A joint test of market power, menu costs, and currency invoicing

Posted in: Economics by admin on January 1, 2009 | No Comments

This article developed a theoretical ERPT framework accounting for menu costs and different choices of currency for
invoicing purposes. Menu costs make it costly for exporters to revise their prices in response to exchange rate changes. This introduces a nonlinearity between the exchange rate and the export price. This nonlinearity motivates the empirical specification of a two-regime pass-through model to analyze the pricing decisions of pork exporters from two Canadian provinces to the U.S. and Japan. The choice of currency used for invoicing purposes imposes theoretical restrictions on the pass-through in the first regime (i.e., when menu costs are high relative to the profits arising from a price change) which can be tested empirically. The empirical model rejects the null hypothesis of no menu costs in three of the four equations. Statistically significant menu costs are identified in the export pricing decisions of Quebec and Manitoba exporters in their dealings with U.S. buyers. Manitoba pork exporting firms also appear to face menu costs in their dealings with Japanese buyers. We argue that the nonrejection in the case of the Quebec–Japan ERPT equation is more likely attributable to the small length of our sample than to the actual significance of menu costs faced by Quebec firms. Overall, the empirical evidence favors threshold pass-through models over linear ones.

For more information the full article can be found at http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1574-0862/issues

China Became Largest Pork Importer in History in 2008

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China’s overseas purchases and imports of pork and pork products in calendar year 2008 were unprecedented for any single country in history, according to U.S. Meat Export Federation (USMEF) calculations from just-released Chinese trade data. Based on import totals from China and Hong Kong, the country imported 1.925 million metric tons (4.2 billion pounds) of pork and pork products last year, including 1.161 million tons (nearly 2.6 billion pounds) of pork variety meats and 764,000 tons (1.7 billion pounds) of pork cuts. Available trade data suggests that China’s imports eclipsed the previous single-year record of 1.022 million tons (2.2 billion pounds) of pork imported by Japan in 2005. Results of a new Chinese survey announced yesterday estimate that 15 percent of migrant rural workers – approximately 20 million people – have lost their jobs due to the economic crisis. A number of subsidy increases have been announced for the rural sector in addition to those for the hog-raising sector, including farm machinery and appliance purchasing subsidies, and a 16 percent rise in the minimum purchase price for grain.

Opening the Throttle and Applying the Brakes: The Disconnected Policy to Support (Stifle) the Canadian Pork Sector

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In addition to fundamental public policy precepts stating that specific policies ought not
to contradict one another, there is something singularly perverse about giving false hope
and setting an industry up to fail. Based on the assistance package, some people who
have been losing money in the pork sector may feel comforted, and they (along with
lenders and investors) may even begin to reinvest in the pork segment. But when the
natural comparative advantage is being structurally eroded by policy backing ethanol
mandates and subsidies to make ethanol from grain, the investments in pork will later
prove less profitable, magnifying existing losses and probably driving a demand for
future public assistance.
The ramification is that by simultaneously assisting the pork segment to recover and
underwriting grain-based ethanol production with subsidy and mandates, governments
are paving the way for future losses in pork and increased industry support measures in
the future. Consistency would demand that pork (and beef) policy and bio-fuel policy be
coordinated; to do otherwise is disingenuous to pork and beef producers and a waste of
public money. A means of recognition and implementation of this is to stop further
funding of new grain-based ethanol development in consideration of the pork strategy,
and for that which can be anticipated in beef.
The notion of opening the throttle and applying the brakes at the same time is that
something must give, eventually. Simultaneously assisting the pork and beef segments
on one hand, and legislating and subsidizing grain-based ethanol on the other puts
policies at odds with themselves. Beyond the insincere treatment of hog producers and
the future demand for public support created, the Canadian manufacturing sector is not in
a position to tolerate the fallout in food manufacturing that will be created. The
recognition of these dichotomies appears not to have reached senior political levels.
The Canadian pork segment is grappling with a range of factors outside Canadian control
– exchange rates, burgeoning red meat supply, H1N1, etc. The CPC strategy anticipates
much of this, and presents a cohesive approach that warrants public support. There are
others for which Canadian governments bear direct responsibility. The CPC strategy
makes reference to the enormous problems created by US COOL, which was allowed to
occur on the foreign affairs watch of the federal government. The CPC strategy does not
acknowledge the detrimental impact of Canadian ethanol policy; nevertheless, it has
seriously weakened the competiveness of hog production. These failings, among the
several challenges facing Canadian pork and beef, fall within the control of Canadian
policy makers, and the pork segment is justified in requesting compensation for them.
Moreover, disconnected policies relating to bio-fuels and trade must be resolved with the
red meat strategy if a cost-competitive Canadian pork segment is to reemerge as
envisioned.

Postnatal piglet husbandry practices and well-being: The effects of alternative techniques delivered separately

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The aim of this study was to evaluate stress responses evoked by 2 alternative methods for performing the following processing procedures: 1) teeth resection—clipping vs. grinding; 2) tail docking— cold vs. hot clipping; 3) identification—ear notch vs. tag; 4) iron administration—injection vs. oral; 5) castration— cords cut vs. torn. When measures of behavior, physiology, and productivity were used, the responses to teeth resection, tail docking, and identification were shown to be altered by the procedural method, whereas responses to iron administration and
castration did not differ. The time taken to carry out the procedure would appear to be an important factor in the strength of the stress response.

For more information the full article can be found at http://jas.fass.org/

Infection, excretion and seroconversion dynamics of porcine circovirus type 2 (PCV2) in pigs from post-weaning multisystemic wasting syndrome (PMWS) affected farms in Spain and Denmark

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Longitudinal case–control studies were performed in post-weaning multisystemic wasting syndrome (PMWS) affected farms from Denmark and Spain using similar designs. It was found that sensitivity and/or specificity values observed from both tests used separately or combined suggested that quantitative PCR and/or serology tests are not apparently able to substitute histopathology.

For more information the full article can be found at http://www.sciencedirect.com/science/journal/03781135

Influence of different types of environmental enrichment on the behaviour of finishing pigs in two different housing systems: Hanging toy versus rootable toy of the same material

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This study aimed to assess the effects of (1) environmental enrichment with either straw bedding or a plastic toy and (2) the way in which the plastic toy was presented on the behaviour of finishing pigs in two different housing systems. One thousand and twenty four (Large White X Landrace) X Large White pigs were housed contemporarily in either a straw-based (ST) or fully slatted (FS) building from 35 kg to slaughter at 104 kg. In each building, half of the pens received additional environmental enrichment in the form of a hanging plastic toy. The remaining pens in the ST house were enriched only by the straw bedding. In the FS house, the remaining pens were provided with a rootable toy of the same plastic material presented on the floor of the pen. There was no significant effect of housing system on the level of manipulation of the hanging toy. Within the FS system, the level of manipulation of the hanging toy tended to be higher than that of the plastic toy presented on the floor (P = 0.052). Neither form of additional environmental enrichment provided a comparable level of occupation to that of straw bedding. In the absence of straw, more investigatory behaviours were directed towards both pen-mates (P < 0.001) and pen components (P < 0.001). Further study is required to identify functional forms of environmental enrichment in slatted systems to occupy pigs and prevent them from performing adverse behaviours.

For more information the full article can be found at http://journals.elsevierhealth.com/periodicals/applan/issues

Specific proteins allow classification of pigs according to sire breed, rearing environment and gender

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Proteomic profiles, like metabolomic and transcriptomic profiles, have other interesting applications. Many medical
studies have shown that they can be used for classification, most often to allowearly clinical diagnoses or cancer prognosis, or as biomarkers to detect specific pathologies. This study evaluated if such an approach can be
used in the context of agricultural research. It was determined that proteins allowed for correct classification of pigs according to sire breed, rearing environment and gender. Proteins can be used for traceability purposes and is an alternative to DNA-based traceability techniques, or as markers for genetic research.

For more information the full article can be found at http://www.journals.elsevierhealth.com/periodicals/livsci

Clinical and pathological responses of pigs from two genetically diverse commercial lines to porcine reproductive and respiratory syndrome virus infection

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This study investigates the response to infection from porcine reproductive and respiratory syndrome virus (PRRSV) for 2 genetically diverse commercial pig lines. Previous analysis showed significant line differences in susceptibility to PRRSV infection. This study revealed significant line differences in growth during infection. Line B was characterized by faster growth rate than line A in the absence of infection and suffered more severe clinical disease and greater reduction in BW growth after infection. It was concluded that a comprehensive framework describing the interaction between the biological mechanisms and the genetic influence of these would be desirable for achieving progress in the genetic control of this disease.

For more information the full article can be found at http://jas.fass.org/

Progress & potholes: Transporters talk the issues

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Livestock Transport Conference highlights animal care leadership role for truckers and other involved in the relocation of livestock.

There have been many advances in science, handling guidelines and training programs in recent years, both for humane livestock handling in general and increasingly for transporting livestock. Among the
examples are Canada’s Certified Livestock Transporter (CLT) program – a comprehensive training course and support service for livestock truckers, shippers and receivers that offers certification. A similar U.S. based program is Transporter Quality Assurance (TQA). As well, North America is moving toward third-party livestock transport audits as part of quality assurance, lead by the recent development of the American Meat Institute’s Animal Welfare Audit for Transportation.

Feed preference in pigs: Relationship with feed particle size and texture

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This experiment was conducted to study the relationship between the feed preference values of feeds reported previously and their particle size and texture characteristics. The effect of individual feed ingredients was studied
when added to a common basal diet. In addition to the basal diet, which included rice, a soybean meal product containing 56% CP, sunflower oil, and wheat bran, a total of 126 diets were studied. Of these, 63 were prepared
by replacing the rice in the basal diet with another cereal. It was concluded that the texture properties
of the feed could explain in part the feed preferences observed in pigs, whereas particle size characteristics had less impact.

For more information the full article can be found at http://jas.fass.org/