AN ECONOMIC ANALYSIS OF DEMAND AND POLICIES IN THE BEEF INDUSTRY

Production costs of beef vary because of seasonal changes in the weather and a seasonal variation in prices, which because of its counter-cyclic effect, could have a stabilising effect on supply. The analysis shows that the permit/quota scheme increases the price at the main city abattoirs and it depresses the price farmers receive on country auctions. If permits/quotas reduce production by as little as 5 %, then the value of the permit/quota is estimated at R52 per animal. Large feeders who are allocated quotas receive a windfall gain, but the small farmer who does not receive a quota because he is an irrigular supplier is harmed. The effect of quotas is to restrict beef production artificially. This is- in direct contrast to the effect of research on output, that is, to promote productivity. Because the pressure to sell cattle is greater during droughts, the quota value increases then. Quotas then aggravate the farmers' position during adverse times by limiting the offtake. After good rains quotas may have no value or a negative value as feeders sell cattle just to maintain their quotas.


Issue Date:
1985-10
Publication Type:
Journal Article
Record Identifier:
http://ageconsearch.umn.edu/record/267082
ISSN:
0303-1853
Language:
English
Published in:
Agrekon, Volume 24, Issue 2
Page range:
9-13




 Record created 2018-01-24, last modified 2018-04-02

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