Marketing institutions for New Zealand sheepmeats

Abstract

This paper has been prepared in recognition of the fact that there is little available information, or research about the most suitable form of marketing institution, which might lead to the development of an appropriate marketing strategy for the New Zealand meat industry. Although there has been considerable debate on this issue in the past decade, many responses have been conditioned by political views, or individual roles within the industry, and this has led to a polarisation of views. Rather than discussing the functions which an institution might perform, or the essential elements of a marketing strategy, views have centred around preferences for central control or free enterprise. A more general approach is developed in this paper, by firstly analysing the difficulties which currently face the industry, and then discussing the primary functions which a marketing institution might be expected to perform. It is important to distinguish between apparent or perceived problems such as instability, and the fundamental causes of such problems. Whilst it is tempting to suggest that industry problems can be overcome simply by increasing the degree of central control, it is realised that creation of this type of intervention can create further costs and difficulties in the future. It is also important to recognise that the so called free enterprise system which has been in operation for many years is not necessarily an ideal form of competitive structure.

From the general discussion of problems and functions of marketing institutions, and how they are related to the characteristics of the New Zealand meat industry, two alternative proposals are discussed in some detail. These proposals are suggested as examples of industry structures which utilise the advantages of more effective competition, while at the same time allowing for more centralised control from the Meat Producers Board. The first of these proposals which is discussed in the most depth, utilises a competitive market to establish prices for carcass meat in New Zealand. The second proposal is essentially the same, except the competitive establishment of prices is replaced by prices determined by the Meat Board.

The essential elements of both of these proposals include the following points: 1. The retention of competitive elements wherever possible within the processing and marketing sectors of the meat industry. 2. The establishment of base prices for carcass meat in New Zealand and relatively free access by all exporters to that meat. This is seen to be necessary to ensure that meat exporters are placed in an environment which will be conducive to maximum use of further processing and sophisticated marketing techniques. 3. The Meat Board is seen to retain control over the setting of the price levels and possibly differentials between grades within New Zealand. 4. The Meat Board would also retain control of stocks of meat which are necessary to maintain price levels, and also to become the major contractor in single buyer, and possibly development markets. In the development of appropriate marketing institutions, the Government's role is seen to be that of ensuring that the solution reached is one which will serve the best long term interests of the industry. A tendency is noted for solutions of this nature to become compromises which protect the interests of those organisations which currently exist within the industry. It is the Government's role to ensure that roles within the industry are clearly defined, and that means are set up by which the efficiency of the industry can be continuously monitored.