The Impact of COOL on Mexican Cattle and Beef Production and Trade Derrell S. Peel Department of...
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![Page 1: The Impact of COOL on Mexican Cattle and Beef Production and Trade Derrell S. Peel Department of Agricultural Economics Oklahoma State University.](https://reader035.fdocuments.in/reader035/viewer/2022062409/5697bff61a28abf838cbe530/html5/thumbnails/1.jpg)
The Impact of COOL on The Impact of COOL on Mexican Cattle and Beef Mexican Cattle and Beef
Production and TradeProduction and Trade
Derrell S. PeelDerrell S. PeelDepartment of Agricultural Department of Agricultural
EconomicsEconomics
Oklahoma State UniversityOklahoma State University
![Page 2: The Impact of COOL on Mexican Cattle and Beef Production and Trade Derrell S. Peel Department of Agricultural Economics Oklahoma State University.](https://reader035.fdocuments.in/reader035/viewer/2022062409/5697bff61a28abf838cbe530/html5/thumbnails/2.jpg)
Background
• Mexico has exported cattle to the U.S. for many years
• Recently Mexico has become a major export market for U.S. beef
![Page 3: The Impact of COOL on Mexican Cattle and Beef Production and Trade Derrell S. Peel Department of Agricultural Economics Oklahoma State University.](https://reader035.fdocuments.in/reader035/viewer/2022062409/5697bff61a28abf838cbe530/html5/thumbnails/3.jpg)
Impacts of COOL on Mexico
• Initial: COOL may reduce cattle exports to the U.S.
• Secondary: Changes in the type and quantity of beef production in Mexico will impact Mexican imports of U.S. beef
![Page 4: The Impact of COOL on Mexican Cattle and Beef Production and Trade Derrell S. Peel Department of Agricultural Economics Oklahoma State University.](https://reader035.fdocuments.in/reader035/viewer/2022062409/5697bff61a28abf838cbe530/html5/thumbnails/4.jpg)
MAJOR U S BEEF EXPORT MARKETSCarcass Weight, Annual
0
200
400
600
800
1000
1200
Japan Canada Mexico Korea
Mil. Pounds
Avg.1996/00
2001
2002
I-N-1803/04/03
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U S BEEF EXPORTS TO MAJOR MARKETSCarcass Weight, Monthly
0
20
40
60
80
100
120
140
1994 1995 1996 1997 1998 1999 2000 2001 2002
Mil. Pounds
Japan
Canada
Mexico
SouthKorea
I-N-3501/23/03
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U.S. Beef Export Shares
0%10%20%30%40%50%60%70%80%90%
100%
1997 1998 1999 2000 2001 2002
KOREAMEXICOCANADAJAPAN
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CATTLE IMPORTS FROM MEXICOAnnual
0
200
400
600
800
1000
1200
1400
1600
1800
1977 1980 1983 1986 1989 1992 1995 1998 2001
Thou. Head
I-N-1703/04/03
1,004,609 head (1986-2002)
3.2 % of Feeder Supplies
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CATTLE EXPORTS TO MEXICOAnnual
0
100
200
300
400
1977 1980 1983 1986 1989 1992 1995 1998 2001
Thou. Head
Mexico
I-N-1403/04/03
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Impact of COOL on U.S/Mexican Cattle and Beef
Trade• Analysis with the GANAMEX model• Assume complete elimination of cattle
imports• No change in Mexican consumption• Results show long run adjustments in
Mexican industry
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““GANAMEX”GANAMEX”Ganadería MexicanaGanadería Mexicana
• A linear programming model to determine the minimum cost of providing a minimum specified quantity of beef consumption.
• Background– Cockerham, 1995– Hayes, 1999
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GANAMEX: Principal Characteristics, I
• Regional Delineation– 4 Production Regions– 6 Feedlot Regions– 4 Consumption Regions
• 4 Cow-Calf Production Systems• 2 Stocker Production Systems• 4 Cattle Finishing Systems
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GANAMEX: Principal Characteristics, II
• 4 Meat types• 2 Slaughter systems
– TIF-like and Local
• 3 Forage Sources– Range, Crop Residues, Irrigated Pasture
• Movement of cattle between production regions for stocker and grass finishing
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GANAMEX: Principal Characteristics, III
• Exports of steer and heifer calves• Exports of feeder steers and heifers• Imports of 2 meat types• Imports of slaughter cows• Exports of beef• Imports of Central American calves and
feeders
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Production Systems
• Traditional– Weaning > Extensive Stocker > Grass Finish– Slaughter Age: 36 - 48 months
• Semi-Intensive– Weaning > Extensive Stocker> Feedlot– Slaughter Age: 26 - 36 meses
• Intensive– Weaning > Intensive Stocker > Feedlot– Slaughter Age: 18 - 26 meses
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COOL Impacts: Mexican Cattle Production
Baseline COOL % Change
Cow Herd 10.41 mill
10.37 mill
-0.4
Calf Crop 5.10 mill 4.35 mill -14.6
Stocker 3.36 mill 3.33 mill -0.9
Grass-fed 2.25 mill 2.28 mill +1.3
Feedlot 1.30 mill 1.55 mill +18.8
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COOL Impacts: Mexican Beef Production
Baseline COOL % Change
Slaughter 4.65 mill 4.91 mill +5.5
Grass-fed Beef
429,187 mt
429,187 mt
0.0
Fed Beef 336,389 mt
394,023 mt
+17.1
Cull Beef 328,374 mt
309,994 mt
-5.6
Total Beef 1,093,950 mt
1,133,204 mt
+3.6
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Impact of COOL on U.S/Mexican Cattle and Beef
Trade• Reduced Mexican cattle imports
– 981,824 head• Reduced U.S. fed beef exports to Mexico
– 56.248 million lbs.• Increased Mexican cow imports
– 83,733 head
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COOL Impacts: U.S. Cattle Prices
Reduced Imports
Reduced Exports
Net Change
Calf Prices + $0.57/cwt
- $1.70/cwt - $1.13/cwt
Feeder Prices
+ $0.28/cwt
- $0.84/cwt - $0.56/cwt
Fed Prices + $0.18/cwt
- $0.53/cwt - $0.35/cwt
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Summary
• Mexico has a comparative advantage in producing calves
• U.S. has a comparative advantage in cattle finishing and meat processing
• Restricting Mexican cattle imports reduces cattle and beef values in Mexico and the U.S.
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http://agecon.okstate.edu/livestock/
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U S BEEF AND VEAL EXPORTSCarcass Weight, Annual
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1979 1982 1985 1988 1991 1994 1997 2000 2003
Bil. Pounds
I-N-0603/03/03
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U S BEEF AND VEAL EXPORTSAs a Percentage of Production, Carcass Weight, Annual
0
2
4
6
8
10
1979 1982 1985 1988 1991 1994 1997 2000 2003
Percent
I-N-0703/03/03
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CATTLE IMPORTS FROM CANADA AND MEXICO
Annual
0
500
1000
1500
2000
1977 1980 1983 1986 1989 1992 1995 1998 2001
Thou. Head
Mexico
Canada
I-N-1303/04/03