The decreasing trend in farm prizes for beef and mutton, originating 1989, continued in 1990. These decreases represent the normal interaction between an increase in supply and a disproportionate increase in demand. Farn1ers' decisions three years ago to produce more beef and mutton because of increasing prices and improved fanning conditions, caused in itial high prices because less animals were slaughtered. Producers increased herd sizes by decreasing the number of animals slaughtered, especially the number of female cattle. At present the industry is eA-pericncing a typical post-herd building phase with significant cyclical lows in pnces. Decreasinb producer prices are stimulated by an inability of consumers to effectively react on decreasing prices because of harsh economic conditions, putting their spending ability under pressure. At the same time mutton producer prices are declining and more momentum is to the decrease in producer prices by the decrease in wool prices. Given the normal cyclical behaviour of the beef and mutton industries it can be expected that the current cyclical low in prices arc to continue for at least a couple of years.