An econometric study of the New Zealand meat market with special reference to pigmeats

Abstract

Among countries with high per capita incomes, the New Zealand economy has one unusual and striking feature, a large proportion of its gross national product is derived from temperate farm product exports. Of the total export income derived from farm products, revenue from meat exports contributes approximately one quarter. The meat producing industry is therefore a very important sector of the New Zealand economy.

As could be expected with such an important export product, many investigations of New Zealand's major export markets for meat have been made. Little is known quantitatively, however, about the market forces which operate within New Zealand, although over one third of the country's total meat production is consumed locally. This study is an attempt to measure the impact of forces operating within the New Zealand market, thereby providing basic economic information which has not been available in the past. The usefulness of such information to those concerned with the formulation of economic policy will be sufficiently evident not to require stressing further.

Because exports of meat are proportionately so large a part of total production, export meat prices have a strong influence on meat prices within New Zealand. The way in which this influence is exerted will depend to a large extent upon the institutional structure of the New Zealand meat market. It is therefore highly necessary that Chapter 1 of this study examines in broad outline the institutional framework under which meat is marketed in this country. Both the internal and export market structure, and especially their inter-relationship, will be examined in this chapter.

Chapters 2 and 3 will be concerned with a postal survey of consumers. The objective of this survey was to examine in detail local consumer attitudes to meat. Chapter 2 outlines the operation of the survey and the question by question results, while Chapter 3 is concerned with the estimation of Engel curves and income-expenditure elasticity from the survey data. One important feature of the survey was that it enabled at least some market parameters to be estimated for meats for which time-series data were not available. The survey therefore provided important information which was available from no other source.

In Chapters 4 and 5 the institutional framework will be considered, with the relevant economic theory, in the specification of an econometric model of the New Zealand meat market. Chapter 4 will discuss special points of theoretical importance, and published work of particular relevance to the model. Chapter 5 will detail the New Zealand model specification, and discuss its properties.

There are several alternative ways in which the parameters of the New Zealand meat market model could be estimated. A discussion of these alternative procedures forms the basis of Chapter 6. At the conclusion of Chapter 6 the chosen procedures will be outlined, while in Chapter 7 the data and sources for all time-series will be discussed. Some general trends in the data will be considered.

Chapter 8 will present the estimated models, and discuss the estimates of all coefficients. Following Chapter 8 a concluding section will examine the achievements of this study.

All monetary figures throughout this study will be quoted in terms of £-s-d rather than dollars. This has been adhered to because the study refers to the pre-dollar period in New Zealand.