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Do Antibiotics Reduce Production Risk For U.S. Pork Producers?

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  • Liu, Xuanli
  • Miller, Gay Y.
  • McNamara, Paul E.
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    Abstract

    Production risk from live weight variation of market pigs has become a more important concern in U.S. swine production. Packers are concerned about the variation in carcass size because of the demand for standardized cuts and the use of automation in the slaughter process. Swine producers care about standardized pigs because of revenue implications and possible links to animal health and productivity. Pig size variation can be due to various condition and inputs including antibiotics. However, discussions on risk reduction from antibiotic use have generally not been considered. Our work extends previous studies by systematically examining the aspects of production risk reduction and highlights the potential results of banning antibiotics from a risk perspective. Using data from National Animal Health Monitoring System 2000 survey data and PigCHAMP, we identify the relationship between antibiotic use and production risk by an econometric model. Applying production costs for feeder to market pigs and a price matrix, the uncertainty in profits is evaluated. The impacts of risk on the decision making of swine producers are examined under the framework of expected utility and stochastic dominance analysis. Our results show that production risk from weight variability of market hogs is important in determining profits and utility under a pricing system. Production risk (i.e. weight gain variability) is related to the use of sub-therapeutic antibiotics. Swine producers could decrease production risk and enhance utility by adjusting antibiotic use. These results offer some support for optimal use of sub-therapeutic antibiotics.

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    File URL: http://purl.umn.edu/22026
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    Bibliographic Info

    Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2003 Annual meeting, July 27-30, Montreal, Canada with number 22026.

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    Date of creation: 2003
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    Handle: RePEc:ags:aaea03:22026

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    Related research

    Keywords: production risk; antibiotics; swine; utility; stochastic dominance; Livestock Production/Industries; Risk and Uncertainty; Q10; Q12; Q14.;

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    1. Lawrence, John D. & Kliebenstein, James, 1995. "Contracting and Vertical Coordination in the United States Pork Industry," Staff General Research Papers 5050, Iowa State University, Department of Economics.
    2. Davidson, R. & Duclos, J.-Y., 1998. "Statistical Inference for Stochastic Dominance and for the Measurement of Poverty and Inequality," G.R.E.Q.A.M. 98a14, Universite Aix-Marseille III.
    3. Hayes, Dermot J. & Jensen, Helen H. & Backstrom, Lennart & Fabiosa, Jacinto F., 2001. "Economic Impact of a Ban on the Use of Over the Counter Antibiotics in U.S. Swine Rations," Staff General Research Papers 5139, Iowa State University, Department of Economics.
    4. Russell Davidson, 2006. "Stochastic Dominance," Departmental Working Papers 2006-19, McGill University, Department of Economics.
    5. David E. Sahn & David C. Stifel, 2002. "Robust Comparisons of Malnutrition in Developing Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 716-735.
    6. Meyer, Jack, 1987. "Two-moment Decision Models and Expected Utility Maximization," American Economic Review, American Economic Association, vol. 77(3), pages 421-30, June.
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