Price Stabilisation Policies: Has The Meat Scheme Benefited Beef Producers In South Africa?

Prices should be non-distortive signals for production and consumption. Deterministic price behaviour patterns (cycles) and rainfall cycles resulted in cyclical supply variation through a process of herd expansion/liquidation. This apparently promoted inefficient management strategies at farm level and distorted production and marketing of beef. Significant seven year supply cycles for beef were isolated and used to determine producers' supply response flexibilities to rainfall and price cycle variation. Multiple regression analysis with distributed lag models were used. Significant lagged supply responses indicate that price signals were distorted and aided the climatological inflexibilities of beef production. Nominal beef producer prices were not stabilised and the control measures, employed for this purpose, effectively reduced farmers' marketing opportunities and thereby increase their exposure to production, price, marketing and income risks. Controlled marketing of red meat failed to stabilise producer prices of beef or to promote the producers' interests.