Seasonality in the New Zealand meat processing industry

Abstract

The research reported in this publication is a part of the Agricultural Economics Research Unit's continuing research effort into marketing and processing charges for livestock. Research Report No.103 ("A Study of Excess Livestock Transport Costs in the South Island of New Zealand" by R.D. Inness and A.C. Zwart) presented the results of an analysis of the cartage pattern of livestock to freezing works for the 1977/78 season. This study identified a transport penalty cost of about $0.5 million associated with seasonality of sheep and lamb supply in the South Island. The present study attempts to provide an economic assessment of the seasonality associated with the operation of the New Zealand meat processing industry and the relationship between seasonality and overcapacity. The author reviews the fixed/variable nature of costs in the freezing industry and suggests that the future path for the industry is likely to be the replacement of high labour fixed costs by lower capital fixed costs via the establishment of smaller higher technology works. This would allow more effective and efficient operation during the off-peak period of slaughter and may allow the payment of premiums to encourage off-peak production.