Economic Models of Cattle Prices: How Usda Can Act to Improve Models to Explain Cattle Prices

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Cattle prices and the livelihood of those who raise cattle in the Urn ted States are influenced by many factors, ranging from weather to consumer taste. In addition, a number of structural changes are occurring in the cattle and beef industry. All these elements, and more, could be considered in developing a logical framework to explain cattle prices and producers' incomes. There is some concern that economic models that the U.S. Department of Agriculture (USDA) and the U.S. International Trade Commission (ITC) use do not account for all the factors that affect cattle prices and producers' incomes. At the request of Senator Tom Daschle, GAO addressed the following questions: (1) To what extent do these models incorporate structural changes-specifically, market concentration in the meatpacking sector, the use of marketing agreements and forward contracts, and imports? (2) What are the most important factors that affect cattle prices and producers' incomes? (3) What are the most significant data and modeling issues that need to be considered in developing a more comprehensive model, or logical framework, to explain cattle prices and producers' incomes?
 

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Page 162 - GAO's Web site (www.gao.gov) contains abstracts and fulltext files of current reports and testimony and an expanding archive of older products. The Web site features a search engine to help you locate documents using key words and phrases- You can print these documents hi their entirety, including charts and other graphics. Each day, GAO issues a list of newly released reports, testimony, and correspondence. GAO posts this list, known as "Today's Reports,
Page 149 - See comment 9. See comment 10. See comment 11. See comment 12. See comment 13. See comment 14.
Page 34 - Slaughter cattle quality grades are based on an evaluation of factors related to the palatability of the lean, herein referred to as "quality." Quality in slaughter cattle is evaluated primarily by the amount and distribution of finish, the firmness of muscling, and the physical characteristics of the animal associated with maturity. Progressive changes in maturity past...
Page 2 - If you have any questions about this report or would like to discuss it further, please contact me on (202) 512-8676.
Page 33 - ... thickness but which are smaller framed. In each of the frame size specifications, guidelines are given relative to the live weights at which steers and heifers may each be expected to produce carcasses with the degree of finish normally associated with the Choice grade (approximately 0.50 inch). (3) Variations in thickness are reflected in differences in ribeye area and, therefore, relate primarily to the ultimate yield grade of the carcass that a feeder animal will produce.
Page 51 - While this analysis did not support conclusions about the exercise of market power by beef packers, even though no other manufacturing industry showed as large an increase in concentration since the US Bureau of the Census began regularly publishing concentration data in 1947, it also concluded that models need to be improved to more fully incorporate relevant determinants of company behavior.
Page 50 - Unking these changes to domestic cattle price changes. 26 For example, GIPSA reported in 1996 that the findings of an extensive literature review were inconclusive concerning the effects of concentration, primarily because of limitations in methods or data in the research reviewed. 27 This report also stated that while the body of evidence from the literature was insufficient to support a finding of noncompetitive behavior, GIPSA also could not conclude that the industry is competitive. The study...
Page 21 - Typically, feedlots and packers agree on delivery month, specific cattle to be delivered, cattle quality standards, and the price basis.
Page 71 - Secretary at least twice each reporting day not leas frequently than once before and once after 12:00 noon Central Time. This information includes the price per hundredweight, the quantity in each lot of boxed beef cuts sold, information regarding the characteristics of each lot (ie, domestic n, export sale, USDA Quality Grade, etc.), the type of beef cut and the trim specification.
Page 45 - Dumping occurs when a foreign producer sells a product in the United States at a price that is lower than that producer's sales price in the country of origin ("home market") or lower than the average cost of production. '"This assumption is relatively standard in applied trade models.

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