IMPACT OF EXPORTS ON THE U.S. BEEF INDUSTRY

Policy and programmatic decisions dealing with beef exports require good information as to the impact of exports on the domestic beef industry. This paper utilizes a partial equilibrium model of the world beef market to assess the impacts on the U.S. beef sector of increases in real income in major beef importing countries, the impacts of changes in the prices of pork and poultry products, and the impacts of changes in the price of feedgrains. A one percent increase in real GDP in Canada, Japan, Mexico, and South Korea yielded a 1.6 percent increase in U.S. exports of high-quality beef. This increase in exports leads to approximately a 29.2 million pound increase U.S. beef production on a retail weight basis. The increase in export demand also yields an increase in beef prices of approximately $0.275 per cwt. on a $120 box of beef and $0.18 per cwt on a $70 fed steer. One percent increases in the prices of pork and poultry products yield a smaller 0.8 percent increase in U.S. beef exports, but also lead to a 1.5 percent increase in U.S. imports of low-quality beef. This is due to U.S. consumers viewing low-quality beef as a substitute for pork and poultry. Finally, a one percent increase in the price of feedgrains reduces U.S. beef exports by 0.4 percent. This is due to a reduction in U.S. beef production from the increased feeding costs.