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Trade & Economic Impacts of Animal Disease Outbreaks Parr Rosson Professor & Director Center for North American Studies Texas A&M University.

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Presentation on theme: "Trade & Economic Impacts of Animal Disease Outbreaks Parr Rosson Professor & Director Center for North American Studies Texas A&M University."— Presentation transcript:

1 Trade & Economic Impacts of Animal Disease Outbreaks Parr Rosson Professor & Director Center for North American Studies Texas A&M University

2 Animal Disease Implications Disruption of Trade Flows Impacts on Prices, Markets Impacts on Market Integration

3 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

4 World Meat Trade Source: ERS/USDA 197019751980198519901995 2000 2004 (Jan-May) 0 1 2 3 4 5 6 7 Million Metric Tons Broiler Meat Beef Pork

5 U.S. Meat Exports, 1970-May 2004 Source: ERS/USDA 2004 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 1970197519801985199019952000 2004 (Jan-May) 0 500 1,000 1,500 2,000 2,500 3,000 1,000 Metric Tons Broiler Meat Beef Pork ) BSE Boost BSE Decline Russian Ban

6 U.S. Broiler Prices, 12 Market Avg. 54.7 51.8 57.5 55.3 55.7 56.3 61.2 58.8 63.0 58.1 55.9 58.4 55.5 63.0 77.3 199019952000 2004 (Jan-July) 50.0 60.0 70.0 80.0 Cents/Pound Asia/Canada High Path. Outbreaks

7 U.S. Imports of Beef and Pork 209 194 184 191 217 266 321 325 367 401 382 715 642 641 734 823 880 945 987 898 1026 199520002004 F 0 200 400 600 800 1000 1200 1,000 Metric Tons BeefPork

8 4.0 6.0 8.0 10.0 Million Head HogsCattle No Cattle Imports in 2004

9 U.S. Beef Exports, 2003 Source: ERS/USDA Canada 10.0% Mexico 19.0% Korea 24.0% Japan 37.0% Other 10.0% 4 Markets, 90%

10 U.S. Pork Exports, 2003 Source: ERS/USDA Japan 55.0% Mexico 16.0% Korea 5.0% Canada 13.0% Taiwan 2.0% Other 9.0% 3 Markets, 84%

11 U.S.Broiler Meat Exports, 2003 Source: ERS/USDA Canada 11% Mexico 8% Turkey 3% Russia 27% China 5% Korea 3% Hong Kong 7% Cuba 3% Other 33% 5 Markets, 58%

12 Integration in the North American Cattle and Beef Industry, 2002 $301 Million, 816,000 Head of Beef Cattle $23 Million, 6,000 Metric Tons of Beef $283 Million, 76,000 Metric Tons of Beef $75 Million, 105,000 Head of Beef Cattle $592 Million, 206,000 Metric Tons of Beef $50 Million, 134,000 Head of Beef Cattle $218 Million, 67,000 Metric Tons of Beef $1.1 Billion, 1.7 Million Head of Beef Cattle $1.1 Billion, 392,000 Metric Tons of Beef Integration in the North American Cattle and Beef Industry, 2003 $470 Million, 1.2 Million Head of Beef Cattle $34 Million, 6,700 Metric Tons of Beef $70 Million, 20,000 Metric Tons of Beef $23 Million, 24,000 Head of Beef Cattle $606 Million, 193,000 Metric Tons of Beef $30 Million, 68,000 Head of Beef Cattle $321 Million, 81,000 Metric Tons of Beef $396 Million, 512,000 Head of Beef Cattle $850 Million, 256,000 Metric Tons of Beef

13

14 Mad Cows & Other Monsters!!

15 European Commission Estimates of BSE Impacts on Beef Use & Prices Financial Times, 1/15 and 1/30 2001. -37% -35% -50% -27% -80% -36% -50% FranceItalyGreeceGermanyEU 0% 20% -20% -40% -60% -80% -100% Percent Change, Oct. 1-Dec. 31, 2000 ConsumptionBeef Prices UK -40% -25%

16 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

17 Alberta Direct Sale Steer Prices Source: Alberta Agriculture, Food and Rural Development, www.agric.gov.ab.ca Jan-02 Mar-02 Jul -02 Jan-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Nov-03 Feb-04 Jun-04 $30 $50 $70 $90 $110 CN$/CWT $106.0 $88.3 $41.5 $36.2 $84.0 $107.0 $115.0 $70.8 $113.0 $77.4 $75.0 Mid-month Average Prices BSE (5/20/2003)

18 Canadian Beef Exports to US Market, Jan-Apr 1989-2004 1989199520002004 0 20 40 60 80 100 120 140 ActualTrend 1,000 Tons

19 Canadian Beef Exports to US Market 31 27 24 1 72 90 101 111 2001200220032004 0 20 40 60 80 100 120 140 BonelessBone In 1,000 Tons(January-April)

20 Canadian Cattle Inventory 11.86 12.0 12.71 13.40 13.41 13.36 13.21 13.20 13.61 13.76 13.49 14.66 1993199520002004 8 10 12 14 16 Million Head, January 1 USDA, ERS, PSD.

21 Alberta Direct Sale Steer Prices Source: Alberta Agriculture, Food and Rural Development, www.agric.gov.ab.ca 2001 prices are monthly averages, source CANFAX calculated by LMIC. & & & & & & & & & && & Jan Feb Mar Apr May Jun Jul Aug SepOct Nov Dec $20 $40 $60 $80 $100 $120 CN$/CWT 2001200220032004 & 2003 BSE

22 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%

23 US Feeder Cattle Futures, Nov 03-Jan 04 BSE 12/23/03

24 US Fed Cattle Futures, Nov 03-Jan 04 BSE 12/23/03

25 U.S. Beef Production & Demand Index Source: USDA/FAS, www.fas.usda.gov/psd, LMIC # # # # # # # # # # # # # # # # # # # # # # # 1980198419881992199620002004 21.0 22.0 23.0 24.0 25.0 26.0 27.0 28.0 Billion Pounds 50.0 60.0 70.0 80.0 90.0 100.0 110.0 120.0 Million Head/Index Beef Production Cattle Inventory Retail Choice Beef Demand Index # 95.8 94.9

26 $85.59 $10 Above Trend $17 Above Average

27 Monthly Omaha Choice Steer Prices JFMAMJJASOND $0 $20 $40 $60 $80 $100 $120 $/100 Pounds $105.50 $72.24 $91.95 2002 2003 2004 $76.73 $62.49 ?

28 US Cattle Imports from Mexico 19701975198019851990199520002004F 0 500 1000 1500 2000 1,000 Head 1,653 1,360 F Annual Avg. 800,000 Head 2004 is CNAS forecast

29 US Feeder Cattle Futures, May-Jul 04 Chicago Mercantile Exchange

30 US Fed Cattle Futures, May-Jul 04 Chicago Mercantile Exchange Cull Cows at Record Prices $55.64/cwt

31 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

32 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

33 Center for North American Studies Parr Rosson Ph: 979-845-3070 E-mail: prosson@tamu.edu “Informed Decisions for Global Change” C NAS

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