Transcript Policy Changes, Trade Tensions, & Disputes: Focus on

Trade & Economic Impacts of Animal
Disease Outbreaks
Parr Rosson
Professor & Director
Center for North American Studies
Texas A&M University
C
NAS
Animal Disease Implications
 Disruption
of Trade Flows
 Impacts on Prices, Markets
 Impacts on Market Integration
C
NAS
Background

Since Mid 1980s, Market Integration in
North America Has Accelerated
 Exports/Imports
 Foreign Direct Investment

Animals & Meat Trade Among Fastest
Growing Components
 Discovery of BSE, FMD, Exotic Newcastle,
Avian Flu Have All Disrupted Trade
 Market Integration Has Outpaced
Regulatory Integration
 Regionalization Allows Trade to Resume
C
NAS
World Meat Trade
Million Metric Tons
7
6
Broiler Meat
Beef
Pork
5
4
3
2
1
0
1970
1975
Source: ERS/USDA
1980
1985
1990
1995
2004 (Jan-May)
2000
U.S. Meat Exports, 1970-May 2004
3,000
1,000 Metric Tons
Russian Ban
Broiler Meat
2,500
)Beef
Pork
BSE Boost
2,000
1,500
BSE Decline
1,000
500
) ) ))
)
))
)
))
0 ))))))
1970
1975
Source: ERS/USDA 2004
1980
))
1985
)
))
)))
)
))
))
)))))
)
1990
1995
2000
2004 (Jan-May)
U.S. Broiler Prices, 12 Market Avg.
80.0
Cents/Pound
77.3
Asia/Canada High
Path. Outbreaks
70.0
63.0
63.0
61.2
60.0
58.4
57.5
55.7
54.7
58.8
58.1
56.3
55.9
1995
2000
55.3
55.5
51.8
50.0
1990
2004 (Jan-July)
U.S. Imports of Beef and Pork
1200
1,000 Metric Tons
Beef
Pork
987
1000
880
800
734
715
1026
987
945
898
823
642
600
641
400
200
321
209 194
184
191
217
325
367
401 382
266
0
1995
2000
2004 F
U.S. Cattle and Hog Imports from Canada
Million Head
Hogs
10.0
No Cattle Imports in
2004
Cattle
7.4
8.0
6.0
4.0
3.2
2.8
1.7
0.8
1.2
0.9 1.0
1.1
4.4
4.1
4.1
2.0
5.7
5.3
1.5
1.4
1.3
1.0
1.0
1.3
1.7
0.5
0.0
1993
1994
Source: USDA/FAS
1995
1996
1997
1998
1999
2000
2001
2002
2003
U.S. Beef Exports, 2003
Mexico
19.0%
4 Markets, 90%
Korea
24.0%
Canada
10.0%
Other
10.0%
Source: ERS/USDA
Japan
37.0%
C
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U.S. Pork Exports, 2003
3 Markets, 84%
Japan
55.0%
Other
9.0%
Taiwan
2.0%
Canada
13.0%
Korea
5.0%
Source: ERS/USDA
Mexico
16.0%
C
NAS
U.S. Broiler Meat Exports, 2003
5 Markets, 58%
Russia
27%
Turkey
3%
Mexico
8%
Canada
11%
China
5%
Korea
3%
Hong Kong
7%
Cuba
3%
Source: ERS/USDA
Other
33%
C
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Integration in the North American Cattle and
Beef Industry, 2002
$1.1 Billion, 1.7 Million Head of Beef Cattle
$1.1 Billion, 392,000 Metric Tons of Beef
$283 Million, 76,000 Metric Tons of Beef
$50 Million, 134,000 Head of Beef Cattle
$218 Million, 67,000 Metric Tons of Beef
$75 Million, 105,000 Head of Beef Cattle
$592 Million, 206,000 Metric Tons of Beef
$301 Million, 816,000 Head of Beef Cattle
$23 Million, 6,000 Metric Tons of Beef
Integration in the North American Cattle and
Beef Industry, 2003
$396 Million, 512,000 Head of Beef Cattle
$850 Million, 256,000 Metric Tons of Beef
$70 Million, 20,000 Metric Tons of Beef
$30 Million, 68,000 Head of Beef Cattle
$321 Million, 81,000 Metric Tons of Beef
$23 Million, 24,000 Head of Beef Cattle
$606 Million, 193,000 Metric Tons of Beef
$470 Million, 1.2 Million Head of Beef Cattle
$34 Million, 6,700 Metric Tons of Beef
C
NAS
U.S. Food Food and Kindred Industry Investment
in Canada, Mexico, and World Total
Billion Dollars
$7.0
$40.0
Total SIC
Canada SIC
Mexico SIC
$35.3

$6.0
$35.9
$34.2
$5.8
$31.0


$5.5
$30.0
$4.7
$4.0
$21.1
$4.4
$4.3
$4.6 $4.5
$3.8
$3.6


$5.0
$5.0
$24.9
$4.0
$35.5
$20.0
$3.2
$3.0
$2.0
$15.6
$2.5
$1.7
$9.3

$2.7
$10.0
$1.4
$1.1
$1.0
$0.5
$0.0
$0.0
1985
1990
1992
1994
1996
Source: Bureau of Economic Analysis, U.S. Department of Commerce
1998
1999
2000
2001
Mad Cows & Other
Monsters!!
European Commission Estimates of BSE
Impacts on Beef Use & Prices
Percent Change, Oct. 1-Dec. 31, 2000
20%
0%
-20%
-25%
-27%
-40%
-37%
-35%
-50%
-36% -40%
-50%
-50%
-60%
-80%
-80%
-100%
France
Italy
Greece
Germany
Consumption
Financial Times, 1/15 and 1/30 2001.
Beef Prices
UK
EU
Canadian Beef/Cattle Trade
Situation

60-65% of Beef Production Exported
 90-95% of Beef Exports to U.S. Market
 Nearly All Cattle Exports to U.S. Market
 Highly Export Dependent, Extremely
Dependent on United States
 BSE Having Major Impacts on Canadian
Beef/Cattle Industry
C
NAS
Alberta Direct Sale Steer Prices
CN$/CWT
$115.0
$113.0
BSE (5/20/2003)
$110
$107.0
$106.0
$90
$84.0
$88.3
$75.0
$70
$50
Mid-month Average Prices
$41.5
$36.2
$30
Source: Alberta Agriculture, Food and Rural Development, www.agric.gov.ab.ca
$77.4
$70.8
Canadian Beef Exports to US Market,
Jan-Apr 1989-2004
140
120
Actual
Trend
100
80
60
40
1,000 Tons
20
0
1989
1995
2000
2004
Canadian Beef Exports to US Market
140
1,000 Tons
Boneless
(January-April)
Bone In
120
111
101
100
80
90
72
60
40
31
27
24
20
1
0
2001
2002
2003
2004
Canadian Cattle Inventory
16
Million Head, January 1
14.66
13.76
14
13.40 13.41 13.36
13.21 13.20
12.71
13.61
13.49
11.86
12
12.0
10
USDA, ERS, PSD.
8
1993
1995
2000
2004
Alberta Direct Sale Steer Prices
CN$/CWT
$120
&
&
&
&
&
$100
BSE
&
&
&
&
&
$80
$60
&2001
2002
2003
2004
$40
$20
Source: Alberta Agriculture, Food and Rural Development, www.agric.gov.ab.ca
2001 prices are monthly averages, source CANFAX calculated by LMIC.
2003
&
&
U.S. Trade Situation

Meat Trade Fairly Concentrated-Top 3-4
Markets Represent Large Share of Trade
– < 10% of Beef, Pork Exported
– 17% of Poultry Meat Exported

Cattle Trade Limited to North America
 U.S. Imports Feeder Calves from Mexico and
Fed Steers from Canada
 U.S. Exports Feeder Calves to Canada
 For Each 1% Decline in Beef Supply, U.S.
Cattle Prices Rise 1.6%
C
NAS
US Feeder Cattle Futures, Nov 03-Jan 04
BSE
12/23/03
US Fed Cattle Futures, Nov 03-Jan 04
BSE
12/23/03
U.S. Beef Production & Demand Index
28.0
27.0
Billion Pounds
Million Head/Index
#
#
120.0
110.0
#
#
26.0
100.0
#
#
25.0
95.8
94.9
##
##
24.0
21.0
1980
80.0
#
##
23.0
22.0
90.0
##
#
Beef Production
Cattle Inventory
#Retail Choice Beef Demand Index
1984
1988
1992
Source: USDA/FAS, www.fas.usda.gov/psd, LMIC
1996
##
##
##
#
70.0
60.0
2000
50.0
2004
Omaha Choice Steer Prices
$100
$/100 Pounds
Trend
$10 Above
Trend
$90
$85.59
$17 Above
Average
$80
$70
$60
$50
$40
1980
1985
1990
1995
2000
2004
Monthly Omaha Choice Steer Prices
$/100 Pounds
$120
$105.50
$100
2004
$91.95
?
$80
$72.24
2003
$76.73
2002
$60
$62.49
$40
$20
$0
J
F
M
A
M
J
J
A
S
O
N
D
US Cattle Imports from Mexico
2000
1,000 Head
1,653
1,360 F
1500
Annual Avg. 800,000
Head
1000
500
2004 is CNAS forecast
0
1970
1975
1980
1985
1990
1995
2000
2004F
US Feeder Cattle Futures, May-Jul 04
Chicago Mercantile Exchange
US Fed Cattle Futures, May-Jul 04
Cull Cows at
Record Prices
$55.64/cwt
Chicago Mercantile Exchange
Summary
 U.S.
Meat Exports Concentrated
 Strong U.S. Demand, Low Domestic
Production, Limited Imports of
Canadian Cattle
– Record High U.S. Cattle Prices
 U.S.
Pork Exports Have Gained As
Beef & Poultry Exports Have Declined
C
NAS
Implications

Degree of Trade Dependence Determines
Potential Severity of Animal Disease
Impacts
 Maintaining Consumer Confidence
Important
 Strong U.S. Demand, Low Domestic
Production, Limited Imports of Canadian
Cattle
– Record High U.S. Cattle Prices

U.S. Pork Exports Have Gained As Beef &
Poultry Exports Have Declined
C
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Center for North American Studies
C
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“Informed Decisions for Global
Change”
Parr Rosson
Ph: 979-845-3070
E-mail: prosson@tamu.edu