ECONOMIC FACTORS DETERMINING CHANGES IN DRESSED WEIGHTS OF LIVE CATTLE AND HOGS

Livestock dressed weights have experienced significant trends and volatility which affect wholesale production of red meats. An econometric model was used to estimate the impact of relative prices and technology on cattle and hog average dressed weights. For fed steers and heifers, the economic incentives affecting placement weights and weight added in feedlots were considered. Results indicate quarterly dressed weights of steers and heifers respond to contemporaneous profitability ratios and to lagged feeder prices, the effects being highly inelastic. Cow dressed weights also responded while hog dressed weights did not respond to profitability ratios. Technology changes may have accounted for about 83% of dressed weight growth for steers and about 62% for hogs from 1980-97.Livestock Production/Industries,

Demand and Supply Factors in the Feed Grain Market: Effects on Corn Producers

Demand and Price Analysis,

Distribution of Cost Efficiencies in the Beef Marketing Channel

Marketing,

USDA DATA REVISIONS OF CHOICE BEEF PRICES AND PRICE SPREADS: IMPLICATIONS FOR ESTIMATING DEMAND RESPONSES

Reduced form price equations were estimated to compare market demand responses from two data sources: U.S. Department of Agriculture (USDA) beef price and price spread data per revisions in 1978 and per revisions in 1990. The latest revisions were necessary to account for changing beef industry technology and product consumption in the 1980s. Results indicate the elasticities of retail and derived demands average about 25 and 17% lower, respectively, when using the 1990 revised data. Trends and lag adjustments played an important role. The analyses suggest careful interpretation of demand responses when time series data lag technology conditions in the market.Demand and Price Analysis, Livestock Production/Industries,

Relative Volatility in the U.S. Beef Market

Marketing,

Evaluation of Beef Promotion Expenditures Under the U.S. Beef Checkoff Program

Agricultural and Food Policy,

Feed Grain Volatility and Effects on Feeder Cattle Producers

Production Economics,

ECONOMIC FACTORS CONTRIBUTING TO THE U.S. BEEF PRICE SURGE IN 2003

Demand and Price Analysis, Livestock Production/Industries,

U.S. BEEF TRADE AND PRICE RELATIONSHIPS WITH JAPAN, CANADA, AND MEXICO

U.S. live cattle and beef trade has increased substantially since the mid-1980s. Total beef imports (cattle and beef, dressed weight) increased from 2.51 billion pounds in 1985 to 3.89 billion pounds in 1998. Total beef exports (cattle and beef, dressed weight) increased from 0.42 billion pounds to 2.38 billion pounds over the same period. Consequently, net imports declined by 0.58 billion pounds. On a value basis, U.S. net beef exports (value of total beef exports less the value of total beef imports) has become considerably less negative, increasing by 88 percent from 1980 to 1998. The overall improvement in the U.S. beef trade was characterized, however, by different trade impacts with the major export customers and import suppliers. These countries are Japan, Canada, Mexico, South Korea, Australia, and New Zealand. Trade relationships and beef price effects in this article mainly address those of the first three countries. From 1990 to 1998, U.S. net imports of live cattle and beef (carcass weight) for all countries declined from 9.2 percent to 5.2 percent of total U.S. beef supplies. Given the average market price for that period and the coefficient of price flexibility, this decline implied an increase in nominal slaughter steer price of $4.00/cwt. However, this price effect was offset by other factors in the domestic market, such as large competitive production, increasing dressed weights, increasing wholesale-retail margins, and a decrease in consumer beef demand. Japan constitutes about 54 percent of the export market for U.S. beef. This country has been the fastest growing export market for high-value cuts of U.S. beef; quantities exported increased by 101 percent from 1990 to 1998. Strong economic growth (until 1997), trade liberalization, and changes in dietary preferences account for most of the increase. The result of these expanding exports, as a percentage of total beef disposition, was an increase in slaughter steer price of$1.70/cwt. U.S. beef and live cattle trade with Mexico has improved considerably (until recent import tariffs on U.S. beef); that is, net beef exports were negative at 357 million pounds in 1990 but became positive at 200 million pounds in 1998. Declines in imported Mexican cattle and increases in U.S. beef exports account for the change. Mexico currently accounts for nearly 20 percent of U.S. beef exports. The result of erasing the trade deficit over the 1990 to 1998 period was an increase in slaughter price of $2.12/cwt. The U.S.-Mexican net trade position in beef and live cattle may remain volatile in the future, however. The U.S. net beef trade position with Canada has declined considerably. Including trade in live cattle and beef, net imports from Canada increased from 2.7 percent to 5.2 percent of U.S. beef supplies from 1990 to 1998. In general, imports (cattle and beef) have significantly increased, while exports (cattle and beef) have increased little over this period. Reasons for the increased deficit include Canadian grain policies and feedlot expansion, U.S. excess capacity in meatpacking, a strong U.S. dollar and intercountry price differentials. The result was a reduction in U.S. slaughter price of$2.55/cwt. Economists, however, consider the U.S.-Canadian beef markets to be highly integrated. Thus, reducing the trade deficit may have little impact on U.S. slaughter price. Overall, U.S. trade in live cattle and beef has not reached the same importance as that of grain. Nevertheless, U.S. export and import quantities measured as a percentage of supplies or disposition imply that producer price effects are not zero. Domestic factors of beef dressed weights, red meat and poultry production, beef margins, feed costs, and consumer beef demand still dominate the price determination picture. The provisional tariff imposed on Canadian exports of live cattle, but recently removed by the U.S. International Trade Commission (ITC), would have slightly increased U.S. price and decreased Canadian price. But with compensating Canadian carcasses and beef entering the U.S. market, and increased slaughter costs, the gains may have been nullified.International Relations/Trade,

INTEGRATION AND INTERDEPENDENCE IN THE U.S. AND CANADIAN LIVE CATTLE AND BEEF SECTORS

The live cattle and beef markets of Canada and the United States are well integrated and highly interdependent, but in an unequal fashion. This paper assesses the role of trade agreements and domestic policies in increasing market integration and analyses the impact of remaining barriers to integration. In this paper, we use integration in the context of forming or blending markets into a whole. When the Canada-United States Free Trade Agreement (CFTA) was implemented in 1989, tariffs on both live cattle and beef were reduced and within a few years many were eliminated. In 1996, the United States imported 1.5 million head of slaughter and feeder cattle from Canada, nearly a sixfold increase in the number of cattle imported prior to CFTA, which numbered 262,091 in 1987. However, live cattle imports are still extremely small compared to the U.S. market, with imports of live cattle in 1996 (carcass weight equivalent) constituting around 4 percent of U.S. beef consumption. The United States is a much more important market for Canada than vice versa, with 60 percent of Canada's beef exports destined to the United States in 1996, but only 16 percent of U.S. beef exports destined to Canada. As impediments to trade between Canada and the United States were removed, north-south trade increased. As the feedlot and packing industries in Alberta expand, it is anticipated that fewer Canadian slaughter cattle will be exported to the United States. In fact, U.S. feeder cattle may be exported to Alberta. Subsidies for beef producers in Canada have been significantly higher than for the United States, at times twice as high, although the level of support for beef and veal is lower than that for other commodities. Both the United States and Canada protect their domestic industries through tariffs, although this protection will decline moderately with the implementation of the 1994 Uruguay Round Agreement. Both countries subsidize their industries through provision of inspection services, research and advisory programs, and marketing and promotion programs; however, the importance of these government policies varies between countries. Canada has eliminated a number of programs previously used to assist the beef industry, including an insurance program, the National Tripartite Stabilization Program. The United States does not have a regular program of income support for stockgrowers. The United States does have several programs that promote beef exports. To the extent that export promotion programs result in higher U.S. market prices, they may also increase U.S. imports of live cattle and beef from Canada. Due to the large size of the United States market relative to Canada, it is commonly argued that cattle and beef prices are determined in the U.S. market, with Canadian prices reflecting differences in exchange rates and transportation costs. U.S. slaughter prices were found to be an extremely important determinant of Canadian slaughter prices. A weaker relationship was found between U.S. and Canadian barley prices. Mutual recognition of the equivalency of U.S. and Canadian meat grading systems has not occurred and this has ramifications for U.S.-Canadian trade in beef. Canadian packers are forced to sell beef at greatly reduced prices in the United States, resulting in lower boxed beef exports to the United States and higher exports of carcasses than would occur with grade equivalency. The same is true for U.S. packers. Because U.S. beef cannot be sold into the eastern Canadian market without a large reduction in price, the U.S. beef industry is deprived of a lucrative outlet for the lean beef that is preferred in eastern Canada. The increasing level of integration in Canadian and U.S. cattle and beef markets has been accompanied by a corresponding increase in their interdependence. Policymakers in both countries must recognize that domestic and export policies need to account for open borders between the two countries, limiting the choice of policies available to achieve a particular goal. Transportation costs will always limit the choice of packers that producers can sell to. However, within these bounds, a single market means that there are more choices for producers. The beef industries in both the United States and Canada are increasingly dependent on export markets, particularly the Pacific Rim. Both countries have a mutual interest in increasing access to third country markets. Integration of U.S. and Canadian live cattle and beef markets is well advanced, and it is perhaps the most integrated market of the major agricultural commodities. Supply management of the Canadian dairy, egg, and poultry industries and the implementation of high tariffs after the removal of quotas have prevented integration in those markets. For grains, marketing institutions and systems in Canada prevent complete market integration. For cattle and beef, the lack of trade barriers and relative unimportance of government intervention in the sector have facilitated movement toward a single market.live cattle trade, U.S. cattle and beef, Canadian cattle and beef, International Relations/Trade, F1,