Alternative Mechanisms for Discovering Prices - the Australian Beef Industry - Case Study Example

Alternative mechanisms for discovering prices The Australian Beef Industry Name Institution Date Introduction Pricing is a lucrative activity that often takes place within an authentic business. The volubility or contingency of any product in the market is demonstrated by its encoded price. Moreover, the price of any commodity in the market demonstrates the competitiveness that is present in any given market segment (Canberra and IBISWorld Pty Ltd, 2003). It would be less valuable to have a stable or unstable price that does not depend on the level of quality affixed within the different products. In Australia, every beef product is destined to be allocated its price (Canberra and IBISWorld Pty Ltd, 2003). Discussion The pricing strategies adopted by the industry have resulted in price fluctuations within the Australian ‘farm-gate’ price. The aggregate potential welfare changes from a tariff reduction can be felt within the economic conditions that are faced by people within the local and international markets (Canberra and IBISWorld Pty Ltd, 2003). Several seasonal factors in Australia have direct and indirect influence on the pricing of the regional and national beef products. One of the factors is drought in some parts of the country. For instance, there is drought in the northern parts of the country and this contributes negatively to the growth and ultimate quality of the dairy products and dairy animals in the area (Canberra and IBISWorld Pty Ltd, 2003). Drought influences or reduces the level of productivity of the dairy animals. Lack of enough water and food materials together with the severe climate brought about by the drought conditions affects negatively on the dairy products and animals in such regions. In the end, the quality and quantity of the beef products from the animals is compromised. Ultimately, the prices of such products will be affected negatively in the market (Henzell, 2007). Apart from drought conditions, there are also seasonal heavy rains in the higher regions of NSW and wet conditions in the south. Such conditions do not favor the success of beef faming in the region. In most cases, beef products from such region are of lower quality and hence demand fewer prices in the market. During the final weeks of winter, livestock markets appear to be pulled towards such regions, and hence the valuation of the beef products in other regions appears to be affected in one way or the other. With seasonal changes, the valuations brought in by the changes in A$ appear to decline within these regions. In the end, the affected valuations that contribute to the partial pricing principles within the beef industries in the country will be affected adversely (Henzell, 2007). In the recent days, changes or drop in the variations of A$ led to trading below 90US¢. Such effects influence on the general growth and productivity of the beef products in the market. As spring nears, it becomes difficult to pin down the overall market sentiments. Pricing remains as one of the strategic entities that are affected by the seasonal changes in the product productivity within the beef industry in Australia. Such changes in the seasonal appearances of winter and spring influences on the overall behavior of the prices affixed to the beef products within and outside the country. These are some of the seasonal factors that have to be considered within the pricing structures. Nonetheless, failure to check on the productivity and pricing based on these seasonal factors will lead to ultimate negative growth in the industry during these seasons (Austin & United States, 1977). For the northern Australian beef producers, sentiments are still very weak because of the drought conditions. Such conditions are thought to happen amidst tight financial suppliers that lower the supply of water, feed, and other necessities that are necessary to ensure high quality beef products in the region. In the end, the beef products appear to be of lower quality or quantity, and hence shift the prices of these products in either way based on the demand and supply curves in the market as illustrated in the curves below. Figure 1 Figure 2 The supply of cattle is still amble in most parts of the country. Such case has always influenced diversified pricing affixed in the beef products. This condition is relevant during the interchange of the spring and the autumn conditions in the region (Austin & United States, 1977). The overall outpour of the rainfall as indicated and proclaimed by the Australian Bureau of Meteorological helps in determining the rate of beef production together with the diverse pricing principles that are going to be applied din order to realize better productivity in the country. Such predictions help in scaling down the rate of productivity in order to have a fair share of the business and marketing conditions in the country. Such productivity is mainly applied to fixed deposition of prices associated to prices of the products that are affected directly by the changes in the weather and climate conditions in the country (Austin & United States, 1977). For the northern regions that are influenced or affected by drought conditions, much consideration is laid upon the normality with which the prices of the beef products to be realized will not be increased or raised beyond the capability of the market to handle. Low of rainfall or handy falls of rain together with severe frost conditions directly and indirectly affect the final prices affixed to most of the products in the market (Australian Institute of Health and Welfare, 2012). In general, the productivity of beef products depends on the suitability of the conditions that prevail in presence of the beef animals. For instance, the quality of the beef products will depend on whether the beef animals were able to access the best avenues of production together with equitable conditions that suits increased quantity and quality of the products (Beattie, 2003). All these seasonal conditions have become relevant in discovering several methods and fields of pricing of the beef products in Australia. It is not that the country does not have the best conditions over which beef production can be achieved (Australian Institute of Health and Welfare, 2012). Nonetheless, the seasonal conditions of winter, summer, and fluctuations in financial performances for engineered products helps in determining different approaches through which marketing and pricing of the beef products has been done in and outside the country. The major commodities of beef have participated a great deal in determining the level of performances and pricing of beef products in Australia. One of the alternative methods of finding prices to the beef products lies with the opportunities and challenges that are figured to be ahead (Gleesonet, al., 2003). Australia is a dominant player in the global beef market. The positive approaches that have been adapted by the country in trying to realize the best ways of production are found within legible pricing that can be determined from considering the future challenges and opportunities presented to the market (Gleesonet, al., 2003). There is a steady rise in the levels of demand for safe and high-quality beef together with the country’s determination to meet the consumer needs. This notion has contributed to the success in pricing for the beef products within and outside the country. For instance, it has become easier for many markets to establish a better market price that suits all the consumers with regard to the high demand for the beef products in the market. This notion has been used by the beef industry to ensure that it has improved most of its products in terms of quality and quantity in the market in order to better the dire demand from the customers (Gleesonet, al., 2003). Australia is a leading or one of the few available and active players in beef production in the oversee market. The number of cattle that are found in the country enables it to meet the foreign and local demand, and hence take it even to greater heights. Australia is the world leader when it comes to exportation of beef products to oversee markets. Because of this opportunity, there are several avenues through which the industry has managed to established pricing strategies and scales in the market (Hooper et, al., 2003). For instance, the high demand for quality and qualitative beef products has forced the industry to make quality and quantity demands as part of the entities to be considered while determining the prices of beef products to be sold locally and internationally. Major drivers of price In Australia, the total production of lamb meat has increased in its stake over time. The local market is the majority destination that covers an approximate of 68% of the total usage in the country. The prices demanded by the oversee customers makes one of the major considerations in pricing (Hooper et, al., 2003). With the rate of domestic consumption often static and subject to competition from other red and white meat, the oversee prices suffer less competition if not as that faced by the local consumption. The rise in demand from the oversee destinations as the United States of America affects the price of the product locally an internationally. There is a growing influence on export sector through the supply of lambs has affected pricing as relates to the exchange rate becoming relatively volatile, seasonal conditions affecting the quality and quantity of the products, effects on other products, presumably used in the production of beef as grains, and returns from wool. Such factors have arisen because of export influences (Hooper et, al., 2003). The behavior of consumers like in the international markets influences local and international pricing. Specialization as in production of lambs, pork, and other beef products is influenced by the customer demands locally and internationally, and hence has contributed to changes in the pricing principles of the beef products. As in recent times, the strength found within the export demand, together with reduction in the availability of lamb production has led to drought and hence increased pricing paid for lambs within the processor and producer levels (Piggott et, al., 2000). Major drivers of domestic prices In the domestic retail prices, retailers have set prices that are sufficient to meet the margin over costs, and balanced against the prices of the competing beef materials at retail markets. The choices that are laid by the retail customers determine the pricing of the beef products at this level (Piggott et, al., 2000). The competition between meats is staged within the price, versatility, quality, and convenience as stated within the retail sectors. Many customers have a positive perception of lamb for quality, taste, and consistency (Richards 2003). Seasonal changes as summer is a barbecue time and hence sees an increase in demand for beef. Production costs also influences on the ultimate pricing that will be affixed within the production sectors in the market (Piggott et, al., 2000). Major drivers of retail costs When it comes to beef, the majority of the buyers work within a number of models that ensure they take care of the price, risks within the supply and quality of the products. Buyers try to attain a target-buying price that will enable them to maintain target returns for the category depending on the usage of the carcass, costs of processing, and the existing price of competition for every category of the products in the market. Over time, many retail buyers vary the mix of the product sourcing between determined buyers or producers, paddock selection, together with markets based on the conditions of the market (Henzell, (2007). With the emergence of a strong seasonal production that comes in spring, the use of the market sources as a measure of the sourcing intake becomes visible. For instance, 2002 saw 37% of the lambs sold at auction while 15% were in the paddocks (Richards 2003). In conclusion, there are less dedicated supply arrangements common in lamb than beef and hence structured with the medium-term rolling contracts (Richards 2003). Conclusion As done in any business environment, every product must have its equitable price pr compensation value that derives its exchange capability for the customers. With the diverse criteria of finding prices towards different products in the market, there is every possibility that the prices will differ basing on a number of segmental factors in the market (Canberra and IBISWorld Pty Ltd, 2003). For instance, the pricing of every commodity will depend on its demand and quality amidst its quantity at the market at that instance. References Austin, L. A., & United States. (1977). Beef versus wool production in Australia. Washington, D.C: U.S. Dept. of Agriculture, Economic Research Service, Foreign Demand, and Competition Division. Australian Institute of Health and Welfare. (2012). Australia's food & nutrition 2012. Canberra: Australian Institute of Health and Welfare. Beattie, W. A. (2003). Beef cattle breeding and management. Sydney: Pastoral Review. Gleeson, T, McDonald, D, Hooper, S, and Martin, P (2003). Australian Beef Industry Report on the Australian Agricultural and Grazing Industries Survey of Beef Producers, Research Report 03.3, ABARE, Canberra. Henzell, T. (2007). Australian agriculture: Its history and challenges. Collingwood, Vic: CSIRO Pub. Hooper, S, Blias, A and Ashton, D (2003). Australian Prime Lamb Industry 2003: Report of the Australian Agricultural and Grazing Industries Survey of Prime Lamb Producers, Research Report 03.2, ABARE, Canberra. IBISWorld Pty Ltd 2003a, Report no. C (2111). Meat Processing and pricing in Australia, IBISWorld Pty Ltd. Piggott, R, Griffith, G, and Nightingale, J (2000). Market Power in the Australian Food Chain, Australian Government Rural Industries Research, and Development Corporation, Canberra. IBISWorld Pty Ltd (2003). Report no. G5121, Fresh Meat, Fish, and Poultry Retailing in Australia, IBISWorld Pty Ltd. Richards, T, and Patterson, P (2003). Competition in Fresh Produce Markets – An Empirical Analysis of Marketing Channel Performance, Report no. CCR1, United States Department of Agriculture, Washington. Read More