The key elements of success and failure in the NZ sheep meat industry from 1980 - 2007

This study explores the nature and performance of the New Zealand sheep meat industry from 1980 to 2007. As almost 94 per cent of sheep meat produced in New Zealand is exported the focus of this study is on the export sector of the sheep meat industry, and in particular, the lamb meat export industry. Deregulation of the New Zealand economy led to a fundamental change of philosophy within the sheep meat industry. Government support was reduced in the mid- to late-1980s, and financial deregulation was initially associated with rising interest rates and high exchange rates. After an initial adjustment period, interest rates fell, but variable exchange rates have remained. After having a high level of involvement in the processing and marketing sectors through ownership of both processing companies and product, the role of the New Zealand Meat Board reduced in the mid-1990s to that of an industry-good role, managing quota and allocating research funding. In the sheep meat industry, markets and market destinations have not changed dramatically over the study period 1980-2007, but the product form has undergone some quite radical changes. The nature of the product now being sold has been transformed from a frozen carcass to a range of both chilled and frozen, and bone-in and boneless cuts of lamb. Over the period concerned, supermarkets have emerged as the dominant prescriber of specifications, and these specifications have become more demanding. This study has identified a number of factors that have been important in transforming the sheep meat industry from a heavily subsidised, production-driven sector to one that is more market-oriented operating in a market economy. The study has also identified factors that underpin the continued instability of the industry as a whole, and specifically, low profitability for process-exporting companies and variable returns for farmers.

Funded by AGMARDT The Agricultural Marketing Research and Development Trust.