Introduction

Trade occurs when buyers and sellers interact. International trade occurs because people want to overcome the problem of scarcity. Without trade countries would have to produce a whole range of products to satisfy consumer choices. International trade is countries specialise in those products which they can produce cheaply and trade these for products they can not.

The production and export of meat was one of the earliest industries to be established in New Zealand. In 1980 meat accounted for 23 per cent of the f.o.b. value of total exports. The proportion has steadily declined over the past decade in the face of diversification with in the economy. Meat provided 27 per cent of total exports in 1975, and 34 per cent in 1970. But this level was high by historical standards, resulting from a production boom in the 1960s which raised meat exports above the 20-25 per cent of total exports prevailing in the late 1950s and early 1960s. Despite this apparent recent decline, the meat industry is still the largest single earner of export revenue. Also in the absence of possible alternatives for most of New Zealand’s farmland, especially the spacious hill country, it is like to remain so. Meat exports are therefore of vital importance to the New Zealand’s economy and to the social and political lifestyle supported by that economy.

In this assignment of trade, I hope I can learn more about the trade aspects of the sheep meat market, and understand more economic insight about this topic. Hope you’ll enjoy it too!

Lamb

Lamb is meat obtained from sheep that are less than 1 year old. Lamb is a red, tender meat with a delicate flavour. It is high in food value. It provides a good source of protein and B vitamins and is rich in the minerals phosphorus and iron. Lamb is popular food in Australia, Great Britain, Greece, New Zealand, and many other countries. The meat obtained from sheep more than 1 year old is called mutton.

The quality of lamb is based on the age, shape, and fatness of the carcass. The carcass is the part of the butchered animal that remains after the skin, head, feet and internal organs have been removed. Usually the grade is stamped on the carcass. Some grades for lamb are from the highest to the lowest, prime, choice, and good. Supermarkets generally sell only prime and choice grades of lamb.

The lamb carcass is divided into seven wholesale cuts. Leg, loin, flank, rack, breast, shoulder, and foreshank. Grocers may divide these wholesale cuts into smaller pieces for sale to consumers. Roasts, chops, however, may be fried. Many other lamb cuts should be braised ( cooked by moist heat in a covered pan ) or cooked in liquid.

An Industry Is Born

New Zealand’s development since the arrival of the first European settlers in 1840 has been dependent largely on farming. The central factor in this farming development over almost a century and a half is the sheep.

From 1840 to 1880 the sheep population in New Zealand grew fairly rapidly but their value was in the wool produced, not in the meat. Surplus sheep were worth very little. Consequently farmers frequently had to destroy and bury surplus stock. Some attempt was made during this period to establish canning and boiling down factories, but the lack of suitable techniques and expertise proved too much and they were eventually closed down due to lack of profitability.

At the same time, the industrial revolution in Britain had resulted in the rapid growth of cities crowded with people out of work and underfed. New Zealand was a source of food in the form of meat, but the problem was transporting it 12,000 miles ( a trip of four months duration by sea ) and ensuring its edibility on arrival.

Techniques for the preservation of meat by refrigeration were being developed in France and Britain during the middle of the century. By 1880 the interest in transporting frozen meat from New Zealand to Britain had developed to the extent that the New Zealand and Australian Land Company decided to experiment with a shipment.

The company employed the sailing ship “Dunedin” which was fitted with a steam engine driven, ammonia compression, refrigerating plant. The stock were slaughtered at facilities established at Totara, south of Oamaru, transported by rail the same day to Port Chalmers where they were loaded into the freezers on board the “Dunedin”. The success of this trip gave the birth of the New Zealand Meat Export Industry. Between 1883 and 1954 all New Zealand meat exports, both beef and lamb went to the United Kingdom in the form of frozen.

The rapid growth of the industry was largely due to the interest and demand shown by local sheep farmers with capital assistance in some cases from United Kingdom companies.

Up to the early 1930s the complete slaughter and dressing of the carcass was carried out by a single butcher. However, with the influence from industry in other countries and severe industrial conflict during the 1930s, the meat processing industry in New Zealand started to mechanise. It was during this period that the solo butcher began to be phased out and replaced by the chain system. By the 1950s all solo butchering had been replaced by the mechanical chain system.

In 1954 the last of the bulk contracts, negotiated during and after the war with the United Kingdom government came to an end, and exports of beef and mutton were rapidly diversified towards the United States of America and Japan, where there were minimal barriers to entry, adequate spending power and in selected areas and some tradition of eating sheep meats. By 1960 three quarters of New Zealand export beef was going to North America, and half of the export mutton to Japan. The United Kingdom remained virtually the sole market for lamb.

Also after the Second World War, it was the beginning of a phenomenal expansion in livestock production. The meat export processing industry was carried along by this expansion so that by 1960, 40 plants were operating throughout the country. By the early 1970s the annual production of edible meat products exported to the world’s markets was almost 1.100 million tonnes.

In 1980 and on the doorway of completing 100 years of service to New Zealand, the export meat industry has an international reputation for consistent grading, consistent quality, combined with reliable supply. The meat processing plants of 1980 comply with the strictest hygiene and quality standards demanded any where in the world. From that small shipment in 1882 New Zealand has become the world’s largest exporter of sheep meats.

Factors Affecting Competition Between Meats

The basic variables determining the consumption of meat in any country are the size of it’s population, the level and distribution of incomes, the availability of supplies and the levels of prices. All of these variables are capable of being quantified with some degree of success. Competition however, involves the comparison of meats over a range of different attributes, some of which are less amenable to quantification than others. While price is a major influence in consumer spending, it is not the only influence and other less tangible influences such as taste, or consumer’s opinion of value for money also have a significant role in the choice between meats.

Below are the main factors which seems to play a part in influencing the choices of consumers as between different meats and in determining the shifts in consumption that have been occurring.

Demand Side:

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• Population

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• Taste and Social Factors

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• Income

#Deflated to 1967 US$ values

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• Relative Prices of Meats

Supply Side :

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• Technological Changes

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• The Transfer of Broiler Technology

Advantages of Meat Export Industry

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• Export Earnings

There is no other single industry making a greater contribution to New Zealand export earnings than the Meat Export industry.

For the year ended December:

These figures show an increase of 28.5% in export value from the meat industry in one year which compares more than favourably with an 18.7% increase for manufactured exports, seen by many as the panacea for our external deficit problem.

For the year ended December 1979, the Meat Export industry earned 38 cents in every export dollar. This not only reflects the importance of the industry to the economy but also the continuous have a world wide reputation for quality at competitive prices.

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• Employment

The Meat Export processing industry is a major employer. At the peak of the season , about 32000 people are employed in a multitude of skilled and semi skilled occupations. The Meat Export processing industry wage bill exceeds $325 million annually.

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• Hygiene and Other Developments

In 1971 the New Zealand Meat industry was given 10 years to bring its plants into line with the hygiene requirements would have closed the door to our largest meat markets with the inevitable economic collapse of the meat industry and with most serious effects on farmers and the New Zealand economy.

Conclusion

World consumption of meats has been expanding, the greatest expansion being in the centrally planned economies of Eastern Europe and the USSR, the oil exporting nations and the newly industrialising nations. The developed countries, however remain the largest consumers of meat, although the fastest rates of increase are now occurring in developing countries. The consumption of sheep meat is increasing but its share of word consumption has declined.

In the majority of New Zealand’s overseas markets, lamb is relatively high priced meat, certainly priced well above the white meas. In the Middle East, Japan and some developing countries, lamb is lower priced on local markets than beef, but in the United Kingdom these two red meats are similarly priced. Lamb is priced above beef in the United States and France and increasingly in the other EEC countries.

Lamb export in New Zealand has a quite important position. This industry brings the economy growth and also provides more employment opportunities.

The trade and consumption patterns over the past two decades suggests that bulk markets for New Zealand’s meats are likely to increasing in the future.

Bibliography

1.  
2. MAF Economics Division - Sheep meat and beef commodity price projections 1987-1992 .
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4. Year Books
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6. Overseas Trade Statistic 1995
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8. Key Statistics - September 1997
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10. The Press
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12. Dairy Exporter
13.  
14. Food Technologist
15.  
16. Sunday Star Times
17.  
18. Listener
19.  
20. World Encyclopedia
21.  
22. Clough & E.M/ Ojala - Competition among meats the place of New Zealand lamb.
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24. Maughan & W.R. Schroder - A marketing system for the New Zealand meat industry.
25.  
26. New Zealand freezing companies & New Zealand meat exporters council- The New Zealand meat export industry.
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28. B.J. Ross, R.L. Sheppard, A.C. Zwart - The New Zealand meat trade in the 1980’s a proposal for change.