Economics

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Author(s): Suparna Bhattacharya, Azzeddine M. Azzam, Darrell Mark
Publication Date: January 1, 2009
Reference: Paper prepared for presentation at the Agricultural & Applied Economics Association’s 2009 AAEA & ACCI Joint Annual Meeting, Milwaukee, WI, July 26-28, 2009
Country: USA

Summary:

In this paper we study the linkage between the ethanol and the meat market by using a multi-market equilibrium displacement model (EDM) that considers six markets – beef, pork, chicken, corn, ethanol, and ethanol byproducts, and their interrelatedness. What we find is that a 10% percent shift in ethanol demand raises the corn price by 4.48%. This leads to a decline in corn demand by 4.05% for cattle, 2.38% for hogs, and 8.55% for chicken. The quantity supplied of byproducts rises by 5.7% and its price 15 declines 3.96%. The price decline leads to 9.5% increase byproduct utilization in cattle sector and 3.11% in the hog sector. We also provide total elasticities of prices and quantities in the meat marketing channel with respect to changes in the price of ethanol, the price of corn, and the price ethanol by products. In all cases the most sensitive sector is the poultry sector, followed by beef and pork.

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