The Effect of Foot and Mouth Disease on Trade and Prices in International Beef Markets
The paper develops and uses a two step quantitative model to analyze the effect of Foot and Mouth Disease (FMD) on international beef markets over time. Using monthly data from 1990-2002 for 7 major beef exporters and for 22 major beef importers, we use a probit equation to estimate the probability that country i exports to country j, taking account of foot and mouth status of exporter, sanitary policy of importer, beef quality, trade preferences, distance, and other factors affecting whether beef trade occurs. We then use OLS to estimate the export prices that are obtained for beef, taking account of beef quality, country per capita, trading preferences, region, per capita income, and a time trend, including terms to adjust for censorship in the first stage. Using the estimated equations, we compare the predicted change in trading partners and in the prices received by the two exporters in our sample that are not FMD free, Brazil and Uruguay, under the assumption that their status switches from having FMD to being FMD free. The model performs well. The results suggest that FMD continues to impede trade between many countries and does accordingly reduce the price received for beef from countries with FMD. Nonetheless, the "sanction" from FMD appears smaller than previously believed.
|Date of creation:||2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vella, Francis & Verbeek, Marno, 1999. "Two-step estimation of panel data models with censored endogenous variables and selection bias," Journal of Econometrics, Elsevier, vol. 90(2), pages 239-263, June.
- Nijman, Theo & Verbeek, Marno, 1992. "Nonresponse in Panel Data: The Impact on Estimates of a Life Cycle Consumption Function," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(3), pages 243-57, July-Sept.
- Knights, Stephen & Harris, Mark N & Loundes, Joanne, 2002.
"Dynamic Relationships in the Australian Labour Market: Heterogeneity and State Dependence,"
The Economic Record,
The Economic Society of Australia, vol. 78(242), pages 284-98, September.
- Stephen Knights & Mark Harris & Joanne Loundes, 2000. "Dynamic Relationships in the Australian Labour Market: Heterogeneity and State Dependence," Melbourne Institute Working Paper Series wp2000n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
- Nijman, T.E. & Verbeek, M.J.C.M., 1992. "Non-response in panel data : The impact on estimates of a life cycle consumption function," Other publications TiSEM 3c661e33-2cd1-47f1-a7d9-3, Tilburg University, School of Economics and Management.
- Dries, Mark A. & Unnevehr, Laurian J., 1990.
"Influence of Trade Policies on Price Integration in the World Beef Market,"
Agricultural Economics of Agricultural Economists,
International Association of Agricultural Economists, vol. 4(1), April.
- Dries, Mark A. & Unnevehr, Laurian J., 1990. "Influence of trade policies on price integration in the world beef market," Agricultural Economics, Blackwell, vol. 4(1), pages 73-89, April.
- Lovell Jarvis & Esperanza Vera-Toscano, 2004. "Seasonal Adjustment in a Market for Female Agricultural Workers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 254-266.
- Rae, Allan N. & Nixon, Chris & Gardiner, Peter, 1999. "Foot-and-mouth disease and trade restrictions: Latin American access to Pacific Rim beef markets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 43(4), December.
- Diakosavvas, Dimitris, 1995. "How integrated are world beef markets? The case of Australian and U.S. beef markets," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 12(1), April.
- Javier Ekboir & Lovell S. Jarvis & Daniel A. Sumner & José E. Bervejillo & William R. Sutton, 2002. "Changes in foot and mouth disease status and evolving world beef markets," Agribusiness, John Wiley & Sons, Ltd., vol. 18(2), pages 213-229.
- Diakosavvas, Dimitris, 1995. "How integrated are world beef markets? The case of Australian and U.S. beef markets," Agricultural Economics, Blackwell, vol. 12(1), pages 37-53, April.
- Delgado, Christopher L. & Rosegrant, Mark W. & Steinfeld, Henning & Ehui, Simeon K. & Courbois, Claude, 1999.
"Livestock to 2020: the next food revolution,"
2020 vision discussion papers
28, International Food Policy Research Institute (IFPRI).
- Newey, Whitney K., 1987. "Efficient estimation of limited dependent variable models with endogenous explanatory variables," Journal of Econometrics, Elsevier, vol. 36(3), pages 231-250, November.
- Koo, Won W. & Karemera, David & Taylor, Richard, 1994. "A gravity model analysis of meat trade policies," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 10(1), January.
- Koo, Won W. & Karemera, David & Taylor, Richard, 1994. "A gravity model analysis of meat trade policies," Agricultural Economics, Blackwell, vol. 10(1), pages 81-88, January.
- Esperanza Vera-Toscano & Euan Phimister & Alfons Weersink, 2004. "Panel Estimates of the Canadian Rural/Urban Women's Wage Gap," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1138-1151.
When requesting a correction, please mention this item's handle: RePEc:ags:aaea05:19424. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.