The Feasibility of Broiler Production in Iowa

This study updates a 1986 Iowa State University study that showed that an Iowa-based broiler industry would be financially successful. However, while the U.S. broiler industry has grown enormously, Iowa still imports almost all of the retail-ready broilers consumed in the state. The author examines current attitudes of broiler industry executives and the legal environment in Iowa. The study reveals some deterrents as well as some benefits to such an industry

Recent Developments and Analysis of U.S.–South Korean Agricultural Trade

EC Agricultural Commissioner Ray MacSharry surprised many by suggesting dramatic reductions in EC commodity prices, which would in effect recouple much of its agriculture with world prices. In July, all twelve EC agriculture ministers accepted the MacSharry proposal as the basis for negotiation. The entire package will be voted on in October 1991, and the general consensus is that some version of the MacSharry proposal will be adopted at that time. There exists a real possibility, therefore, that the European Community will eventually find an agricultural price reform proposal that is acceptable to the United States and other GATT participants. Should this occur, it will inevitably be in the closing moments of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations. One can then imagine a scenario in which the South Korean or Japanese negotiators are forced to decide between accepting a proposal that is politically unacceptable at home or being blamed for the failure of the GATT round. If this situation occurs and if the round fails, the South Korean and Japanese negotiators will be criticized in the United States for having assumed that the U.S. and EC negotiators would fight to a standstill and that, by adopting a wait-and-see attitude, the South Koreans could have avoided the ill will that the GATT negotiations have generated

Trans-Pacific Partnership and Foreign Ag Subsidies

Testimony before the House Committee on Agricultur

Meat Exports or Soybean Exports? An Iowa Perspective

How would a representative Iowa soybean producer optimally allocate promotional dollars? Hayes suggests in this study that producers will accrue more positive economic results from funding meat exports rather than soybean exports. Meat exports that originate in Iowa cause local and national prices to rise, and promotional dollars spent to increase markets are best spent on markets with growth potential (in this case, the pork export market is particularly critical)

A New Risk Management Tool for Crop Producers

A new crop insurance product, “Margin Protection,” was introduced by the USDA this fall. The product provides corn and soybean producers in Iowa (and rice and wheat producers in selected states) with a margin guarantee. The product was developed by economists at Iowa State and Watts and Associates in Bozeman, Montana. The sales closing date for MP in Iowa is September 30

Response to “Ethanol Production and Gasoline Prices: A Spurious Correlation” by Knittel and Smith

In a recent working paper, Christopher Knittel and Aaron Smith present an attack on a peer-reviewed paper “The Impact of Ethanol Production on US and Regional Gasoline Markets Relating Ethanol Production to Gasoline Prices written by myself and Xiaodong Du, and published in 2009 in Energy Policy (Vol. 37 No.8), as well as two subsequent working papers in 2011 and 2012. Our work found that as ethanol production increased, the price of gasoline fell relative to the price of crude oil. Knittel and Smith claim to have refuted this result, and conclude that their “Empirical models that are most consistent with economic theory suggest effects that are near zero and statistically insignificant.

THE CHINESE MARKET FOR U.S. PORK EXPORTS

China feeds twenty-two percent of the world's population on seven percent of its arable land. In contrast, the U.S. and Canada own seventeen percent of the world's arable land, but feed only five percent of its people. As China's income increases, its people will demand more livestock products, including poultry, dairy, beef, and eggs, and more alcohol. Potential Chinese import demand for pork is examined in this paper. The question facing Chinese policymakers is whether to follow their current policy of food self-sufficiency or allow imports of pork muscle and variety meats. Projections of Chinese production and consumption indicate that, by the year 2007, China could import up to 9.1 million metric tons (product weight equivalent) of pork. The current Chinese government is very opposed to food imports of any kind. However, China has applied for entry into the World Trade Organization. Negotiations on China's entry could include access to China's pork market, and it is most likely that access could be gained to the variety meat market. The implications of two opposing scenarios are examined in this paper: first, China continues its policy of self-sufficiency; or second, China allows imports of pork variety meats. Self-Sufficiency Scenario: The anticipated increase in livestock production will cause feed grain consumption in China to increase more rapidly than production. Once China becomes a permanent net importer of feed grains, its prices will rise to reflect world feed grain prices plus transportation costs. This development will make China's pork products more expensive than imports. This simple line of argument means that China is about to modernize and expand the world's largest pork industry in the wrong place. Expanding pork production in China instead of allowing imports from efficient producers will cause an enormous misallocation of world resources. The Chinese people would benefit more if China concentrated on labor intensive crops and allowed for the free importation of livestock products. Import Access Scenario: Where the pork market is concerned, U.S. and Chinese consumers complement each other. Chinese people like variety meats, whereas U.S. consumers prefer pork muscle meats. Because of its dominance in the world market, China would be able to determine world prices if it allowed free importation of variety meats. The drop credit, which is the value of the pork variety package, is estimated to increase by 45 percent. However, the increase in the value of the pork variety package would not imply an increase in prices in the U.S. domestic market which largely consumes pork muscle meats. Implications for U.S. Producers: Even if China does not allow imports of pork, U.S. producers will still benefit from increased Chinese demand. Due to projected increased consumption over the next ten years, it is likely that China will stop exporting its current level of 150,000 to 200,000 tons of pork muscle meat. If China does allow free importation of pork variety meats, the increased value of the U.S. drop credit would add $4.72 to the value of each hog carcass or about$1.90 per hundredweight. For the U.S. pork industry, the net annual benefit of access to the Chinese market would be approximately $300 million per year. Hayes argues that opening this market may be feasible as part of negotiations over China's entry to the World Trade Organization. Regardless of how Chinese pork market policy evolves, the demand for U.S. feed grain will increase, causing some movement of land in the U.S. from wheat production into feed grain production.China trade, livestock, feedgrains, meat, International Relations/Trade, F1,

The environmental and economic impact of removing growth-enhancing technologies from U.S. beef production

The objective of this study was to quantify the environmental and economic impact of withdrawing growth-enhancing technologies (GET) from the U.S. beef production system. A deterministic model based on the metabolism and nutrient requirements of the beef population was used to quantify resource inputs and waste outputs per 454 × 106 kg of beef. Two production systems were compared: one using GET (steroid implants, in-feed ionophores, in-feed hormones, and beta-adrenergic agonists) where approved by FDA at current adoption rates and the other without GET use. Both systems were modeled using characteristic management practices, population dynamics, and production data from U.S. beef systems. The economic impact and global trade and carbon implications of GET withdrawal were calculated based on feed savings. Withdrawing GET from U.S. beef production reduced productivity (growth rate and slaughter weight) and increased the population size required to produce 454 × 106 kg beef by 385 × 103 animals. Feedstuff and land use were increased by 2,830 × 103 t and 265 × 103 ha, respectively, by GET withdrawal, with 20,139 × 106 more liters of water being required to maintain beef production. Manure output increased by 1,799 × 103 t as a result of GET withdrawal, with an increase in carbon emissions of 714,515 t/454 × 106 kg beef. The projected increased costs of U.S. beef produced without GET resulted in the effective implementation of an 8.2% tax on beef production, leading to reduced global trade and competitiveness. To compensate for the increase in U.S. beef prices and maintain beef supply, it would be necessary to increase beef production in other global regions, with a projected increase in carbon emissions from deforestation, particularly in Brazil. Withdrawing GET from U.S. beef production would reduce both the economic and environmental sustainability of the industry

The Chinese Market for U.S. Pork Exports

It has become obvious to many observers that China will need to import feed grains or livestock products to achieve consumer diets similar to those of the developed world. The first part of this report discusses the supply and demand situation for the Chinese pork market through 2007. The second section provides an in-depth analysis of the Chinese market for pork variety meats and the potential benefits that will accrue if this market is opened. The last section lists actions that would allow U.S. pork producers to make optimal use of these new opportunities