IDEAS home Printed from
   My bibliography  Save this paper

Dynamic Effects of Drought on the U.S. Livestock Sector


  • Leister, Amanda M.
  • Lee, John G.
  • Paarlberg, Philip L.


This study investigates the long term adjustments to drought by crop and livestock sectors using a dynamic partial equilibrium quarterly modeling framework of the U.S. agricultural economy. By employing a model that links crop production with highly disaggregated livestock production sectors in tandem with observed and projected quarterly data on U.S. drought conditions and producer responses to drought, this work assesses the long term economic implications for producers and consumers. Results show short term drought effects including increases in crop and forage prices in tandem with decreased live cattle prices resulting from increases in slaughter due to drought induced beef cattle herd liquidation. Long run drought impacts result in model predicted crop price increases that cause livestock inventory reductions due to reduced expected future returns. As herd sizes decrease, there are fewer animals moving through the U.S. meat supply chain, which leads to decreases in animal slaughter and increased livestock prices in the long run. Longer term market adjustments cause a significant decrease in consumer surplus, while prolonged drought in 2013 amplifies the model predicted price changes and extends the time needed for key variables to return to baseline levels.

Suggested Citation

  • Leister, Amanda M. & Lee, John G. & Paarlberg, Philip L., 2013. "Dynamic Effects of Drought on the U.S. Livestock Sector," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149946, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea13:149946

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Anderson, David P. & Welch, J. Mark & Robinson, John R.C., 2012. "Agricultural Impacts of Texas’s Driest Year on Record," Choices, Agricultural and Applied Economics Association, vol. 27(3).
    2. Tian Yu & Bruce A. Babcock, 2010. "Are U.S. Corn and Soybeans Becoming More Drought Tolerant?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(5), pages 1310-1323.
    3. Gramig, Benjamin M. & Horan, Richard D., 2011. "Jointly determined livestock disease dynamics and decentralised economic behavior," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(3), September.
    4. Jason Henderson & Nathan Kauffman, 2012. "Initial impacts of the 2012 drought," Main Street Economist, Federal Reserve Bank of Kansas City, issue 3.
    5. Jeffrey H. Dorfman & William D. Lastrapes, 1996. "The Dynamic Responses of Crop and Livestock Prices to Money-Supply Shocks: A Bayesian Analysis Using Long-Run Identifying Restrictions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 530-541.
    6. Paarlberg, Philip L. & Hillberg, Ann & Lee, John G. & Mathews, Kenneth H., Jr., 2008. "Economic Impacts of Foreign Animal Disease," Economic Research Report 56453, United States Department of Agriculture, Economic Research Service.
    7. Guidry, Kurt M. & Pruitt, J. Ross, 2012. "Damages to Louisiana Agriculture from Natural Disasters," Choices, Agricultural and Applied Economics Association, vol. 27(3).
    Full references (including those not matched with items on IDEAS)

    More about this item


    Drought; Livestock; Crops; Dynamic Partial Equilibrium Model; Agribusiness; Crop Production/Industries; Demand and Price Analysis; Farm Management; Production Economics;

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea13:149946. 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). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.