Marsh, John M.

August, 2009

By: Brester, Gary W.; Marsh, John M.; Atwood, Joseph A.
Conventional wisdom appears to support the thesis that declines in USDA’s farmer’s share-of-the-retail-dollar (FS) statistics are indicators of low returns to agricultural production. We estimate changes in cattle and hog FS statistics and their relationship with producer surplus (PS) for changes in various exogenous factors. The method accounts for correlations among structural parameter estimates while simulating multivariate distributions of joint parameter realizations. The simulations indicate that relationships between FS and PS depend on the source of exogenous shocks. The lack of informational content in FS statistics suggests these data should not be used for policy purposes.

April, 2007

By: Marsh, John M.
A systems econometric model of the livestock (beef and pork), poultry (broiler), and corn sectors was estimated to evaluate cross-sector relationships. The equilibrium multipliers and comparative statics indicate unequal cross-effect of market disturbances, e.g., shocks in the livestock and poultry markets impact corn demand and supply more than shocks in the corn market impact livestock and poultry demands and supplies. Recent 2003 mad cow disease (BSE) problems in Canada and the United States display nontrivial cross-effects. For example, the BSE occurrences reduce real corn revenue in the United States by $0.62 billion, or 5.0% of its 2003 revenue.

August, 2004

By: Brester, Gary W.; Marsh, John M.; Atwood, Joseph A.
Concerns about the negative effects of U.S. meat and livestock imports on domestic livestock prices have increased interest in country-of origin labeling (COOL) legislation. An equilibrium displacement model is used to estimate short-run and long-run changes in equilibrium prices and quantities of meat and livestock in the beef, pork, and poultry sectors resulting from the implementation of COOL. Retail beef and pork demand would have to experience a one-time, permanent increase of 4.05% and 4.45%, respectively, so that feeder cattle and hog producers do not lose producer surplus over a 10-year period.

April, 2004

By: Marsh, John M.; Brester, Gary W.
An econometric model is used to estimate real wholesale-retail marketing margins for beef and pork. From 1970 to 1998, these margins increased by 27% and 149%, while farm-wholesale margins declined. Wholesale-retail (WR) marketing margin increases have caused livestock producers to focus on the retail sector as a contributor to declining real livestock prices. Increases in WR margins may be related to increased demand and costs of value-added food products/services as well as increased market concentration in the retail grocery sector. Results indicate that retail factors, and to a lesser extent meat processing factors, significantly increased WR margins and decreased livestock prices.

December, 2001

By: Brester, Gary W.; Marsh, John M.
Real livestock prices and farm-wholesale marketing margins have steadily declined over the past 20 years. Studies examining the causes of these declines have generally failed to account directly for technological change in livestock production and red meat slaughtering. We estimate reduced-form models for beef and pork farm-wholesale marketing margins and cattle and hog prices that include specific measures of technological change. Empirical results indicate cost savings generated by improved meat packing technologies have reduced real margins and positively influenced real cattle and hog prices. However, technological change embodied in cattle production weights has led to substantial declines in real slaughter cattle prices. Nonetheless, the net effect of improved meat packing technology has been to increase cattle price by $1.75/cwt and reduce the farm-wholesale beef marketing margin by 22.8 cents/lb.

December, 2001

Analysis of U.S. feeder steer prices normally includes fed cattle prices and feed grain costs. An expanded econometric model which investigates finance cost, profit risk, hay cost, technology, and Mexican feeder cattle import shares is estimated. Results indicate statistical significance of nearly all variables. The increase in feeder import shares contributed to $0.60/cwt of the $24.48/cwt decline in real feeder price from 1980-1999. Improved technology in producing feeder calves had reduced feeder prices more substantially, by $4. 86/cwt from 1980-1999. Increased feedlot technology through cost savings has increased feeder price. Feedlot risk management and macro-economic policies affecting the U.S. prime interest rate could continue to affect feeder prices.

December, 1999

Livestock dressed weights have experienced significant trends and volatility which affect wholesale production of red meats. An econometric model was used to estimate the impact of relative prices and technology on cattle and hog average dressed weights. For fed steers and heifers, the economic incentives affecting placement weights and weight added in feedlots were considered. Results indicate quarterly dressed weights of steers and heifers respond to contemporaneous profitability ratios and to lagged feeder prices, the effects being highly inelastic. Cow dressed weights also responded while hog dressed weights did not respond to profitability ratios. Technology changes may have accounted for about 83% of dressed weight growth for steers and about 62% for hogs from 1980-97.

December, 1992

Reduced form price equations were estimated to compare market demand responses from two data sources: U.S. Department of Agriculture (USDA) beef price and price spread data per revisions in 1978 and per revisions in 1990. The latest revisions were necessary to account for changing beef industry technology and product consumption in the 1980s. Results indicate the elasticities of retail and derived demands average about 25 and 17% lower, respectively, when using the 1990 revised data. Trends and lag adjustments played an important role. The analyses suggest careful interpretation of demand responses when time series data lag technology conditions in the market.