op. c i t . for discussion related t o lamb and beef respectively.

the Australian market suggest that for a l l meats except pork the

proportionate f a l l i n prices would probably range from one half of, t o

the fu l l proportionate increase in,quantity consumed.(l9)

For the ~ndustry as a whole t o t a l sales revenue would decline

(the f a l l in t o t a l export receipts would be greater and more than offset

any increase i n domestic sales revenue), and saleyard prices for

livestock would fa l l . In turn, t h i s may have some depressing influence

on the number of livestock sent for slaughter. Depending on the

mechanism of control (i.e. export quota or delivery requirement for

domestic market), any resulting f a l l in supply would have a 'second

round' effect on the domestic price or export volume. More attention is

given below t o the likely supply response of a f a l l i n saleyard prices.

For i l l u s t r a t i ve purposes, u t i l i s ing the resul ts of econometric

studies, a 10% reduction i n exports of beef could have the following

+ticia2 effect:

( i ) ra ise average unit export returns by a relatively

small amount (i.e. 2% or less);

( i i ) lower t o t a l receipts for exports by 8% or more;

( i i i ) increase domestic sales by approximately 10%

(assuming 50% of output i s exported);

(iv) cause a f a l l in domestic r e t a i l beef prices

of 5%-10%;

(v) increase t o t a l sales returns from domestic sales

by between 0% and 5%;

(19) A number of e las t ic i ty estimates are shown in Appendix Table IX. These f a l l largely i n the range of -1 t o -2 which imply a price f lex ib i l i ty of -1.0 t o -0.5.

(vi) reduce t h e pr ices of competing meats on the domestic

market by probably about 1%-3%.

The overa l l i n i t i a l drop i n industry sa l e s revenue and thus i n

uni t re turns t o producers could be some 5% or less.

Assuming there were no adjustments i n marketing margins a

substant ia l r e s t r i c t i o n of beef exports could be expected i&ediately t o

lead t o a proportionately smaller f a l l i n domestic prices. A s imi la r

s i t ua t ion is believed t o ex i s t f o r mutton. The introduction of such

measures could well require expanded administrative regulation from t h a t

which has existed i n the past.

Etcport Tax

Imposition of an export tax on beef and lamb ( in spring) would

lower average un i t re turns t o exporters by c lose t o t h e f u l l extent of

the tax, would d iver t supplies t o loca l market and would r e s u l t i n a

f a l l i n domestic prices.

The r e s u l t s of the empirical s tud ies suggest t h a t t h e i n i t i a l

impact of an export t a x of 3c per l b (about 10%) on beef exports would

reduce saleyard pr ices by about 2c per lb. A 10% tax on lamb exports i n

the export period would tend t o reduce Victorian saleyard pr ices by about

10% (i.e. about 2c per lb) .

Total re turns t o producers would be lower as a re su l t o f the

tax although par t of any f a l l would be o f f s e t should t h e t a x be

redis t r ibuted t o producers.

Flow on Effects - Supply h'esponse and Consumer Substitution between Meats

It has been argued above t h a t an export t ax o r quant i ta t ive

controls would have the immediate e f f e c t of a f a l l i n domestic pr ices a t

the saleyard level. uepending on the movement i n marketing cos ts t h i s

f a l l would be re f lec ted i n r e t a i l prices. As a flow-on ef fec t , such

f a l l s i n p r i c e would induce a supply response a s producers adjusted t o

the lower pr ices , and a consumer response as consumers adjusted t h e i r

meat purchases t o the changed s t ruc tu re of r e t a i l prices.

The re la t ionship between the level of output and the pr ices of

the various products of the r u r a l sec tor is extremely complex. Poultry

and pigmeat production responds f a i r l y rapidly t o changing economic

conditions i n the respective indus t r ies and is largely independent of t h e

p r i ce of o ther primary products, except possibly grain pr ices i n some

circumstances. There a re more r e s t r i c t i v e biological limits on the r a t e

of increase i n the breeding nucleus fo r lamb and beef production and, i n

addition, these forms of production, together with wool and t o some

extent cerea ls , compete fo r t h e available resources o f the pastoral

industr ies . Historically, mutton production has largely been considered

a by-product of wool production and lamb a joint product. These

indus t r ies a r e also subject t o marked seasonal fluctuations.

The impact of administratively determined pr ice changes on the

leve l of output w i l l depend on the magnitude and duration of the changes

and t h e i r e f f ec t on producers' expectations. The product t r ad i t iona l ly

showing the grea tes t short term pr ice f luctuat ions is lamb. However,

despi te r e l a t ive ly much higher pr ices i n t h e autumn and winter,

production is l e s s than i n the spring and summer months. This is due t o

the r e l a t i v e l y high cos ts of producing f a t lambs i n these periods, when

lambing percentages a re lower and feeding cos ts higher. Without the

incentive o f r e l a t ive ly high off-season pr ices much l e s s iamb would be

produced i n these months.

The high level of sheep slaughterings and t h e build-up of the

c a t t l e herd which accompanied the decl ine i n wool prices r e l a t i v e t o beef

i n the l a t e 1960s and ear ly 1970s, and the sharp increase i n sheep pr iccs

since t h e remarkable upturn i n wool pr ices are c lear evidence t h a t

graziers respond t o r e l a t i v e p ro f i t ab i l i t y . However, the avai lable

empirical evidence is insuf f ic ien t t o provide a basis fo r making a

quant i ta t ive estimate of t h e l i k e l y change in output for a given change

i n saleyard prices.

A t t h e same time t h e second-round impact of changes i n t h e

r e l a t ive pr ices of meats, suggests a fur ther p a r t i a l o f f se t t i ng influence

on the i n i t i a l p r ice f a l l . A fa l l i n the pr ice of any one meat, such a s

beef o r mutton, would induce a switch of consumer demand in favour of

tha t meat at the expense of other meats (whose pr ices would thus a l so

tend t o f a l l ) which would counteract t h e i n i t i a l pr ice f a l l .

In summary, therefore, it i s concluded t h a t the imposition of

an export tax o r of quant i ta t ive controls on exports of beef, mutton o r

lamb ( in t h e spring) would tend t o have a l e s s than proportionate e f fec t

i n lowering domestic pr ices fo r these meats. Some 'overflow' e f f e c t on

the pr ices f o r other meats could a l so be expected t o follow a pr ice f a l l

fo r any one meat. Aggregate re turns t o producers would f a l l and

as a consequence t o t a l meat production i n Australia might be lowered, o r

not increase a s f a s t as otherwise. Effectively, the inter\,cntion would

t ransfer income from producers t o consumers.

B. Price Controls

The second method of influencing pr ices is v i a administrative

control of prices. i.e. by a p r i ce f reeze o r pr ice regulation. Such

measures employed on t h e i r own irould appear t o be .a temporary expedient

only i n effor ts t o lowerand/or s t ab i l i s e prices, because they do not

adjust any of the price determining influences and tend t o defy rather

than work through market forces i n an attempt t o influence prices. They

may be sustainable only if coupled with other measures such as rationing

or quantitative controls, and could require a far greater administrative

regulation of the market than has existed i n post-war years.

C. Consumer Subsidy

Payment of a consumer subsidy may be considered as an

al ternative measure t o s tab i l i se consumer prices. Rather than direct ly

influence the market operation and market clearing price (as is the aim

of the first two approaches discussed above), a consumer subsidy would

remove the direct linkbetweenconsumer prices and market clearing prices.

Provided a satisfactory method of payment of subsidy t o the consumer can

be operated, the i n i t i a l impact of subsidies would be t o lower the r e t a i l

cost of meat. This would then tend t o encourage consumers t o increase

the i r volume of purchases and a s a follow on, to be prepared t o bid up

prices. The extent of any price f a l l which would follow a subsidy

payment would, therefore, be less than the s i ze of the subsidy.

I t is not possible t o make exact estimates of the l ikely

overall impact of a particular subsidy but research resul ts suggest:

( i ) that the major portion of the subsidy would be

reflected i n lower r e t a i l prices; and

( i i ) that the market clearing price (i.e. price before

subisdy) i n Australia would r ise . This would

cause some diversion of product away from export

sa les onto the domestic market and the average

return from exports might also r ise .

I Thus, a subsidy, while it would ac t t o hold consumer pr ices I down, would have an e f fec t on t h e market s imilar t o an increase i n

I domestic demand, pushing up market c lear ing prices, divert ing some

I supplies away from exports and returning higher pr ices t o producers who

t might be expected, over a longer term, t o endeavour t o increase t h e i r

output.

Such action would tend t o increase income of both consumers and

producers, tend t o lower export volume and t o t a l export receipts , but it

would cons t i tu te a c a l l upon taxat ion revenue. Administratively it would

pose very considerable d i f f i c u l t i e s i n ensuring it was e f fec t ive at t h e

f ina l consumer level. This may involve a large administrative

inf ras t ruc ture t o operate a mechanism of d i s t r ibu t ing the subsidy.

General Imp1 ications of Stabilisation Measures

In addition t o the d i r e c t economic e f fec t s o f the th ree types

of measures which have been discussed above, there a re a number of other

important issues r e l a t ing t o t h e i r implementation which have not been

explored i n d e t a i l i n the paper but which may warrant consideration by

the Committee. These include f o r example:

( i ) The e f fec t on the d i s t r ibu t ion of income between

consumers, meat producers and the meat trade.

Also, t he posit ion of individual producers of

spec i f ic types of meat o r with par t icu lar

seasonal patterns of production, could be

a l te red vis-8-vis other meat producers and

other sectors of ru ra l industry.

( i i ) There could be implications for the marketing

si tuat ion of Australian meat producers. A

lowering of domestic prices enta i ls diverting

supplies from the export market. This could

lead t o some loss of markets and a possible

weakening i n the industry's trade negotiating

position fo r meat, part icularly i n the event of

a build-up i n supplies re la t ive to demand.

( i i i ) There could also be an increase i n the degree of

uncertainty i n meat production and trading.

This could affect producers' expectations, the i r

assessments of future market returns and

influence t he i r production plans.

Appendix Table I

PRODUCTION AND DISPOSAL OF MEAT: AUSTRALIA

('000 Tons Carcass Neight]

Production Exports Apparent Consumption (a)

Date Beef and Veal Lamb Beef and Lamb Mutton Veal ktton veal Beef and Lamb Mutton

1972 July-Sept. 368 70 108 232 16 74 136 54 34 I Oct . -Dec. 318 81 125 189 16 54 12 9 65 71 1973 w Jan.-March 359 64 129 205 10 75 15 4 54 54 I

Total July-March 1972-73 1,045 21 5 362 626 42 203 419 173 159

1972 October 111 27 39 74 7 18 37 20 21 November 110 29 44 64 5 18 46 24 26 December 97 25 42 51 4 18 46 21 2 4

1973 January 111 26 45 67 5 28 44 2 1 17 February 114 19 40 61 3 25 53 16 15 March 134 19 44 77 2 22 5 7 17 22 Apri 1 99 17 24 n.a. n.a. n.a. n.a. n.a. n.a.

La) Apparent consumption is derived by subtracting exports from production; it includes use in canning and no account has been taken of changes in stocks. n.a., not available.

Source: Commonwealth Bureau of Census and Statistics, The Meat Industry Bulletin (various issues); id, Overseas Trade [various issues).

Appendix Table I1

APPARENT PER HEAD CONSUMPTION OF MEAT: AUSTRALIA

Year Beef and Mutton Lamb Pork Poultry Canned Bacon and Total Veal (a) (a) cal la) (b) Meat (c) Ham (d) (e

(a) Carcass weight. @) Dressed weight. (c) Canned weight. (d) Cured carcass weight. (e) In terms of carcass weight; excludes o f f a l . (f) BAE estimate.

Source: Commonwealth Bureau of Census and S t a t i s t i c s , The Meat Industry Bulletin, February 1973; BAE,Trends in AustraZimt Rural Produotion and Fxports, March 1g73.

Appendix Table 111

AUSTRALIAN EXPORTS OF MEAT: BY VARIETY AND

PRINCIPAL DESTINATION

('000 Tons Product Weight)

It- 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 (PI (b)

Beef and Veal

United Kingdom 25.0 13.8 26.7 30.7 40.0 79.4 EEC 0.2 - 0.5 1.0 1.0 85.1 (c) United S ta tes 197.1 201.5 231.7 208.6 255.2 249.4 Canada 3.8 8.8 24.0 18.9 18.8 19.1 Japan 12.0 14.7 16.3 30.2 47.2 52.3 USSR - - 10.9 28.3 11.2 - Other 13.6 13.2 15.2 16.0 22.5 28.6

Total 251.7 252.0 325.3 333.7 395.9 434.5

Mutton

United Kingdom 7.0 4.1 11.3 16.7 14.9 10.0 United S ta tes 32.1 21.5 24.4 9.6 23.6 10.3 Canada 14.8 16.2 27.7 3.2 18.9 12.5 Japan 40.0 22.5 44.4 39.8 66.7 61.0 Greece 1.6 0.6 5.3 14.5 28.8 8.9 USSR - - 3.6 30.2 10.2 - Other 8.2 9.9 18.3 14.8 34.9(a) 20.5

Total 103.7 74.8 135.0 128.8 198.0 123.2

Lamb

United Kingdom 3.0 13.4 16.8 18.4 13.9 14.7 United States 1.5 7.2 9.8 13.3 8.0 2.8 Canada 1.8 6.2 10.8 5.6 6.4 3.3 Other 2.8 2.2 3.4 5.6 8.8 7.1

Total 9 .I 29.0 ' 40.8 42.9 37.1 27.9

Gal Of which, 14.300 tons were sen t t o Romania. @] Nine months ended March. Cc] Including U.K. @] Provisional.

Sowce: Commonwealth Bureau of Census and S t a t i s t i c s , Overseas !l!rade Cvarious issues] .

Appendix Table IV

MOVFMErnS IN SALEYARD AND RETAIL MEAT PRICES: AUSTRALIA

Actual Prices (cents per lb) Price Indexes (1966-67 = 100.0)

Date SALEYARD (c) RETAIL (d) SALEYARD [a) RETAIL@)

Beef Lamb Mutton Beef Lamb Mutton Beef Lamb Mutton Beef Lamb Mutton

' 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73

July August September

October November December

January February March

April

(a) Constructed from Homebush saleyard prices,see deta i l s under (c) i n these footnotes. (b) Based on movements i n weighted average prices of meat i n six capital c i t i e s ; the f igure for the year is the simple average of the index i n each of the four quarters. (c) Homebush saleyard - beef prices: 650-700 lb , 1st and 2nd export quality; h h prices: 29-36 lb, 1st and 2nd export quality; mutton prices: wether and/or maiden ewe, 40-50 l b export quali ty. (d) Retail prices are based on the actual weighted average for the March 1973 quarter. A l l other r e t a i l prices shown were then determined by application of the r e t a i l price index described i n footnote (b) above. Beef pric8: weighted average r e t a i l price fo r beef i n Sydney. New South Wales was chosen as the most representative for the whole of Australia because it is (i) a major producing and exporting S ta te and ( i i ) the largest domestic market; lamb and mutton prices: weighted average r e t a i l price for lamb and mutton i n Melbourne. Victoria was chosen as the most representative because it is (i) the largest producer and ( i i ) the largest exporter.

Sources: Australian Meat Board S ta t i s t i c s ; Commonwealth Bureau of Census and S t a t i s t i c s , Consumer Price Index (uariws issues).

Appendix Table V

PRICES FOR AUSTRALIAN MEAT ON PRINCIPAL OVERSEAS MARKETS

Beef Lamb Mutton

USACa) United United

Kingdom (b) Kingdom (d) USA (el Japan (f Date

Aust. pence Aust. Aust. Aust. U.S. cents Aust. Aust. U.S. cents cents cents cents cents cents cents pence

per lb per i b per lb per i b per i b ~ g ) per lb per i b per lb per i b per ib(g)

1967-68 43.3 38.8 14.9 33.6 n.8. 10.4 23.4 29.8 26.7 n.a. 1968-69 46.9 42.2 14.5 31.1 n.a. 11.9 25.5 33.2 29.8 n.a. 1969-70 54.1 48.5 14.2 30.5 n.a. 12.2 26.5 39.2 35.1 n.a. 1970-71 54.9 49.0 17.2 36.9 11.8. 12.5 26.8 40.6 36.2 n.a. 1971-72 57.8 49.2 20.0 43.0 n.a. 13.6 29.3 37.4 31.4 n.a.

1972 July-Sept. 62.6 52.6 22.7 46.4 n.a. 18.9 38.8 40.9 34.3 n.8. 0ct.-Dec. 64.4 53.9 26.6 52.6 48.2 18.4 36.0 - - 33.2

1973 Jan. -March 79.2 58.9 31.5 56.7 59.1 20.5 37.0 - - 51.1

1972 Oct. 62.7 52.6 25.0 50.3 n.a. 17.9 36.1 47.2 39.6 30.0ch) Nov . 63.6 53.4 26.2 51.9 45.9 18.3 36.2 n.q. - 33.1 Dec. 67.0 55.6 28.5 .55.6 50.4 18.9 36.9 n.q. - 36.5

1973 Jan. 72.7 57.1 30.6 56.7 51.6 20.1 37.2 62.0 48.7 40.7 Feb. 79.5 58.5 31.8 57.4 56.2 20.4 36.8 n.q. - 52.8 March 85.5 60.5 32.1 56.1 69.5 21.1 36.9 n.q. - 59.8 Aprl l 79.7 56.3, 29.0 50.8 n.a. 22.3 39.1 n.q. - n.a.

(a) Boneless manufacturing meat-cow. (b) Australian frozen crops. (c) Boneless ox crops. (d) Australian lamb 1st qual i ty . (e) Boneless processing mutton. (f) Boneless mutton carcasses. (g) F.A.S. (h) Only one weekly quote f o r the month. n.a., not available. n.q., no quote.

Souroee: Australian Meat Board and Bureau of Agricultural Economics.

Appendix Table V I

USA MEAT INDUSTRY: PRICES

- - -- -

Average Saleyard Prices Average Retail Prices

Percentage Change Percentage Change Date Australian Choice U t i l i t y Pigs Beef i n Beef Prices i n Pork R i c e s wrts Of s teers Cors Barmws and Choice Compared t o the Pork Compared t o the

Boneless Bull Beef Omaha (boaha Gil ts@) Grade Qmrterly Figures puarterly Figures i n 1971-72 i n 1971-72

US cents US4 U S 'Sf US cents per l b per 100 l b per 100 l b per 100 l b pm lb $ US cents per l b 0 Cc.i.f .) l i v e weight l i v e weight l ive weight

1972 July August Septeaber

October hsmber D e c d e r

1973 Jarmary February Mrch

A p r i l

Percentage Change - January to Elarch quarter over October +20.3 +U.l +20.8 +23.3 +14.1 - +11.8 to December quarter 1972-73

la) Average for a l l weights at Midwest Markets. Sources: USDA, Livestock and M a t .%taution (various issues). Australian Meat Board, M a t Produoer and &porter (various issues).

Appendix Table VII

UNITED STATES: SUPPLY AND CONSUMPTION OF MEAT

(Carcass Weight Equivalent]

supply Consumption @)

Production (a) Imports Beef and Veal Pork Date

Beef Beef and Sheepmeats Pork and Sheepmeats Total Per Head Total Per Head Veal Veal

' 000 ' 000 ' 000 ' 000 000 ' 000 lb ' 000 lb tons tons tons tons tons tons tons

1972 July-Sept 2,527 55.4 1,368 277.2 24.5 2,742.9 29.8 1,442.8 15.7 Oc t . -Dec 2,600 61.2 1,565 236.1 4.9 2,755.7 29.9 1,568.3 17.0

1973 Jan s -March 2,447 55.8 1,456 197.7 8.5 2,603.1 28.2 1.460.3 15.8

1972 October 914.7 -22.3 536.2 95.5 2.2 984.3 10.7 534.8 5.8 November 862.5 20.1 543.7 79.0 1 .3 915.6 10.0 537.5 5.8 December 823.2 18.8 485.3 61.6 1 . 3 855.8 9.2 496.0 5.4

1973 January 883.0 20.5 512.9 74.1 1 .8 933.0 10.2 524.5 5.7 February 759.4 17.4 437.5 66.5 3.1 817.9 8.9 450.0 4.9 March 804.9 17 .9 505.8 57 .I 3.6 852.2 9.1 485.7 5.2

(a) Refers to commercial ~roduction which excludes farm slaughter and covers all States except Alaska and Hawaii. (b) Civilian consumption,

Sources: USDA, Live s tock and Meat S i t u a t i o n (various issues]; id, Live s tock and Meat S ta t i s t i c s . 1972 .

Appendix Table VIII

UNITED KINGDOM: SUPPLY AND CONSUMPTION OF MEAT

SUPP 1~ Consumption (a) (b)

Production Imports (a] Beef and Veal Sheepmeats Date

Beef Beef Sheep- and Lamb Mutton and Lamb Mutton meat Per Per

Head Total Head Veal Veal

'000 '000 '000 '000 ' 000 '000 '000 '000 lb '000 Ib tons tons tons tons tons tons tons tons tons

1968 891.4 195.3 47.3 257.0 302.4 42.5 3.5 1,134.3 45.1 582.6 23.2 1969 856.9 159.4 44.0 339.5 326.2 35.0 7.6 1,184.4 46.9 545.8 21.6 1970 932.4 179.7 43.5 260.8 293.0 33.0 10.4 1,187.3 46.9 ' 5 3 6 . 0 21.1 1971 938.4 185.2 40.8 247.9 314.3 33.4 15.2 1,178.7 46.9 563.9 21.9 I

1972 (c) 894.5 181.2 35.2 273.4 296.5 29.5 22.7 1,112.2 44.2 519.7 20.4 e m I

1972 July-Sept. Cc) 217.0 55.5 10.0 62.9 60.3 7.4 2.7 279.9 n.a. 130.5 n.a. Oct . -Dec. (c) 237.1 57.0 10.3 75.4 51 .I 5.5 4.8 312.5 r 1 119.1 11

1973 (a) Jan. -March(c) 202.0 40.0 8.5 80.4 91.6 5.9 8.5 282.4 II 137.5 I( - --

1972 Oct. (c) 95.6 24.9 4.4 25.2 28.5 2.6 1.5 120.8 n.a. 58.8 n.a. Nov. (c) 80.1 18.6 3.2 31.2 11.2 1.8 1.3 111.3 33.4 I I I t Dec. (c) 61.4 13.5 2.7 19.0 11.4 1.2 2.0 80.4 26.8 I 1 I,

1973 Jan. (c) 71.9 15.8 3.4 28.5 31.4 2.0 2.8 100.4 49.8 Q, 11 Feb. (c) 64.0 12.0 2.5 24.3 31.1 2.2 2.5 88.3 45.3 II II

March (c) 66.1 12.2 2.6 27.5 28.9 1.7 3.1 93.6 42.3 11 I ,

Note: Totals may not always agree because of rounding. (a) Product weight. (b) Quarterly and monthly consumption data are apparent consumption and are derived by adding net imports to production - no account has been taken of changes in stocks. (c] Provisional. n.a., not available. Source: Cornonwealth Secretariat, Meat and Dairy Produce Bulletin, Cvarious issues).

Appendix Table IX

PERCENTAGE CHANGE IN QUANTITY DDIANDED FOR A 1% CHANGE IN PKICL

Elasticities of Demand at the Retail Level

Except Where Otherwise Indicated)

Study Beef Lamb Mutton Pork Chicken

Gruen -0.96 -1.55 -1.02 -2.8 (2 1

Marceau -1.33 -2.07 -1.09

Papadopoulos -2.06 -1.3 -2.13 -3.99

Paton

Pender and Erwood

Taplin c4 1 -1.7 and -1.4

Taylor -1.0 -2.0 -1.2

Van der Meulen -1.3

SouPceS: R.A. Bain, 'The Influence of Timing of Production on Total Revenue to the Australian Prime Lamb Industry', &Idarterly Reviev of AgricuZtLuvrZ Economics. Vol. XXV, No. 3, July 1972.

F.H. Gruen and Others, Long Term Projections o f AgriculturaZ Supply and Demand - AustmZia, 1965 t o 1980, Vol. 1, Dept. of Economics, Monash University, 1967.

I.W. Marceau, 'Factors Affecting the Demand and Price Structure in the N.S.W. Meat Market', a thesis submitted in candidacy for the Degree of Master of Science in Agriculture, Sydney University, 1965.

C. Papadopoulos, 'A Model of the Australian Meat Market', a thesis submitted in partial fulfilment of the Honours Degree in Economics, Adelaide University, June 1970.

S.J. Paton, 'A Study of the Demand for Chicken Meat in Australia', Research Seminar, Agricultural Economics IV. University of New England, October 1970.

R.W. Pender and V. Erwood, 'Developments in the Pig Industry and Factors in the Australian Meat Market Affecting Demand for Pigmeat', Quarterly Review of Agricultural Economics, Vol. X X I I I , No. 1, January 1970.

(Contin-ued on next page)

J.H.E.,Taplin, 'Time of Lambing f o r Prime Lamb Production', Quarterly Revia of AgricuZturaZ Economics, Vol. X V I I I , No. 3, Ju ly 1965.

G . N . Taylor, A Reply, Economic Record, Vol. 40, No. 89, March 1964.

J. Van der Meulen, 'Demand f o r Meat a t t he Retai l Level', unpublished paper presented t o a meeting of t he N.S.N. Branch of t h e Australian Agricultural Economics Society, Sydney, September 1963.

Notes:

1 ) Two e l a s t i