Die Effektiwiteit Van Die Vloerprysskema As Stabilisasie-Meganisme In Die Primme Beesvleisbedryf

The Meat Board has administered an auction system with a minimum guarantee price (floor price) for beef carcasses since 1956. The floor price functions as a mechanism to purchase carcasses when beef producer prices decline to predetermined low levels. The Meat Board debones and freezes this meat, which is later sold to the trade. The net effect of these purchasing and selling actions on the annual beef producer price was empirically analysed. The net floor price effect, 1970 to 1993, can be described as negative since the magnitude of price-lowering effects due to Meat Board sales of frozen beef was twice that of price-raising effects resulting from floor price purchases and supply control, taking into account the absolute extent of price lowering and raising effects. Relatively large quantities of beef had to be purchased at floor price before significant price increases resulted, but the selling of relatively small quantities of frozen beef was responsible for significant producer price decreases. Supply control measures played an important contributory role in bringing producer price increases into effect. The original aim of the floor price system was to remove beef by means of exports, an aim which was frustrated by economic sanctions and subsidised world beef prices. The fact that floor price beef was sold into the domestic market neutralised the effectiveness of the beef floor price system.