An econometric study of wholesale meat prices in the United Kingdom

Abstract

Despite the drive to develop new markets for New Zealand’s meat exports, the United Kingdom still remains the most important single market by far. Over the five year period 1962/3 to 1966/7, meat provided about 27% of New Zealand’s total export receipts, while around 60'% of total meat earnings came from sales in the United Kingdom. Thus approximately one-sixth of New Zealand's total export earnings are derived from the United Kingdom meat market, an indication of the importance of this market to the New Zealand economy. New Zealand's interest in the United Kingdom meat market lies mainly in the lamb sector which absorbs about 90% of the total lamb exports. In contrast, only around 20% of the exports of mutton and beef and veal from New Zealand is sent to the United Kingdom. This study is an attempt to analyse econometrically the fluctuations in meat prices in the United Kingdom and quantify the relationships causing these fluctuations. The aims are threefold: 1. To formulate and test a series of models capable of forecasting short and long term wholesale meat prices in the United Kingdom. 2. To estimate the relationships existing in this market between wholesale meat prices and the factors determining their levels in order to provide information which could be of use to policy makers in general and those concerned with the formulation of meat production and marketing policy in New Zealand. 3. To describe econometrically the operation of the United Kingdom wholesale meat market and explain the behaviour of the operators involved in the price formation process. In an endeavour to achieve these aims, a series of models of varying complexity and sophistication, explaining annual, quarterly and monthly movements in United Kingdom wholesale meat prices, are formulated and tested.