Testing the Integration of U.S.–Canadian Meat and Livestock Markets

Posted in: Economics by admin on January 1, 2006 | No Comments

Price transmission is a critically important issue that affects market enlargement and the unification
of Canadian–U.S. agriculture. This study adopts alternative frameworks to examine the nature of
cross-border integration in selected meat and livestock markets. The aim is to determine the extent to
which selected meat and livestock markets transmit price signals across the international border using
time-series data through 2001. Typically, price-based studies examining market integration across
countries ignore important spatial and temporal factors affecting commodity price relationships such
as adjustments lags, changes in the value of national currencies, and policy-induced trade barriers.
Here, we account for such factors in our two model specifications. The first model is based upon the
law-of-one price (LOP) framework and focuses on spatial efficiency. The second analytical framework
is the vector autoregressive (VAR) model that highlights the dynamic notion of market connectedness.
The LOP analysis permits us to formally test the existence of perfect market integration and complete
market segmentation. The VAR analysis enables us to gauge price-shock transference. Empirical
evidence is generated confirming that the two national markets for whole chicken are segmented, a
not unsurprising finding given that poultry is a supply managed sector in Canada. The Canadian–U.S.
hog- and pork-product markets were found to be more integrated than the Canadian–U.S. steer- and
beef-product markets. Evidence is also provided showing that the Canadian–U.S. exchange rate inhibits
cross-border integration in these commodity markets.

The United States pork niche market phenomenon

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Niche pork markets and alternative swine production practices offer an unusual contrast to commodity pork markets and industrial confinement swine production. The pork niche market producers are a distinct clientele group for animal scientists, agricultural engineers, veterinarians, and other suppliers of information and technology. If pork niche markets continue to flourish, the markets and the producers that supply them will be a viable sector in a diverse US pork industry. The niche pork market sector offers an entry pathway for beginning producers, diversified farmers, and sustainable agriculturalists. To continue to grow and develop, the sector will need appropriate research, extension, and support programming. It also will need to develop tangible incentives for existing producers to expand their
operations and for new or conventional producers to learn production methods of these systems. Specifically,
research on production costs, transaction costs, and herd health management is needed to provide producers
with the information they require to remain competitive and to secure operating capital from local banks.
The pork niche market is a rapidly evolving sector that presents unique challenges and opportunities.

The Value of USDA Situation and Outlook Information in Hog and Cattle Markets

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This study investigates the impact of six major USDA reports in hog and cattle markets: cattle, cattle on feed, cold storage, hogs and pigs, livestock, dairy, and poultry outlook (LDPO); and the world agricultural supply and demand estimates (WASDE). A TARCH-in-mean model, with dummy variables to measure the impact of USDA Reports and other external factors, is used to model close-to-open live/lean hog and live cattle futures returns from January 1985 to through December 2004. The analysis revealed a statistically significant impact of all but cattle and cold storage reports in live/lean hog futures. Hogs and pig reports had the highest impact on live/lean hog returns by increasing conditional standard deviation 96%. Cattle, cattle on feed, and hogs and pigs reports had the highest impact on live cattle returns by increasing conditional standard deviation 26% and 37.5%.

A cost–benefit analysis of Salmonella-control strategies in Danish pork production

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This economic analysis is an evaluation of the socio-economic profitability of different control strategies along the stable to table chain. It was found that only hot-water decontamination would be profitable from a socio-economic point of view because it was the only alternative with a positive net present value: €3.5 million.the least profitable alternative was use of home-mixed feed with a net present value of -€262.3 million, whereas for sanitary slaughter it was -€43.6 million, and for acidified feed it was -€79.9 million. Furthermore, regardless of the alternative chosen, it is the pig industry (farmers and slaughterhouses) that would have to pay for the benefits of the rest of society. After our analysis was concluded, the Danish pig sector decided to increase focus on slaughterhouse hygiene and at the same time to introduce hand-held steam-sucking on some slaughterhouses. The effect of this will be shown in the years to come.

What Can the United States Learn from Spain’s Pork Sector? Implications from a Comparative Economic Analysis

Posted in: Economics by admin on January 1, 2005 | No Comments

Consumer choice and suggested price for pork as influenced by its appearance, taste and information concerning country of origin and organic pig production

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The aims of this work were therefore to determine the influence of appearance, the eating quality and, for the
first time, the price that consumers are willing to pay for pork labelled with information concerning the system
and origin of pig production. The study was conducted in four countries to try to derive any common aspects which could form the basis of a European marketing strategy.

Economic impacts of reduced pork production associated with the diagnosis of Actinobacillus pleuropneumoniae on grower/finisher swine operations in the United States

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The purpose of this study was to estimate the economic impacts of reduced pork production associated with the diagnosis
of APP on grower/finisher swine operations, by means of a welfare analysis from the perspective of the US society. As a whole, the swine industry may stand to benefit less from increased pork production (associated with eliminating APP) than consumers. Most of the economic surplus lost by consumers (as a result of reduced pork production associated with APP) was transferred to producers as economic gain. Individual swine producers need to compare the costs of
measures intended to control APP with the anticipated benefits of decreased APP. Uncertainty in the survey-based estimate of the production impact of APP was the greatest
contributing factor to the uncertainty in the estimates of the economic effects of APP.
Results of the sensitivity analysis could propel the design of future surveys of pork
producers.

Distributional Impacts of Country-of-Origin Labeling in the U.S. Meat Industry

Posted in: Economics by admin on January 1, 2004 | No Comments

Concerns about the negative effect of U.S. meat and livestock imports on domestic livestock prices have increased interest in country of origin labelling (COOL) legislation. An equilibrium displacement model is used to estimate short-run and long-run changes in equilibrium prices and quantities of meat and livestock in the beef, pork, and poultry sectors resulting from the implementation of COOL. Retail beef and pork demand would have to experience a one-time, permanent increase of 4.05% and 4.45%, respectively, so that feeder cattle and hog producers do not lose producer surplus over a 10-year period.

Cost-effectiveness of controlling Salmonella in the pork chain

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The objective of this paper is to explore the cost effectiveness of different control scenarios against Salmonella
in the Dutch pork chain to determine the most promising scenarios. Multiple scenarios were analysed, whereas each scenario included the epidemiological and economic consequences of interventions in the pork chain on the separate stages and on the pork chain as a whole. The first conclusion is that with respect to the prevalence reduction in the stages, the lairage stage seems to be most cost-effective. The second conclusion is that the most cost-effective strategy for the pork supply chain is to implement interventions in the first place in the slaughterhouses and also in the finishing farms. The third conclusion is that the cost-effectiveness is reduced in case not all farms or firms within a particular stage participate in reducing the prevalence of Salmonella. The most effective strategy with respect to the reduction of Salmonella will be to include the transportation and lairage in the Salmonella control
program, since these stages may become more important when the largest problems are solved in the finishing and
slaughter stage. The results of this paper give the first insight in the promising scenarios. In further research,
these scenarios have to be examined in more detail and can subsequently put into practice.

Wholesale-Retail Marketing Margin Behavior in the Beef and Pork Industries

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An econometric model is used to estimate real wholesale-retail marketing margins for beef and pork. From 1970 to 1998, these margins increased by 27% and 149% while farm-wholesale margins declined. Wholesale-Retail (WR) marketing margin increases have caused livestock producers to focus on the retail sector as a contributor to declining real livestock prices. Increases in WR margins may be related to increased demand and costs of value-added food products/services as well as increased market concentration in the retail grocery sector. Results indicate that retail factors, and to a lesser extent meat processing factors, significantly increased WR margins and decreased livestock prices.