Comparative Advantage and Labor Issues in the Livestock and Meat Industry in Mexico and the U.S. Derrell S. Peel Department of Agricultural Economics Oklahoma.

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Presentation transcript:

Comparative Advantage and Labor Issues in the Livestock and Meat Industry in Mexico and the U.S. Derrell S. Peel Department of Agricultural Economics Oklahoma State University

Comparative Advantage What will be produced? –Resource allocation Trade Implications

U.S. Beef Exports to Mexico

Arid/Semi-Arid TemperateTropical

Geoclimatic Resources 1.97 million square kilometers in total 1.1 million square kilometers used for grazing –9 hectares/AU stocking rate 11 percent arable land –21-24 million hectares planted –0.2 hectares/person

Traditional Cattle Marketing System Local cow/calf production/ pasture finishing Central Market Local Market Local cow/calf production/ pasture finishing Local Market Most Sales are Pasture Finished Cattle

EXPORTS NATIONAL MEXICAN CATTLE AND BEEF MARKET REGIONS

Changes in Consumer Beef Demand Increasing Quantity Growing preference for fed beef

Percent of Slaughter Cattle by Type in Mexico City Monthly, April 2000 – February 2008 Fuente: SNIIM

New Cattle Marketing System Local cow/calf production/ stocker production, some pasture finishing Central Market Local Market Local cow/calf production/ stocker production Local Market Types of Cattle Sold: Feeder Cattle Feedlot Finished Pasture Finished Regional Feedlot Local cow/calf production/ stocker production, some pasture finishing

Cattle Feeding Centers

Cattle Exports by State of Origin

Comparative Advantage in the Livestock and Meat Industries Other issues –Public infrastructure Roads Legal/financial systems –Industry infrastructure TIF slaughter plants Boxed beef –Retail Food Marketing

Important Factors Changes in beef demand More intensive production systems Internal animal and product flows Regional considerations Competition with other meat industries

A Delicate Balance Opportunity –The increase in beef demand and especially in the proportion of demand for fed beef. Threat –The need to use more intensive production systems and the increase in concentrate feeds in competition with pork, poultry and milk production.

Comparative Advantage Summary Forage and feeder cattle production –Export and domestic markets Limited cattle feeding and meat processing industries –Market focused –Feed disadvantage Less intensive, more by-product use –Small-medium scale integrated operations Continued beef imports –Quantity and specific products –South American product?

Labor Issues in the Livestock and Meat Industries Changes in the U.S. Meatpacking industry –Large scale operations using more technology and large amounts low-medium skilled labor –Located in rural areas Hispanic labor is very important