A Foot and Mouth Disease Induced Model of US Excess Supply of Beef
Agriculture is a vulnerable sector of the U.S economy, accounting for 13% of Gross Domestic Product and 15% of employment. It produces quality cheap food for domestic consumption and accounts for more than $65 billion in export revenues. Contagious animal diseases like Foot and Mouth Disease (FMD) are often referred to as economic diseases because of the magnitude of harm they cause producers, local communities and the consequences in international trade. Losses from the 2001 FMD outbreak in the United Kingdom are estimated at $10.7 to $11.7 billion. The total cost of an FMD outbreak is the sum of eradication cost, production losses, and the loss of exports. This paper examines the export effects of a bioterrorist attack such as the introduction of FMD on the US beef industry. The context is to model the US beef market as a price taker on the international beef market, the simplifying “small open economy” assumption of international economics. Although, the beef market is linked to beef prices around the world, we tend to conceive of the US beef market in terms of domestic supply and demand and the resulting domestic equilibrium price. The excess supply of beef is the difference between quantities supplied and demanded that increases with price and responds to other influences on domestic supply and demand. We assumed that U.S consumers will exercise more caution when purchasing beef at grocery store as a result of the outbreak of FMD. As U.S consumers alter their diet, poultry and pork will become good substitutes with poultry having a higher demand than pork. The economic impact of FMD is simulated based on expected changes in price of beef and its substitutes based on three different scenarios of the levels of FMD occurrences.
|Date of creation:||2009|
|Contact details of provider:|| Web page: http://www.saea.org/|
More information through EDIRC
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.:
- Jarvis, Lovell S, 1974. "Cattle as Capital Goods and Ranchers as Portfolio Managers: An Application to the Argentine Cattle Sector," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 489-520, May/June.
- Randal R. Rucker & Oscar R. Burt & Jeffrey T. LaFrance, 1984.
"An Econometric Model of Cattle Inventories,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 66(2), pages 131-144.
- Randal R. Rucker & Oscar R. Burt & Jeffrey T. LaFrance, 1984. "An Econometric Model of Cattle Inventories," Monash Economics Working Papers archive-25, Monash University, Department of Economics.
- Peterson, Hikaru Hanawa & Chen, Yun-Ju (Kelly), 2003. "The Impact Of Bse On Japanese Retail Beef Market," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35233, Southern Agricultural Economics Association.
- James N. Trapp, 1986. "Investment and Disinvestment Principles with Nonconstant Prices and Varying Firm Size Applied to Beef-Breeding Herds," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(3), pages 691-703.
- Yair Mundlak & He Huang, 1996. "International Comparisons of Cattle Cycles," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 855-868. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ags:saeana:46053. 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.