A MODEL OF THE EGYPTIAN
LIVESTOCK SECTOR
BY
William Talbot Harbaugh
A thesis submitted in partial fulfillment
of the requirements for the degree
of
Master of Science
in
Applied Economics
MONTANA STATE UNIVEH.Sl'fY
Bo2:eman, Hontana
April 1986
(
ii
APPROVAL
of a thesis submitted by
William Talbot Harbaugh
This thesis has been read by each member of the ·thesis
committee and has been found ·to be satisfactory regarding
content, English usage, format, ci ta·tions, bibliographic
style, and consistency, and is ready for submission to the
College of Graduate Studies.
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I
iii
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'
;
~!
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iv
ABSTRACT
The Egyptian livestock sector is currently undergoing
rapid changes in government policies and in demand for meat..
In order to
exam~ne
the implica·tions of these changes for
meat supplies and prices, and.to evaluate alternative
policies for the future, a quadratic prograwning model of
supply and demand for the sector is developed. This model is
used to examine,policies, concentrating on meat and feed
t
imports and feed ration distribution. I conclude. that. only
large increases in imports can prevent decreases in per
capita meat consumption.
v
TABLE OF CONTI£NTS
Page
1. INTRODUCTION . . . . . . . . . . . . . . ·. . . . . . . . . . . . . . . . . . . . . . . . .
1
2. LITERATURE REVIEW..................................
4
Theoretical Literature.............................
Egyptian Literature . . . . . . . . . . . . . . . . . . ·. . . . . . . . . . . . . .
4
11
3. DESCRIPTION OF THE MODEL ............ ·. . . . . . . . . . . . . . .
13
The Matrix of Technical Coe:fficients . . . . . . . . . . . . . . .
Crop Production Activities . . . . . . . . . . . . . . . . . . . . . . .
Livestock Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Milk Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .·...
Feedlot Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Government Feed Activities ......... : . . . . . . . . . . . . .
Feed and Nutrient Balance Equa·tions .. :. . . . . . . . . . .
Labor Balances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Milk Balances .............. ·.. . . . . • . . . . . . . . . . . . . . .
13
16
18
22
23
23
25
25
26
Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~ . . . . . . . . . . . . . . . .
27
4. RESULTS AND CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
Sensitivity Analysis...... . . . . . . . . . . . . . . . . . . . . . . . . .
Interpretation of Base Sensitivity Runs ..........
34
37
Scenarios..........................................
1977 Runs........................................
1990 Runs.........................................
2000 Runs ....... ·. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38
39
45
50
Conclusion.......... . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . .
50
5. REFERENCES CITED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52
APPENDICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
vi
TABLE OF CONTENTS (cont'd)
Page
APPENDIX A _, Crop and Nu-trient Coefficien·ts. . . . . . .
Objective
Fu~ction
57
Coefficients . . . . . . . . . . . . . . . . . . .
57
Labor Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ._. .
58
Land Availability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59
Crop and Feed Produc·tion Coefficients. . . . . . . . . . . . .
61
Selling Prices. . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . .
61
Nutrients From Feeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62
APPENDIX B- Livestock Coefficients . . . . . . . . . . . . . . .
63
Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63
Herd Parameters. .
Literature: . . . .
Herd Structure.
Death Losses. . .
Growth Rat:.es. . .
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65
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65
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66
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67
. . 69
Milk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .·. . . . . . . . . .
Milk Production Coefficien·ts. . . . . . . . . . . . . . . . . . . .
Milk Prices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ghee Production Coefficients . . . . . . . . . . . . . . . . . . . .
Milk Labor Requirements . . . . . . . . . . . . . . . . . . . . . . . . .
69
69
70
71
72
APPENDIX C
Labor Coeff icient,s. . . . . . . . . . . . . . . . . . .
73
Quantities of Labor on the Farm . . . . . . . . . . . . . . . . . . .
_73
Wages for Hired Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74
Transfer Coefficients for Labor . . . . . . . . . . . . . . . . . . .
74
~-·...........
76
APPENDIX D - Computer Program . . . . . . . .
vii
LIST OF TABLES
Page
1.
Results of Sensitivity Test . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.
Parameters for 1977 Runs.. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.
Results of 1977 Runs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.
Parameters for 1990 Runs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.
Results of 1990 Runs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 4 7
6.
Monthly Crop Labor
7.
Cropping Areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.
Crop and Feed Coefficients . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.
Selling Prices for Crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Requirement~s.
'
. . . . . . . . . . . . . . . . . . . . 59
10. Feed Nutrients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11. Milk Coefficients.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
12. Dairy Product Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
13. Male Labor Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4
1
INTRODUCTION
The Egyptian livestock sector seems set to undergo a
,
I
~
period of rapid change, due to both exogenous even·ts a:nd
alterations in ~olicies. The purpose of .this thesis is to
develop a method for modeling the effects of some of the
more quantifiable and s_ignificant of ·these changes.
I am concerned with two broad categories of events,
divided by whether their primary impact is on supply or
demand. The Egyptian governmen·t is heavily :.involved in the
agricultural sector, and most of my concern in the category
of supply involves the impact of
H~s
policies. In demand,
the most important changes are exogenous to the sector,
occuring as rising population and incomes increase the
demand for meat products.
In order to examine bo·th categories of changes in
context, a model of both supply and demand had to be
developed, where equilibrium is de-termined by simultaneous
solutions of the supply and demand equa·tions of the main
products of the sector.
The demand side of the model consists of an estimate of
the demand curves for the main red meat p:t;:oduc·ts (and for
imported frozen·meat}. Prices and incomes are the variables
in these estimates. Because these are aggregate demand
(
2
estimates, population as well as income act as shif-ters.
The supply equations come from a linear programming
model of livestock produc·tion. Inpu·ts include feeds,labor,
and breeding animals, and outputs are the various types of
meat, milk, and milk products. In a purely competitive
profit maximizing world accurate specification of the
technical coefficients of production and costs and prices
would ensure
th~t
accurate marginal cbst curves could be
derived from the linear programming model. Because such a
world does not apply, and because accurate specification of
the technical coefficients is unlikely, many restrictions
and modifications were imposed on the model in order to
force it to behave in a way more akin ·t.o reality.
On the demand side, I in·tend to analyze the impac·t of
shifts in demand caused by changing population and incomes.
Because the price increases caused bJr the. shifts in d~mcind
will fall most heavily on the poor, ·t.he analysis will
attempt to include the effects on the poor. The rationing of
frozen meat imports is also a matter of concern primarily to
the poor, and it will be considered as a means of increasing
their consumption levels.
On the supply side of the livestock sector, the
questions of interest deal mainly with gov.srnment.al policy .
.
The government determines the pricing, rat.ioning and
composition of the "unified feed". I Hill examine the
'\
3
effects of a more rational method for formulating ·this feed.
As currently distributed, the feed acts as an incentiv~ for
fattening animals, because feedlots can buy the feed at low
rates and then sell it at. far higher ones on _the gray
market.
I will look at wha·t. might. happen if it l-Jere made
available to all producers, ei·t.her at. ·the subsidized price
or to the highest bidders. The government also affects
livestock production through it.s widespread involvement in
the determina·t.ion of cropping pat·t.erns. This involvemen·t.
consists of acreage requirements, :r:o·tation requiremen·t.s, and
distortionary pricing. Recently there has been interest in
moving prices closer to their market levels and eliminating
the acreage requiremen-ts, in order ·to reduce the implicit
taxation of agriculture and also to reduce the delitereous
effects of market· distortions. The main concern of ·those
working towards this goal has been the effects on crops, I
will look at wha·t effect these changes could have on
livestock.
4
LITERATURE
REVIE~'l
THEORETICAL LITERATURE
The theory for the model used in this thesis comes from
two historical sources. The first. of these can be seen as
having its origins in the "Tableau Economique" of Quesnay,
and consists of attempts to model ·the production side of an
economy by a series of
coeffici~nts
representing inputs to
and outputs from various sectors. This idea eventually
evolved into Walras' attempts ·to mathematically describe
general equilbria, and then Leontief' s system of inpu·tou·tput coefficients. Activity analysis in linear programming
is a relat.ed idea,
insof~r
as it also relies on fixed
coefficient constant returns to scale assumptions about
production functions. The historical path of the second part
of the theory is more modern, origina·ting with a 1951 paper
by Stephe_n Enke. This stream of the li·terature is more
'
concerned with computational
aspects. Enke's paper
"Equilibrium Among Spatially Separate Harkets: Solu·tion by
5
Electric Analogue", Enke(1951), was the starting point for
the development of programming models
~Jhich
allowed the
simulation of market equilibria for economies which faced
downward sloping demand curves.
To ease the exposition I will begin with Enke. His paper
was concerned with simulating the solution to a spa·t.ial
market problem where a number of local markets, each
initially in equilibriu1.11
~dthout
trade, were allowed to
trade. What prices and quan·t.i ties trould prevail once trade
was allowed, and what would the flow of goods be, subject to
.
.
transportation costs? Enke envisioned a solution to this
problem yia an analog computer, using ba·tteries and
resistors supplying vol·tages and currents (corresponding t.o
prices and quanti ties before ·trade) t,o points on a circui·t.
board. Assuming that the excess supply functions were
linear, Enke could use the linear function relating the
amperage ( quan·t.i ty flows) to t;.he vol·t.age drop between two
points (price difference) to simulate the change in the
quantity of trade that occurs as prices change. Wires would
connect points on the circuit board to allow the flow of
current, while batteries with their :polarities reversed to
the existing voltage difference would siand in for
transporta·t.ion costs, assuming ·these were ..a linear function
of quantities. With all the wires, batteries and resistors
connected the computer would almost instantly reach an
6
equilibrium that minimized total power loss, and then the
equilibrium prices and quan·tities could be read off it using
volt and amp meters.
(This suggestion should be taken as a
serious one, ra·ther than merely as an in·triguing method of
visualizing the problem. Such analog computers were already
in use by engineers for the solution df similar hydraulic
problems, among others.)
Samuelson, in his paper "Spatial Price Equilibrium and
Linear Programming", Samuelson(1952), saw that Enke's
objective function, the minimization of power loss, could be
converted into a more traditional economic one, the
maximization of the area between supply and demand over all
the markets. He chose to call this maximand "Ne·t Social
Payoff" (NSP) in order to avoid the complications involved
with the welfare implications that. t.his area usually has for
economists. To Samuelson (in ·this case at least) the
maximiza·t.ion of this area had the purely positive
implication that it corresponds to the competitive
equilibrium. The linear programming problem mentioned in ·the
title of the paper refered to minimizing transportation
costs subject to certain requirements on the quan·ti ties of
goods going to various ports. This is clearly a less general
problem of the type that Enke looked at, C!,Ild Samuelson's LP
.
approach to Enke's question involves solving repeated LP
problems, varying the quantities of goods shipped, then
(
7
minimizing the cost of those shipmen·ts, until a pattern of
shipments that maximizes NSP is found.
It was not un·til
later that LP was seen as a way of specifying the supply
functions in these equilibrium models.
...
Takayama and .Judge
were among t.he first t.o consider
this, in "Spatial Equilibrium and Quadratic Programming",
Takayama and Judge( 1964), a paper that. was primarily
'Concerned with proposing a nonite.rative procedure for
solving Enke' s problem, using the me·thods of linear
programming. Their approach was to use the Kuhn-Tucker
conditions of non-linear programming t.o construct; a linear
model equivalent to the nonlinear one. This works, in the
case of linear excess supply. func·tions, because ·the KuhnTucker requirements involve the first derivatives of the
objective function, which are linear because t.he "Ne·t Social
Payoff" is quadratic. Takayama and Judge also pointed out
that Samuelson's technique in general, i.e. the use of NSP
as an objective function,
is no·t limi·ted to spatial or
single product markets. They also suggested that the linear
programming model. need no·t explici·tly cont.ain the supply
functions, they could be implicitly included by specifying
production activities, resource constraints, and input
prices, as with any LP problem.
Duloy and Norton made several changes in this technique.
Their paper,
"Prices and Incomes in Linear Progranuning
(
Models", Duloy and Norton(1975), was primarily concerned
with development of large scale equilibrium planning models.
The basis for their technique was derived from Hartin(l975),
and consisted of ,segmenting the demand function and
calculating the area under demand corresponding to each
quantity. Selling activities were then added to the model,
with objective function values
correspondin~
to the area
under demand at each quanti-ty. Decreasing the size of
t-he
segments allowed for an arbitrarily close approximation to
the shape of the demand curve, and of the area under demand
at any given quantity.
(An advantage of this.technique over
Quadratic Programming is that demand functions need not be
linear.) Duloy and Norton's main improvement was a crude
technique for handling interdependence in demand. The
original scheme was appropriate for more than one good only
if their demands could be considered as independent. The
most obvious way of dealing wit.h in·terdependent demand would
be by specifing a large number of poin·ts on the demand.
surface, and adding a selling activity with appropriate
quanti ties of each good in the quantity balance rows and ·the
sum of the areas under demand associcrted with those
quantities in the objective function. For more than a few
goods the number of activities needed to
g~t
a reasonable
.
approximation of demand would be enormous, and so Duloy and
Norton rejected this approach. Instead they divided final
9
ou·t.put in·to groups of goods, allo\"ring zero substi·t.u·tion
between groups, and substi tu·tion among the goods in a group
according to the price ratios between ·the goods.
The older stream of li·tera·t:.ure is concerned less with
computational considerations t.han wi.t.h the question of the
existence of equilibria and methods
for describing the
I
structures of an economy, par·ticular ly the production side.
Most of my discussion of this school comes from Dorfman,
Samuelson, and Solow(1958). Quasnay,s Tableau was developed
by Walras and Cassel into a series of four sets of equations
describing the economy. Essentially this system consis·t.ed of
·.
a set of functions equating ·the demand for resources in
production to their supply, a set of output demand functions
expressing demand as a function of prices and income,
(calculated as the sum of ·the values of the resources), a
set expressing the supply of resources ·to prices of output.
goods and the value of the resources, and finally a set
mandating the condition for competitive equilibrium, that
price equal the ·cost of produc·tion. Given a· few not
unreasonable assumptions, it is possible to show that
is a mathematical solution to ·this set of equations,
theJ.~e
i.e.
that this mathematical model of the economy has a
determinate solution as (presumably!) the .. economy that is
being modeled does. The significance of this re~ult for my
purposes is that, with some not too serious adjustments, the
10
above kind o£ equilibrium modal can be related to a linear
programming one, and so it can be shown that a solution
exists to a programming model Hhich is also an equilibrium
solution to the mathema·tical description of the economy.
At this point the two s·treams of the literature can be
united. The Enke-Samuelson maximand can be combined with ·the
LP model to drive it towards an equilibrium solution. The
result is a computational me·thod for solving the
mathematical simulation of an economy or economic sec·tor.
In this thesis I use a nonlinear programming approach.
Although my demand functions do happen to be linear, which
would allow use. of traditional Quadra·tic Programming
approaches, the nonlinear programming computer program ·that
I use (MINOS) is more direct. The use of nonlinear
programming has de£ init.e advan·tagas. 'l'he solution to the
programming problem gives useful results beyond t.he
assurance that equilibrium has been at.tained. The values o£
additional resources and the costs or losses that would
occur given increases or decreases in production of a .ood
can be easily found from the output. of the coinpu·ter
algorithm.
11
EGYPTIAN LITERATURE
Various attempts have been made to describe and model
the Egyptian livestock sector, although none have been
discovered that use Quadratic PrC!gramming.
In the latest of a series of papers Soliman and
Shapouri(1985) report ebonometric estimates of demand for
various types of meat. While I was unable to reconstruct
their results from the data they report, .I was able toreestimate demand. functions from it t,hat served as the basis
for the demand side of my model.
Preston, McConnen, and Ha:rnes ( 1984) constructed a simple
Linear Programming model that; served as ·the conceptual basis
for the one used in this Thesis. Their model was primarily
concerned with feeding a'ctivities, but. included alterna·tive
~
sources of meat, such as imported feeders and frozen mea·t.
In addition their paper cons:i.dered t.he effect of changes
affecting meat supply on per capita consumption, although
not endogenously.
In addition to these papers some reports on broader
studies exist. The most relevan·t of these was found to be
Winrock(1980) "Potential for On-Farm Feed Production and
Utilization by the Egyp·t,ian Small li'arm Sector". This served
primarily as a source of data.
12
Several papers from the Agricultural Development Systems
(ADS) Egypt Project also deal ni·th the livestock sector.
Again, these served primarily as data sources and are cited
in the appendices. The papers by Fitch and Soliman also
provided useful insight into nonquant.if iable aspects of the
situation regarding meat and livestock, particularly in
regards to the attitudes of government. policy makers.
Cuddihiy's (1980) World Bank paper also was useful in this
regard.
Several sources were useful for general background
information. The most interesting of these was Richard's
( 1982) book on the history of Egyptian agricul·t.ure. Ikram' s
Egypt: Economic Development in a Period of Transition(1980)
provided information on cropping pat.-terns and was the best.
source for the informa·tion needed to make es·tima·tes about
future trends in population and income.
13 .
DESCRIPTION Oli' THE 1:10DEL
The model used in this thesis is a Quadratic Programming
model. The basic form is as follows.
Max Z
,~
I
= ax
-
(1/2
* xBx)
+ dy - cz,
s.t. Aw
<= b
Where
a is a vector· of demand func·tion in·t:.ercepts,
x is a vector of quantities for goods with downward
sloping demands,
d is a vecto~ of prices for the above goods
y is a .vector of quantities of goods with
perfectly elastic demands,
B is a matrix of slope coefficients for inverse demand
functions,
c is a vector of the costs of purchased inputs,
z is a vector of quantities purchased
A is a matrix of coefficients describing the technical
requirements of production,
w is a vector of quantities used in production, and
b is a vector of resource constrain·ts.
The purpose of this chapter is to describe these vectors
and matrices and how they were derived.
The Matrix of Technical Coefficients
This matrix is intended t.o ac·t as a reasonable
description of the production functions of the livestock
sector of the economy. It also describes the crop produc·tion
sector, in very abbreviated form.
In ·this section I will
first describe the basic ou·tlines of the matrix, then
14
describe what the coefficients represent and how ·they were
obtained. Actual calculations and sources for data can be
found in the appendices.
The matrix consists of activities. to produce crops, to
maintain livestock herds, to produce veal, fed meat and
dairy products from these herds, import. activities for
maize, frozen meat and feeder animals, and an activity for
the mixing of the government. produced unified feed.
Act-ivities to buy inputs used in produc·tion include hiring
activities for labor and for supplying the nonlabor
requirements for crop produc·tion. In addition there are
activities for selling the various outputs. In the nonlinear
part of the demand function ·t.he selling activities are for
the three types of meat, cull, fed, and veal. Sales o£ milk,
ghee and manure are activities with linear objective
function coefficients, because no data were available to
estimate demand functions. Sales of non-feed products from
the crop production part of the model are also linear in the
objective function, because of the .above reason as well as
the fact that prices for crops are generally set by the
government.
The balance equations in the matrix include, beside
those for the selling acti vi·ties, labor, n,utriexrt
requirement.s for li_vestock, land constraints, milk balances,
and balances for the transfer of feeds from crop production
15
to the livestock activities. In addition there are a large
number of balance equations for what might be called
intermediate ·goods. These ensure that ·the herd is large
enough to provide the number of animals that are fed, that
replacements are .raised . for. culled animals 1 that. raw milk
makes its way from cows to ghee production and so on.
The matrix is a static one. While constraints are
included to ensure that. the growth of the livestock herds
follows past trends, and while these constraints can easily
be modified to allow any arbi·trary fu·t.ure growth rates,
there is no provision for alloning ·the model to determine
optimal rates of change.
(
·'
The livestock production sector, including ·the
production of brops, is divided irrto two typical farm sizes.
One,
(the first 'in the organiza·tion of ·the matrix)
represents a typical small farm, of 1.2 fedqans.
( a feddan
is approximately an acre) The second represents larger farms
(i.e. greater than 3 feddans) whose average size is 5:8
feddans. Since the organization of t.hat part of ·the matrix
devoted to each size farm is iden·tical, I wili concentra-te
my explanation on the small farm. '!'he o·t.her sections of the
matrix, dealing with feedlots and miscellaneous government
activities, will be explained last.
16
Crop Production Activities
These activities are included because positive supply
functions for feed inputs cannot be es·timated. Since it
seemed certain that shifts in the demand for meat and in the
prices recieved for crops would affect the supply of ~e~ds,
it seemed best to include some means, alb.ei t
a crude one,
for modeling this response. Ac·ti vit,:les are included for ·the
production of those crops that take np ·the major part of t.he
land base and which. provide most of tlie domestically
supplied feeds. These crops are cotton, :rice, maize, and
sorghum in the summer, berseem (Egyp·tian clover) and wheat
in the winter. Berseem is fur·ther cl:t-·;.rided in·to four types,
each allowing a different number of cuts to be taken, and
one supplying seed for the following year. There are land
constraints for the overall amount of land available in each
season, and constraints that initially hold the land devoted
to each crop at the reported level, and for later runs
preven·t i t from moving more than 20% from that level. This
is an a·ttempt to compensa·te for the ra·ther skimpy
specification of the factors that influenbe what crops are
planted.
Each crop production activity has a negative objective
function coefficient, which is an estimate of the costs of
production excluding the land and labor costs. Each activity
1'7
includes estimates of the labor requirements for this crop,
by month. The crop production activi·t;.ies then supply crops
and feeds to the respective balance eqtia·tions. C:r:·ops can
then be sold, and feeds transfered to livestock production.
Cotton will be an example of hoH ·this works. Each feddan
of cotton production has direct costs of 93.2 Egyptian
pounds (L.E.), entered as a negative in the objective
function.
In addition that feddan takes one feddan out of
the small farm summer land balance, and requires labor of
various amounts from 8 of the 12 monthly .labor balances.
(The treatment of labor is described in. greater detail
below.) .p19 metric tons of seed co·t;.tori then are entered
into the cotton balance, and .319 tons of cotton stems into
their balance. The seed cotton is bought by the government,
through a separate activity, and the co·tton seed cake .which
remains from the cotton processing
~nter~
another balance,
to be fed directly or later mixed into unified feed. Since
cotton is harvested in the fourth quarter of the year the
stems can be fed to lives·tock in ·that. quarter.
(In reality
cattle are not fed these stems, and the model ·does not allow
them
io
be fed, but they are included here to allow cotton
to have all possible attribut·es of the o·ther crops in the
model.) Activities then exist that a.llow the small farmer to
transfer his stems to a large farm, or to a fee~lot. There
are no objective function values for any of these transfer
I
18
activities, except a charge for transpor-tation, because ·the
value of the feeds is de·termined endogenously.
Livestock Activities
There are separate sets of these activities £or Baladi
cattle and for water buffalo, which combined with the two
farm sizes implies
fou~
sets in total. The basic purpose of
these activities, besides the conversion of. feed in·to mea·t,
is to require that the herd in the model has approximately
the same numbers of the various types of animals as the
actu~l
Egyptian herds would, were they· to be producing
similar amounts of meat and milk.
The livestock activities allow for the quarters in which
calves are born to vary, so as t,o make best use of the
seasonality of feed availabilit,y. This was done because
there is a definite pat·tern to births. The Winrock study
reports they usually occur so that lactation will take place
during the berseem season. Winrock also reported a clear
seasonal pattern to growth, with mos·t taking place during
the berseem season. A third reason for separating nutrient
supply and demand by quarters is tha·t it reduces aggregation
problems in the nutrient balan.ces. This will be discussed
later.
19
The livestock activities are cooxdinated by a herd
activity (HERD), which specifies the number of animals in
the breeding herd and the coefficients which drive t.he rest
of the activities .. · Each breeding female in, for example, the
small farm cattle herd produces .632 calves. This should be
read as the number of calves produced by one breeding female
in one year. The .632 goes in the calf balance equa-tion.
Death losses.and culling are such that .1842 of the breeding
females must.be replaced yearly. The 2.6% historical growth
rate of the cattle herd implies that an additional .0322
breeders will be needed anually. So the 1 in the HERD
activity puts .2164 in the breeder replacement row. Each
breeder animal requires .04 bulls,
thls coefficient enters
into a bull balance equation which -tlllsures tha·t ·the large
farms have the bulls needed for breeding. The cull loss of
.1842 times an average weight of 400 kg. and a 58% slaughter
percentage implies that each breediug animal annually pu·ts
42.73 kg. in the cull meat balance.
(See Appendix B for
details) Labor requiremen·ts specify the amoun·ts of labor
that men and women must supply each mon·th to m'ain·tain the
herd animals. Additional coefficients represent the
proportion of breeding animals on maintenance rations and a
rough estimate of manure production.
This HERD activity in and of itself requires no
nutrients. Separate sets of
ac'l:~i vi ties
for calving, and
20
raising calves as feeders or breeder replacemen·ts demand ·t.:.he
nutrients. These will now be described. Separa·t.e CAV
activities are
~pacified
for the calves born in each
quarter. Each of these ac·t.i vi ties requires that. a 1 be
subtrac~ed
from the calf balance equa·t:.ion. Each demands
nutrients from-the quarterly nutrient balances. These
nutrient demands are not those of the cal£, which will be
considered later, rathe.r they are ·those of the breeding
female. Say we look at CAVl, a first quarter calving
activity. This activity will take uut:.rie~ts from each
quarterly balance in the first yea.r and the first quarter in
'
the second year. The first ·two months of the calving quar·ter
include nutrients demanded for gestation, the last month of
that quarter and all of the two subsequent quarters include
requirements for lactation.
Each of the calving activities'puts a·calf, denoted by a
positive one, into one of the quartorly cal£ balances. The
calf from CAV1 c;:an go.from this balance into RFD1 or RBD1,
to be raised as a breeder or a feeder.
In addition it could
be sold as veal, putting 30 kg.s into the veal meat balance,
or lost to· dea'th. Each of these activities takes one animal
out of the calf balance and (excep·ting VEAL), nutrien·ts from
the nutrient balances. 'fhe raising
ac·tivi·~.ies
put. animals,
via positive coefficients, into the replacement breeder or
feeding animal balances. Sufficient replacement breeders are
21
required to satisfy the balance mentioned in the section
describing the HERD acti vi·ty. RE'D animals enter balances
from whence they go into the feedlot activities.
The bulls needed for reproduction are not included in
the HERD activity, rather BULL activi·ties, on the large
farms, represent these animals. The ctssumption is that small
farms contract with the larger ones for breeding services. A
coefficient in the
repl~cement
breeder balance ensures that
sufficient new animals are available to replace culled bulls
and provide for
grow~h
needs.
(For simplicity, these
replacements. are identical to the
r~;placemen·t
breeder
animals, although in reality they would have different
nutrient requirements, etcetera.) These bulls have
maintenance requirements met through t,he nutrient balances
just as do the HERD animals, only there is no separate
activity for this.
Not all the .animals that are born will actually survive
to be transfered from one act,ivU:;y t.o another. The Winrock
study reports rather high losses, particularly among the
young animals. One way of dealing ldth this fac·t would be ·to
use tranfer coefficients of less than one and add the
nutrients consumed by those ·that, die ·to the nutrient
requirements of the living. I adopted the ..follmdng more
complicated technique so tha·t it would be easier ·to change
assumptions about death ra·t.es.
22
Each animal raised as a feeder or a breeder replacemerrt
puts a negative fraction into a death loss balance for
animals of that type, born in that p<'J.rticular quarter. This
fraction represents the number of animals of that type that
can be expected to die before maturity. Loss activities put
positive l's into these balances, and sub·t.rac·t. nutrien·ts
from the nutrient balances. These nutrient coef:ficien·t.s were
calculated from the Winrock data on losses, and
represe~t
a
'typical' dead .animal, where ·the nut.rien·ts required in each
quarter are reduced by the proportion of animals tha·t die
before culling that have died by ·tha·t quarter.
I.e. , if 30%
of the animals that die do so before t.he 2nd quarter, the
second quarter nutrient requirement \·dll be 70% of that for
a live animal, and so on for subsequent, quarters.
Milk Activities
Milk from the herd can either be sold raw or processed
into ghee. 'fhe ghee and the remaining skim milk can then be
sold. These GE activities are divided by mont~s and by the
source of the milk (cattle or buffalo). Each draws milk from
the appropriate quarterly balance, and female labor from ·the
monthly female labor balances. They supply ghee and skim
milk to balances that allow these products to be sold.
23
Feedlot Activities
Feedlots take animals out of the feeder balances and
feed them to achieve various gain rates, demanding nutrients
from a set of feedlot nutrient balru1ces. The feeding period
is two quarters, gain rates range f:rorn . 8 to 1.1 kg. per
day. Each feeding activity supplies meat. , quanti·ty depending
upon the rate at which the animal was fed, to ·the fed and
cull meat balances. The assump·tion is that the second
quality meat from butchering is counted as cull in the
government data. There are separa·te se·ts of feeding
activites for buffalo and ca·t.tle (buffalo enter ·the feedlo·t.s
at higher weights), but no dis·t.inction is made in the meat:
it all enters the same fed and cull balances. Feeding an
animal allows the
I
p~rchase
of a certain amount of unified
feed, this can then be fed or sold to the farms.
Government Feed Activities
'!'he Egyptian government is involved in the animal feed
business in several ways but. most importantly in mixing and
rationing a subsidized feed mixture. This mixture is
composed mainly of cottonseed cake, wheat bran, and imported
....
maize. The governmen·t obtains the co Vtonseed as residue from
its monopsonistic purchases of cotton, the wheat bran from
24
milling domestic and imported wheat, and the maize from
direct imports.
(In addition to the maize used for the
ration, some is imported and fed directly) These ingredients
and several other minor ones are theri. mixed in government
mills and distributed to feedlots and to farmers enrolled in
the livestock insurance program, according to the number of
animals owned. The livestock insurance program, and thus ·the
feed ration, are effect.ively limited to large farmers. This
"unified feed" (UFD), as it is called, is not necessarily
fed by those who receive it, rather there is a widespread
gray market, where farmers sell their ra·tion ·to ·the feedlo·ts
at prices several times ·that, charged by· the governmen·t.
The model deals with unified fe0d by including importing
and mixing activities. Balances allot-r the feedlots and large
farms to buy feed at the government price, the quantity
allowed depending on the number of animals owned. Once the
feed has been bought, it can either be fed or sold to other
enterprises, through more transfer act,ivities. These
transfers do not have explicit objective function values,
the model determines the value of
UH:?J
t,ransfers
endogenously ..
As the model was set up for the calibration runs, the
proportions of feeds in the unified feed
w~re
set according
.
to the formula used by the governrnf:)nt.. In later runs this
mix was varied, in order to see if a mora optimal one could
be found.
25
The imported maize tha·t is not used for the unified feed
can be bought from the government and fed directly. In the
calibration runs, the quan·tity imported was fixed a·t ·the
reported 1977 quantity.
Feed and Nutrient Balance Equations
There are 9 separate set,s of th0 quarterly nu·trient
balances for each size farm.
(4 of these, one for each
quarter, comprise a set.) The first two sets are for
calving, The next five are for rais.i..u.g feeders and
replacement breeders. A breeder replacement that is born
into say the third quarter will have its initial nutrient;
requirements in the third quarter nutrient balance of the
first set. Nutrient balances for the three and a half years
this animal takes to reach maturity will then progress
quarter by quarter and year by year ·through the set..
Requirements for bulls and for main-t:.aining breeders t,hat are
not calving share the last of ·these sets of balances. The
last two sets of nutrient balances allow transfers to
feedlots and the other size farm, respectively.
Labor Balances
There are separate labor balances for every morrth and
for two types of labor, male and female/child. Each farm
26
size has a certain amount o£ labor available from family
workers. Additional labor can be hired by the month.
It is
possible to transfer male labor ·to the female balances, and
vice versa. One day of female labor transfers to th~ male
balances as hal£. a unit of male labor. Tl1is reflects the
fact that female wage ra·tes are half ·tha·t of male. On the
other hand, male labor transfers to the :female balances a·t
one to one, because men are not. assl\tned ·to be any more
productive than women at the major :female activities,
milking and processing ghee.
Milk Balances
Each calving activity puts milk into the quarterly milk
balances. Because Cattle and Buffalo milk have different, fat
contents they are kept separate. Butchering a calf as veal
puts the amount of milk ·tha·t the calf would normally have
consumed into the balances. From these balances milk can
either be sold raw or be processed and ·then sold. Small
farms consume a very large frac·tion of ·their milk produc·tion
a-t home, but this was ignored, wi·th ·the effect o:f valuing
this consumption at the market pricG.
27
Demand
Demand for fed, cull, and veal meat was estimated using
ordinary least squares on price, quantity, and expendi·ture
data for 1965 thru 1977.
The equations estimated were of the inverse form
p = a + BQ + cY
.
where p = a vector of real prl.ces,
Q = a vector of per capit,a quantities,
y = real per capita priva·te expendi·ture,
a = a vector of intercept terms,
B = a matrix of quantity effects,
c = a vector of income effects.
The equations used were
Pcull= -1.316 -.024 Qcull -.057 Qfed -.012 Qveal +.025 Exp
( 1. 0)
Rsqd.= .95, D-W = 1.7,
(2.8)
(0.4)
(16.6)
S.E. of est. = .037,
Mean of dep. var.=0.84
Pfed = -1.693 -.057 Qcull
(2.5)
Rsqd.= .97, D-W = 1.8,
Mean of dep. var.=1.05
~.073
Qfed -.045 Qveal +.033 Exp
(2.0)
( 1. 2)
S.E. of est. = .042,
(18.2)
28
Pveal= -1.565 -.012 Qcull -.045 Qfed -.258 Qveal +.032 Exp
( 1. 3)
(0.4).
Rsqd.= .98, D-W = 2.0,
( 1. 7)
(11.0)
S.E. of est. = .041,
Mean of dep. var.=1.14
where the absolute values of the T-ratios are in
parenthesis, and the R squareds are adjusted for the number
of independent variablep.
Prices and incomes are deflated Nith 1977 as the base
I
I
I
year. In order to use these equations in the model a level
of private expenditure had to be specified and they had t,o
be converted from the per capita form in Nhich t.he Nere
estimated to the aggrega·t.e form which the supply side of the
model is in. This was done by specifying a popula-tion level
and a level of· per capita expendi tu.r.·e. For each equa·tion ·the
per capita expenditure was then mul·t.iplied by its
coefficient and the result added td ·the intercept. The slope
coefficients were then divided by ·the population ·to allow
use of aggregate quantities.
The above equations were t.he ones used in the model,· but
'
'
others were estimated and rejected for various reasons. The
demand for meat is obviously the result of a system of
equations, where prices and quan·t;i ties are .. both determined
by the interception of supply snd demand. Quantity is
therefore not an exogenous variable, and is correlated with
'
. . ' .... "··' - .,,
... ... :.
..
~
.
: ':'
•••• ~ .. J•• i t~..!
•
29
the disturbance. The OLS es·timator will be biased. A
favorite method for dealing with this situation is to use
instrumental variables, or two stage leas·t squares. In these
techniques one or several variables that are correlated wit.h
the regressors but not with the disturbances are found.
Assuming there are several of these, they are then used to
calculate estimated values of the regressors. These
estimated values, now ipdependent of the errors, are used as
in OLS. This _qets rid of the bias problem, but unless'
variables can be found that are rat.her highly correlated
with the regressors the variance will increase
substantially. In this case, it meant finding
variabl~s
highly correlated with quanti·ty, bu·t still independent. of
the errors. These simply could not b€~ found. One difficulty
was the nature of the livestock ~reduction process.
Quan·ti ties produced are determined by a complica·ted mult.i
year process. Suppose feed imports were used as an exogenous
regressor. First of all, these imports are no·t really
exogenous, thus they too are correlated with the errors.
Even worse, they are just not very well correlated with
current production. An increase in imports might; encourage
more current feeding activity, or it might cause farmers to
build up their herds, thus reducing curreqt production.
Perhaps some structure of lagged effects could ~xplain
quanti ties produced, but ·the data are inadequate to estima·t.e
30
it. Attempts were made with other, similar variables, bu-t.
the results were all discouraging.
There are good argumen·ts £or using OLS when only bad
instrumental variables can be found. Kennedy(1979) remarks
that Monte Carlo studies show that wi·th small samples OLS is
less sensitive t:o errors in variables, misspeci£ica·tion, and
multicollinearity. See also Mariano(1982). All the above
conditions probably hold true, to some extent, in this case.
Another approach considered was to es·tima·te ·the 'normal'
demand equations, with quant.i·ty as
'l.~he
dependent. variable.
The estimated equations could then be inverted ·to give the
form needed for the model. This was rejected, mainly because
the available estimates of quantity were so much worse than
those of price.
(See below.) Errors in measuring the
independent variables add to·the bias problem, because they
are correlated with the disturbance term.
Problems were caused by the da·ta. I had available annual
price, quantity E3Xpendi ture da·ta and tHo price de£ lators,
covering 1965 to 1980. Unfor-tunately one price series went.
from 1965 to 1978, Hhile another covered 1970 to 1980. The
two were not at all similar in the duplicated years so I
used the first as it covered a longer period. The last year
of this series, 1978, was an outlier.
Alre~dy
highly
suspicous of the data, I dropped this year rath~r than allow
it to distort the overall results. The deflators were
31
likewise very inconsistent, differing about 76% in 15 years.,
I tried using each and an average of the two, then settled
on the one showing the least inflation, largely because
using it to deflate expenditure produced a rate of real
increase that seemed consistent with the literature's
concensus. In addition to the private expenditure data, I
had numbers on GNP. I considered using GNP as the income
variable, on the argument that government provided services
make up a substantial part. of income in a socialized count.ry
such as Egypt. I eventually used private expenditure anyway,
in the belief that these government serv:lces were not that
important to the.demand for meat. The .~uantity measurements
come from "Official slaughterhouse data" cited in Shapouri
and Soliman(1985). These measurements certainly do not
reflect total slaughter, I originally used the generally
accepted figures that half the fed meat and 40% of
th~
cull
and veal meat is counted in the official figures. No sources
I have found are willing to specula·t.e on whether or how
these percentages have changed over time. I was unable to
get the supply side of the model to produce "enough" fed
cattle when using the figure that half of slaughter was
reported, so I reestimated the equa·t.ions using . 66 as the
proportion. These quantities agreed with the supply side of
the model and with other estimates of the numbers of animals
slaughtered.
32
Other difficultie:;; were caused by the kinds of meats in
Egypt and the way they are supplied. Frozen meat is imported·
I
by the government, and during the period 1965-1977 wa~
rationed to households at .68 L.E. per Kg. This meat is not
good quality to begin with, and often gets worse. I dealt
with it by including ·the quantity imported as part of the
supply of cull meat, because this seemed to be the only
method for including it. in the demand functions.
In the equations finally used, the res·t.riction was
imposed that cross quantity effects be equal. It was imposed
in this case to ensure that the matrix of cross price
effects would be symmetric, and thus ·t.ha·t. the consumer's
surplus line integral. would be unique, a requirement, tha·t
ensures a unique solution for the maximization part of "tl1e
model.
The validity of the restriction that cross quantity
effects be equal was tested using F ·t.ests.
Veal-Cull rest., F
= 3.3,
with 1 and 24 degrees of freedom
Cull-Fed
rest.,, F = 1. 2, with 1 and 24 degree.s of freedom
Veal-Fed
rest., F
= 5.1,
with·l and 24 degrees of freedom
The 5% confidence level for F is 4.3 and
~pe
1% level 7.8 .
.
These restrictions therefore s·tretch the truth somewhat. On
the other hand they are necessary, and the hypo·thesis that
they hold is not flagrantly disproved by the data.
33
In the above paragraphs I have described the reasons to
be skeptical about the demand equations I have es·timated. In
defense of the results, I would argue that the equations
found seem very- plausible, and are xather robust for the
number of observations and the quali·ty- of the da·ta. Nowhere
do the parameters estimated differ excessively- from what
economic theory- and previous work would lead one to expect,.
34
RESULTS AND CONCLUSION
This chapter considers sensitivity analysis on some of
the parameters, describes the various scenarios that the
model is used to investigate, and repor·t.s on and analyzes
the results.
Sensitivity Analysis ,
The purpose of sensitivity analysis is to measure the
"robustness" of the model. A list of coefficients that migh·t.
be expected to affect the results would include the
following.
Coefficients of the demand equations
Cropping costs and non-feed returns ·
Quantities of crops and feeds produced per feddan
Nutrients available in feeds
Proportion-of feed fed that is consumed by animals
Nutrient requirements
Growth rates and ages of parturition, weaning, culling
Fertility rates, abortion and death losses of immature
animals
Quantities of milk produced
Prices of dairy products and costs of producing them
Weights at slaughter and ca.rcass yields
Quantities of Unified Feed Ration provided
Labor requirements for various activities, amounts of labor
available on the farm, costs of hiring labor
Returns to livestock.due to animal labor
In short, virtually all the parameters in the model,
plus those left out of it can change t.he results. However,
35
the effects of small changes in most of these coefficients
can be expected to be small and predictable. E.g. if the
nutrient requirements of buffalo turn out to be somewhat
higher than estimated, we expect the model to over estima·te
the number of buffalo and underestimat:.e the number of
cattle. Ignoring the value of animal labor will skew the
number of animals kept downward, while ignoring the energy
requirements of that labor in the nutrient balances has the
opposite
effect~
The more important question is whe·ther small changes in
coefficients of uncertain determination can cause
substantial changes in the quanti ties of ·the acti vi·t.ies. The
first area where this can occur is in the crop sector of the
model. The major factors determining which crops are planted
are the biological requirements of the ro·tation schemes and
government regulations, and these fac·tors are comple·tely
left out of the model. As it turns out, the model does not
provide crop patterns at all similar to ·those that actually
prevail and so explicit cons·traints were imposed. The other
area where I felt the model was likely ·to be unstable
concerned the number of calves produced annually by the
breeding herd animals. and in the number of replacemen·t.
breeders
needed~
While changes in these nu!Jlbers would not
affect the ou·tput of the lives·tock sec·tor greatiy, a small
increase in the pumber for the buffalo herd might be
36
expect.ed to greatly increase the size of that herd, a·t the
expense of the cattle herd. In a similar vein, changes in
the relative values of other like coefficients might also be
important., but since the resul-ts could be expected to mimic
those for the above change thelr were ignored. As it turned
out, the sizes of the herds also were very sensitive to
shifts in the demand for meat, so I had to restrict these
sizes at 'reasonable' levels anyway.
One of the main factors determining the relative
proportions of animals kep·t by farm slze is the availabili·ty
of labor. Large farmers must hlre labor during much of the
year, while small farmers have sufficien·t amoun·ts available
within the family. The quan·tl ties of· labor available to eac·h
size farm can be expected to significantly affec·t this
distribution. Again, in ·the end I was forced to bind the
herd levels, so it seemed pointless to pursue this, although
I presumably could simulate the actual situation by
experimenting with different levels of labor until I force
the model to do what I want. I·t does hml'ever seem desirable
to show exactly how far of£ the model is from ·simulating
reality, and to this end ·two runs are made.
In run A, the
herd sizes and areas of crops planted.are fixed at the
reported 1977 levels, in B crops are fixe4 while herd sizes
are allowed to vary. For results see Table 1.
37
TABLE 1. Results of Sensitivity Test.
Quantities in Thousands.
-----------------------------------------------------------
'
Run:
A
B
Quantity, Dual Activity or reduced cost in paren·t.hesis
Small Farm Cattle
Buffalo
751 (-121)
1180 (-70)
Small Farm Cattle
Buffalo
376 (-57)
393 (-60)
0
528
Meat: Cull
Fed
Veal
145
116
21
122
16
29
0
1279
In·terpretation of Base Sensitivity Runs
It is clear from these runs that the· model unders·t.ates
the profitability of livestock production. It seems likely
that this is the result of ignoring the value of animal
work, while implicitly including some of its costs. If this
is the explanation, it is notable that, should machines come
to replace animal labor meat product.ion would fall, under
the assumptions ·of· this model. In reali·ty of course, ceasing
the use of animals for work would presumably make them more
efficient meat and milk producers, mitigating this effect
and conceivably overriding it. The model apparen·tly also
I
overestimates the profi·tability of buffalo, compared to
cattle, in fact the unres·trained run produces no ca·ttle. The
general concensus, on the other hand, is that cattle are
more profitable. I can offer no single explanation of this
discrepancy.
38
Other results of the sensitivity runs are rather
encouraging.
Th~
model does produce animals, milk, etc. Run
A does not result in outrageously negative returns to
livestock production, and the profits from crops seem
reasonable. The value of the unified feed ration is
i
extremely close to the actual price at which farmers resell
it.
· Scenarios
I am interested in examining the costs and benefits of
present policies and in comparing possible future policies.
For the present polices, runs for the base year 1977 were
made under different conditions, while 1990 and 2000 were
picked as the years in which to look at future policies.
It was necessary to restrict the number of scenarios,
because each setting of one parameter could conceivably be
examined in combination with each setting of each of the
others, and the humber of combinations grows with at leas·t
the square of the number of parameters of interest. There is
no point in generating more information than can be digested
so I eliminated broad categories of cross-combinations. For
1977, one run was made simulating the present policies and
one under more market oriented alternative policies. For the
year 1990 three main scenarios were examined. A examines the
situation in the abscence of policy changes. B is based on
39
policy changes that are already under considera·tion, t-7hile C
examines alternative ways of maintaining real prices at
approximately the 1977 levels. C looks at two basic ways of
doing this, one concentra·ting on imports of feeds, feeders
and meat and the other on shifting domestic resources to
livestock. For 2000, the initial runs showed ·that results
did not alter the conclusions drawn from the 1990 runs. This
is discussed in later •ections.
1977 Runs
The Egyptian government bo·th subsidizes and protec·ts the
livestock sector. The subsidies are mainly seen in low
prices for the unified feed ra·tion, while the pro·tection
results from .the effective governmen·t. monopoly on importing
feeds, feeders, and meat and the willingness of the
government to keep imports at low levels. To investigate the
costs of these policies, two runs were done for 1977. A has
the reported levels of subsidies and imports, and B has the
unified feed subsidy removed and feasible levels of import.s
and exports are allowed. Table 2 shows ·the parame·ters that
differ between these runs, Table 3 shows the resul·ts.
40
TABLE 2. Parameters That Differ for the 1977 Runs.
Parameter
Bound
Run A
Low
High
Run B
High
Low
----------------------------------------------------------Crop Areas
(Thou. of Feddans)
(reported
levels)
Small Farms
Summer:
Cotton
Rice
Maize
Sorghum
remainder
Winter:
Berseem 1
Berseem 2
Berseem 3
Berseem 4
Wheat
remainder
(+
-
20%
change)
658
531
933
227
592
660
533
935
229
594
527
425
747
182
474
791
637
1121
274
712
426
i93
92
703
679
547
428
195
94
705
701
549
342
155
74
563
544
438
512
233
112
845
816
658
642
518
911
221
577
644
520
913
223
579
514
415
730
178
462
772
623
1094
266
694
416
188
89
686
663
534
418
190
91
688
665
536
334
151
72
550
531
428
500
227
108
824
797
642
Large Farms
Summer:
Cotton
Rice
Maize
Sorghum
remainder
Winter:
Berseem 1
Berseem 2
Berseem 3
Berseem 4
Wheat
remainder
Exports of feeds:
Cottonseed Cake
·Wheat Bran
Rice Bran
(Thou. Tons)
0
0
0
0
0
0
no limits
no limits
n<;> limits
41
TABLE 2. continued.
Parameter
Bound
Run A
Low
High
Run B
Low
High
-------------------------------------------------------~---
Imports: (Thou. ·Tons)
Maize
Wheat Bran
Frozen Meat
Feeder Cattle
(Thou. Head)
Unified Feed:
Rationed price
(L.E./Ton)
Quantity
Ration Scheme
176
300
74
176
300
74
300
74
1000
300
74
0
0
0
20
25
740
Large farms, feedlots
0
n.a.
0
n.a.
42
TABLE 3. Results of 1977 Runs. Quantities in Thousands.
Run:
A.
B
Quantity, Dual Activity or reduced cost in parenthesis
Small Farm Cattle
Buffalo
Small Farm Cattle
Buffalo
751 (-94')
1180 (-96)
376 ( -107)
393 (-91)
751 (-98)
1180 (-81)
376 (-130)
393 (-143)
Meat:
·Cull
145 (1.22)*
145 (1.28)*
Fed
116 (1.54)*
73 (1.61)*
Veal
21 (1.67)*
25 (1.70)*
*These are marginal costs. For A, Veal production had an
upper limit of 21, the reduced cost on veal was .42
Crops and Land:
Small Farms:
Summer:
Land
Cotton
Rice
Maize
Sorghum
remainder
Winter:
Land
Berseem 1
Berseem 2
Berseem 3
Berseem 4
Wheat
remainder
2946
660
533
934
227
592
(-98)
(76)
(72)
(0)
(-2)
(-98)
2946
791
637
862
182
474
2367
426
195
92
705
681
547
(-85)
(-23)
2367 (-59)
342,(-21)
155 (-8)
(-4)
(0)
(15)
(31)
(-84)
(-90)
(114)
(90)
(0)
(-4
(-91)
80 ( 0)
651 (0)
816 (78)
54 7 (-59-)
43
TABLE 3. continued.
Run:
B
A
Quantity, Dual Activity or reduced cost in parenthesis
---------------------------------------------------------Large Farms Summer:
I
~
~~
I
I
Land
Cotton
Rice
Maize
Sorghum
remainder
Winter:
Land·
Berseem 1
Berseem 2
Berseem 3
Berseem 4
Wheat
remainder
Unified Feed Q.
Gray market value
Exports of feeds:
(-74)
(30)
(54)
(-6)
(0)
(-74)
2875
772
623
752
266
462
(-69)
(75)
(80)
( 0)
(4)
(-70)
2310
416
188
89
. 686
665
536
(-17)
(-11)
(0)
(0)
(12)
(74)
(-17)
2310
334
151
73
576
797
597
(0)
(-8)
(-4)
( 0)
740 (4)
145
(O)
(126)
( 0)
0 (79)
104
(Thou. Tons)
Cottonseed Cake
Wheat Bran
Rice Bran
Imports:
2875
645
520
911
222
577
0
0
0
112
0
231
(Thou. Tons)
Maize
Wheat Bran
Frozen Meat
· Feeder Cattle
(Thou. Head)
176 (56)
300 (31)
74
0 (296)
1000 (88)
300 (88)
74
20 (320)
"Social Welfare"
8.05 E+08
9.40 E+08
44
For 1977, I am primarily interes-ted in quan-tities and
prices of meats, the governments cost of imports and
subsidies, as domestic and foreign exchange, ·and t.he social
welfare costs ·of the policies.
The model echoes the results of previous studies.
Government policies promote domestic n1eat production while
-discouraging cheaper imports, and such policies have obvious
welfare costs which are substan·t.iated by the model.
'
'
I
r
~
I
I
I
~
According to the base run, current Egyptian red meat
consumption is about 7 kg. per person, annually. Without
government intervention in the s~ctor (except for frozen
meat imports), this would have decreased abou·t. a kilogram.
On the other hand, the
welfar~
cost of these policies, as
measured by the area between the supply and demand
functions, was about 3.5 L.E. per person, or about 3% of
GNP. Expanding meat imports by 40, 000 ·t.ons would have
allowed equivalent consump·t.ion levels at a cost of only
about .6 L.E. per person.
Both rups show evidence of the desireability of
expanding imports of feeds and feeder animals: vlhile it
sensible for the government to stop subsidizing the unified
feed ration, feed imports are s·till a feasible proposition
at market levels. Indeed, the model sugges.ts tha-t. some
.
exports of cottonseed cake and impor-t.s of maize t-rould
provide a feed ration better than the presen·t one. See the
dual activity values in Table 3.
45
1990 Runs
Demand is recalculated on the assumptions that
population has
~rown
to 51 million and private expenditure
equals 145 1977 L.E., per person. The population projection
comes from the 1985 World Bank Report, while the per capi·ta
private expenditure estimates are simply projections of the
series used in estimating demand. The major differences in
the four runs are summarized below. Table 4 gives the
details, and 5 the results.
A) Base Run for 1990
Herd coefficients unchanged from 1977 levels
Herds have grown at historic rates and will continue to
Cropping patterns unchanged from 1977
Imports of feeders and frozen meat unchanged from 1977
Imports of feeds (maize,wheatbran)_unch~nged from 19~7
B) No unforseen changes in policies.
Unified Feed has urea added.
5% improvement in calving ra·t.es and death losses
Future Herd growth lessens to half 1977 levels
Unified feed at market price
Imports of feeds (maize,wheat(bran) increase with population
Imports of frozen meat increase with population
Major policy changes. This includes the above changes plus
CI)
Imports of frozen meat increase with population
Imports of feeders increase
Imports of feeds (maize,wheat(bran)) increase by more than
in B
CD)
Future Herd growth ceases
A cessation of veal slaughter
New cropping patterns
46
TABLE 4. Parameters that Differ for the 1990 Runs.
-----------------------------------------------------------
Parameter
Run A
Low/High
Bound
or level
Herd
coefficients
Herd growth
Cat·tle
Buffalo
Crop areas
Veal
slaughter
Feed Exports:
(Thou. Tons)
Cottonseed
Cake
Wheat Bran
Rice Bran
Imports:
as 1977
3.0%
2.5%
as 1977
Run B
Low/High
Run CI
Low/High
Lo~/High
5% imprvd.
5% imprvd.
5% imprvd.
1. 5%
1. 25%
as 1977
free
0
0
0
0
0
0
1. 5%
1. 25%
as 1977
0
0
0
0
0
0
176
300
74
229
400
0
229
400
967
0
0
0
0
0
0
0.0%
0.0%
+ or - 20%
fixed at, 0
free
free
Run CD
0
0
0
0
0
0
0
0
0
0 1000
500 500
0 1020
300
400
967
300
400
967
0
0
(Thou. Tons)
Maize
176
Wheat Bran
300
Frozen Meat
0
Feeder Cattle
(Thou. Head)
0
Unified Feed:
Rationed price
(L.E./Ton)
25
Quantity
740
Ration Scheme
as 1977
Mix
as 1977
25
1000
as 1977
urea added
0
40
n.a.
1040
free market
urea added
n.a
2000
free market.
urea added*
*also, imported maize is substi tu·ted for cot·ton.seed cake
47
TABLE 5. Results of 1990 Runs. Quanti·ties in Thousands.
Run:
A
B
CI
CD
Quantity, Dual Activity or reduced cost in parenthesis
Small Farm
Cattle
1113(-61)
Buffalo
1637(-66)
Large Farm
Cattle
562(..:.117)
552(,-121)
Buffalo
Meat:
Cull
Fed
Veal
176(2.19)
34(2.82)
17(2.89)
(-132)
(-148)
(-101)
(-124)
(-10)
(-2)
(-145)
(-165)
(-180)
(-210)
(-72)
(-85)
198(2.18)
.38(2.80)
9(2.92)
301(1.98)
111(2.50)
9(2.80)
198(2.18)
38(2.81)
0(2.96)
These are margin~l cost~ in parenthesis. For A, Veal
production had an upper limit of 21, the reduced cost
on veal was .42
Unified Feed:
Quantity
740(36)
Gray market
Value
55
0(79)
70
. 71
50
Exports of feeds:
Cottonseed Cake 0
Wheat Bran
0
Rice Bran
0
112
0
0
0
231
0
0
0
0
2000(12)
Imports:
Maize
176(41) 1000(88)
742(0)
Wheat Bran
300 (41)
300(88)
500(74)
Frozen Meat
741
967
2000
Feeder Cattle
(Thou. Head)
0(663)
20(320)
80(506)
1040(48)
999(35)
400(53)
967
0(10815)
"Social Welfare", or objective function value.·
8.33+E08 9.40+E08
13.48+E08
9.67+E08
48
The results are not uriexpected. Increasing income and
population will cause demand shifts that are far beyond the
capacity of the livestock sector to accomodate without large
price increases. If present polices continue, real meat.
prices are predicted to nearly double. These increases will
make imports of meat, feeds, and feeders ever more
attractive, and the welfare costs of limiting these imports
ever greater. Even drastic increases in frozen meat imports
will not suffice to keep prices stable, as seen in run CI.
Continued herd growth will consume most of the available
feeds, and fed meat production will decline without
substantial increases in imported feeds. Without large
increases in imports, meat price icreases make domestic
livestock production more attrac·tive, but this will not
translate into supply increases without imported feeds.
For 1990, my estimates of per capita social welfare
range from 16 to 26 1977 L.E., depending on the scenario.
Meat consumption ranges from 4.5 to 8.3 kilograms, while
average prices go from 2. 1 to 2. 3 L. E. . Of the ·t.wo most
relevant runs for policy evaluations, CI and CD, only CI,
with its large increases in imports. results in an increase
in meat consumption on a per capita basis. The o·ther runs
result in decliries on the order of 30%.
.
One policy goal for the livestock sector is to increase
meat consumption by the poor. I tried to present an analysis
49
of. how consumption would be affected under the various
proposals, using the lowest 40% of the popula·t.ion, by
expenditure, as my definition of poor. This was chosen as a
definition because the income distribution data I had
available was broken down in this way.
The analysis proceeded by using time series es·t.imates of
the demand response to increases in income for estimating
cross-sectional effects. They are no·t. the same things.
Normally the cross-sectional effects would be higher and
using time series estimates as stand-ins would overestimate
consumption of the poor.
El-Issaway( 1982) computes tha·t the lowest 40% of the
population has 19% of total expendi·t.ure, based on data from
1974. This
numb~r
seems to have been fairly constant, since
1958, and I assume it will continue to be so. For 1990, if
expendi tu.re continues to grow a·t i·ts historic ra·te, average
expenditure will be 145 1977 L.E., so the poor will average
69 L. E. . Regretably, when these numbers were used wit,h the
predicted 1990 prices the result was negative quantities of
consumption for fed and veal meat. This is unfortunate firs·t
of all because it suggests that when used for predicting
future aggregate consumption demand may be shifted outward
too rapidly by increasing incomes, and segondly because i·t
prevents me from presenting any intelligent dis~ussion of
meat consumption across .income groups. Cross sectional
50
demand for meat is obviously an area where further work
would be very rewarding.
2000 Runs
I made several runs for 2000, under various estimates of
future herd sizes. The results paralleled those for 1990.
The most distinguishing feature was dramatic price increases
for meats. As there were no conclusions to be drawn from
these results that could not be found in the 1990 runs I do
not elaborate on 2000.
Conclusion
In terms of the evaluation of current and fu·ture
policies, I conclude that present policies in the meat,
sector cause substantial reductions in welfare, on the order
of 3% of GNP. Alternative import orien·t.ed ·policies would
provide more meat at lower cost. For the
fut~re,
imports on
a large scale are necessary if meat consumption is to
increase.
Further research in this area would probably not be
useful without improvements in the quality and ·t.ypes of data
available .. Accurate values for herd numbers and slaughter
quanti ties are essential, as is be·tter data on input-output
51
coefficients at the farm level. Cross sectional da·ta on meat
consumption, by type of meat, would be useful. Specific
information on the meat rationing program and its
effectiveness would be helpful in planning alternative
approaches to mitigating the effects of in~reasing price~ on
the poor.
52
REFERENCES CITED
53
REFERENCES CITED
Cuddihy, W.: Agricuiturai Price Management in Egypt. World
Bank Staff Working Paper No. 366, The World Bank,
Washington D.C., 1980.
Dorfman, R., .P. Samuelson, and R. Solow: Linear Programming
and Economic Analysis. McGraw-Hill, New York, 1~53.
Duloy, R. . and P. Norton: "Prices and Incomes in Linea·r
Programming Models." American Journal of Agricultural
Economics. pp. 116-120, November, 1975.
Enke, S. : "Equilibrium among Spa·t:.ially Separated Markets:
Solution by Electric Analogue." Econometrica. pp. 40-47,
January, 1951.
FAO: The Water Buffalo. FAO Animal Production and Healthi
Series, No. 4 .. FAO, Rome, 1977
Fitch, J., and I. Soliman: The Livestock Economy in Egypt:
An Appraisal of the Current. Si tuat.ion. Economics Working
Paper Series, No. 29, Agricultural Development Systems:
Egypt Project,- University of California, Davis, 1981.
Ikram, K.: EgyEt: Economic Pevelopment in a Period of
Transition. Johns Hopkins University Press, Baltimore,
Maryland, 1980.
Kearl, L., et alia: Arab and Middle East Tables of Feed
Composition. Utah Agricultural Experiment Station, Logan
Utah, 1983.
Kennedy, P.: A Guide to Econometrics. MIT Press, Cambridge
Massachusetts, 1979.
Mariano, R.: "Analytical Small-Sample Distribution Theory in
Econometrics: The Simultaneous-Equations Case."
International Economic Review. pp. 50~-533, October,
1982.
54
Martin, N.: "Stepped Produc·t. Demand and Factor Supply
Functions in Linear Programming Analyses." American
Journal of Agricultural Economics. pp. 116-120,
February, 1975
Mohie-Eldin, A.l "The Development of the Share of
Agricultural Wage Labor in the National Income of
Egypt." in The Political Economy of Income Dis·tribution
in Egypt, G. Abdel-Khalek and R. 11'ignor eds .. Holmes and
Meier, New York, 1982.
Murtagh, B., and M. Saunders: MINOS: Users Guide. Technical
Report SOL 79-100, Stanford Universit~, 1979.
Norton, R. arid Leopoldo.M. eds.: The Book of CHAC. Johns
Hopkins University Press, Baltimore, Maryland, 1983.
National Research Council: Nutrient Requirements of Beef
Cattle. sixth revised edition, National Academy Press,
Washington D.C., 1984.
a.
Preston, R.,
McConnen, and G. Haynes: An Analysis of Red
Meat Production in Egypt. Unpublished Report,
International Agricultural Development Service and
Ministry of Agriculture, Egypt. 1984
Richards, A.: Egypt's Agricultural DeveloEment, 1800-1980.
Westview Press, Boulder, Colorado, 1982.
Samuelson, P.: "Spatial Price Equilibrium and Linear
Programming." American Economic Review. pp. 283-303,
June, 1952
Shapouri,· S., and I. Soliman: Egyptian Meat Market: Policy
Issues in Trade, Prices and ExEected Market Performance.
ERS Staff Report No. AGES841217,. USDA, Washington D.C.,
February 1985.
Soliman, I.: Red-Meat Price Policy in EglE1· Economics
Working Paper Series, No. 62, Agricultural Development
Systems: Egypt Project, University of California, Davis,
1982.
.
Soliman, I., and M. El-Azim: An Appraisal of Lives·tock
Concentrated Feed Policy Ill Eg~. Economic~ Working
Paper Series, .No. 138, Agricultural Development Systems:
Egypt Project, University of California, Davis, 1981.
55
Soliman, I., T. El-Zaher, and J. Fitch: Hilk
Production Systems in Egypt and the Impact of Government
Policies. Economics Working Paper Series, No. 121,
Agricultural Development Systems: Egypt Project,
University of California, Davis, 1981.
Soliman, I., J. Fitch, and N. El Aziz: The Role of
Livestock Production on the Eg:ypt,iap. Farm. Economics
Working Paper Series, No. 85, Agricultural Development
Systems: Egypt Project, University of California, Davis,
1982.
Winrock International: Po·tential for On-Farm Feed
Production and Utilization by the Egyptian Small Farm
Sector. Winrock International, Morrilton, Arkansas,
1980.
.
.
World Bank: 1985 World Development Report. Johns Hopkins
University Press, Balt,imore, Maryland, 1980.
56
APPENDICES
'.
57
APPENDIX A
Crop and Nutrient Coefficients
A portion of the model is an abbreviated description of
the Egyptian crop sector as it applies to lives·tock.
Activities with negative objec·tive function values convert
labor and land into crops and crop by-products. Activities
exist for selling the crops and transfering the relev,ant
by-products to the livestock sector where they are available
for feeding to animals. Further activities transfer to the
various animals in various quarters, converting t.he feeds
into nutrients in the process. This appendix will explain
the derivation of the objective function coefficients for
the cropping activities, the labor requirements, land
availability, ·coefficients for the amounts of crops and
feeds produced, selling prices for the crops, the seasonal
pattern of feed availability, and the nutrients available in
the feeds.
Objective Function Coefficients
Several sources were available with information on the
variable nonlabor costs of planting for the base years,
58
1977-1978. Winrock(1980), Ikram(1980), Richards(1982) were
all examined. Unfortunately these sources gave grossly
different estimates for the costs, and none made any
distinction betMeen farm sizes. Given this situation and the
relatively unimportant effec·t of these costs on the cropping
pattern allowed by the model, I chose the simple expedien·t
of taking the average of all the available es·timates.
Labor Requirements
Labor requirements for crop produc·tion were derived from
data in Richards and in the Winrock study. Winrock (pp. 113,
126) gives labor requirements for crops by mon·ths for each
study village, while Richards (p. 233) gives three estimates
of labor requirements, for the labor of men and women and
children. I decided that Richards' dat.a was the mos·t
reliable, largely on the basis of its comple·teness. Since
the Winrock data offered a breakdown of requirements by
months, I used their numbers to derive
requirements needed each mon·th.
percei~tages
of total
I then combined Richards'
middle estimates of Male and Female labor required,
accepting Mohie-Eldin's (1982) argument that since female
wage rates were half men's their productivity was also half.
Finally I divided up these total requirements using the
monthly percentages calculated from Winrock. For Berseem, I
59
followed basically the same procedure, making some
assumptions about how requirements for the berseem varied
for different types. The following table shows the resul·ts.
TABLE 6. Monthly Labor Requirements. Man Days per Feddan.
Cotton Rice Maize Sorghum Wheat Berseeml
J
F
M
A
M
J
J
A
s
0
N
D
10.2
17.0 1.4
10.6 17.7
8.9 9.5
6.4 3.4
2.6 2.0
14.9 8.8
12.7 6.8
3.0 5.5
6. 7'
6.0
4.5
12.7
5.1
4.5
7.6
7.6
1.3
21.0
1.0
1.5
1.0
1.0
1.0
19.0
5.5
0.5
4.0
2.0
2
3
4
7.0
7.0
7.0
7.0
7.0
7.0
7.0
7.0
15.0
7.0
7.0
3.0
1.0
3.0
1.0
3.0
3.0
1.0
1.0
Land Availability
For the base years of the study, I used as overall land
availability the 1975 - 1978 average of crop area planted.
(Ikram(1980), p. 414) Different totals are available for the
summer and the ~inter plantings. For the calibration runs,
used the 75-78 averages of area planted to each crop as
additional constraints. Berseem was divided into 4 types,
following Richards. Future years use these same
coefficients, most of the literature says that land
development schemes are barely, if at all, keeping up with
losses from urbanization. The land areas had to be divided
I
60
between small and large farms, for which I used the figure
that 50.62 percent of the crop land was held by small
farmers.
(Calculated from M~hie-Eldin(1982), p. 277.) In
calcula·t.ing this I assumed that the land repor·t.ed as being
used for orchards was all held by large. farmers. Again, for
the ca.libration runs this ra·tio divided the area plan·ted to
each crop proportionately between small and large. It seems
unlikely that this is ac:;:tually true and there is anecdotal
evidence that different sized farms plarrt different crops,
but no usable numbers. For subsequent model runs, areas
planted were allowed to fluctuate, see the chapter on
results for details.
The numbers used follow, in thousands of feddans.
TABLE 7. Cropping Areas. Thousands of Feddans.
Crop
Total
Small Farms
Large Farms
Summer:
Cotton
Rice
Maize
Sorghum
s. remainder
5821
1302
1051
1846··
451
1171
2947
659
532
934
228
593
2874
643
519
912
222
578
Winter:
Wheat
T. Berseem
Berseem 1
Berseem 2
Berseem 3
Berseem 4
remainder
5228
1344
2801
844
383
183
1391
1083
2646
680
1418
427
194
93
704
548
2581
664
1383
417
189
90
687
w.
5~5
----------------------------------------------------
61
Crop and Feed Production Coefficients
The sources for these coefficients are Winrock(1980),
Soliman and El-Azim(1981), and Ikram. Where there was a
discrepancy between the sources over the same coefficient,
generally the case, the average was used.
TABLE 8. Crop and Feed Coefficients. Tons per Feddan
Crop
Coefficients
Cotton
Rice
Maize
Sorghum
Wheat
Fodder:
Berseem
Berseem
Berseem
Berseem
.919
2.212
1.583
1. 591
1. 417
1
2
3
4
Lint
Grain
Grain
Grain
Grain
.39 Seeds
1.2 S·t.raw
. 2 Leaves
1.485 Straw
.184 Bran
.153 Bran
6.5
13.0
19.5
22.0
Selling Prices
Selling prices were no problem for the base runs of the
model. Prices for crops are set by the government. For later
runs assumptions had to be made. One important one was that
the government would relax the mandatory area requirements.
Specific details are covered in the chapter on results.
For the base runs, selling prices for grains and cotton
were as follows. The source is the Ministry of Agriculture,
cited in Ikram, p. 424.
62
TABLE 9. Selling Prices for Crops.
L.E. per Ton
Crop
Price
Wheat
Maize
Rice
Cotton
Sorghum
61.7
71.4
66.1
222.0
. 65.0
Nutrients from Feeds
Data on the nutrients. in feeds comes solely from
Kearl(1983). They were recalculated so as to be equivalent
to the units used in the NRC formulae.
The results of this were as follows.
TABLE 10. Feed Nutrients. Grams per Kilogram.
Crop
Nutrient
CP
NEM
NEG
920
292"
1410
863
930
870
33
105
524
1106
35
610
880
270
96
19
1704
370
1137
213
890
170
96
28
1670
227
1103
129
930
890
890
35
144
93
863
1364
1777
357
835
1196
850
190
1373
858
DM
Cotton seeds
Rice:
straw
bran
Maize:
Grain
leaves
Sorghum:
grain
Berseem fodder
Wheat:
straw
bran
Imported Maize
Unified Feed
(1977 formula)
-------------------------------------------------------
63
APPENDIX B
Livestock Coefficients
This appendix explains the deriva·t:.ion of the nutrient
requirements, and the parameters that describe herd
performance, composition and milk production.
Requirements
The nutrient requirements for livestock were derived
using the functions in NRC(1984). There are several problems
with this procedure. First of all they are obviously not
correct for water buffalo, which is a different genus. They
were used· because no other numbers were available. Secondly,
even for cattle they are subject to
critic~sm.
The major
complaint is that they allow no substitution between
nutrients, when such substitution certainly occurs in fact.
Again, no acceptable alternatives are available.
Requirements for dry matter intake (MNDM), crude protein
(CP), net energy for maintenance and for gain (NEM, NEG),
and maximum dry matter intake (MXDM) were calculated. The
formulae used are as follows.
'
64
MNDM
For breeding females,
MNDM
= W**.75
* (.1462*NEM- .0517*NEM**2- .0074).
For growing and finishing cattle,
MNDM
= W**.75
* (.1493*NEM- .0460*NEM**2 -
.0196), where W
equals live weight, and NEM equals Meal NEM per kg. diet.
NEM was calculated as a weigh·ted average of the NEM in the
. available feeds. This varies with the season. Adjus·tments ·to
this figure were made on the basis of sex and frame size.
CP
CP
= (33.44
* (MNDM+MXDM)/2 + 2.75 * W**.5 + .2 * W**.6) I
(. 90 * . 66), with additional requiremen·ts of 55 g/day for
the last 3 months of pregnancy and of 33.5 times milk
production in kilograms during lactation.
NEM
NEM
=C
* W**.75, where C is a temperature dependent
constant equal to .084 during quarters 1 and 3,
.077 during
quarter 2, and . 075 during quarter 4. Addi·tional NEM is
required for pregnancy and lactation, calculated from
NEl1
and
= CBW * (0.0149 - .0000407t) *e**(.05883t-.0000804t**2)
NEM = .1 * ( %fat ) + .35 where t is the day of
gestation, CBW is calf birth weight.
65
NEG
NEG
= .0608
* (W **.75) * (ebg)**1.119, where ebg is empty
body weight gain.
MXDM
MXDM
= .035
*
W
These formulae were used in a computer program to
estimate nutrient requirements for the model. The program
set the variable parameters to their proper values for the
various types of animals, calculated basic requirements on a
daily basis, added in pregnancy and lactation requirements,
added in weight gain where appropriate, and then accumulated
the quarterly totals.
Herd Parameters
Literature
The data used in deriving the parameters of the
livestock herd comes from 2 main sources. The first source
is Winrock(1980). This study included livestock surveys of
two villages, one in the Nile delta and one in upper Egypt.
The data collected included the number and type of animals
held by different sized faims, death and birth rates and the
month of birth, weights at birth and ma·turity, culling age,
66
milk production, labor inpu·ts, and so on. In addition to
this survey, data from several working papers published by
the Agricultural Development Systems (ADS) Egypt Project
were used. The data in these papers comes from the 1977 Farm
Management Survey.
Herd Structure
Average data from the two Winroclt surveys p:t."ovided the
starting point for the herd structure coefficients. '!'here
are two main coefficients, one representing the number of
calves born yearly from each breeding member of the herd,
and another representing the number of animals needed each
year to replace cull and death losses and provide for growth
in the herd size. The calving coefficients were calculated
from the data on parturition
inteJ.~vals
and birth ra·tes.
Again using cattle as an example, the annual birth rate was
63.2% and the parturition interval 15 months. Thus 79% of
the breeding females conceive and
hav~
a live birth every 15
month cycle. Assuming a 5% abortion rate, 83% in the 15
month cycle or 66% annually, conceive, and so .63 live
births occur per year. 17% of
~he
breeding females do not
concieve and so require only nutrients for maintenance for a
year.
(After a 12 month period I assume they conceive or are
culled.) In addition to these births, the replacement
67
breeders produce a calf as a heifer before they enter the
breeding herd.
Fo.r.: buffalo the corresponding numbers are 55.3% annual
birth .r.:ate, an 18 month par-turition interval, 83% with live
births each 18 months, 87% concieve each cycle, 13% on
maintenance.
Death Losses
These coefficients also come from the Winrock
s~rveys.
Data were reported on calf and adul·t. mortality ra·t.es. These
rates were used to calculate both expected losses for
breeder replacements and feeders and the nutrients consumed
by a typical. animal expected to die. For example, the
typical Baladi steer
ra~sed
as a feeder has a mortality rate
of 15% in the first six months, 3% in the second, and 4% in
latter years. Since I have assumed it takes two years to
raise a feeder to the point where it goes
~o
the feedlot,
the survival rate for this type animal was calcula·ted as
,.
. 79. Every unit of the feeder activity would then require
.21 of the death loss activit,y. This activity takes an
animal out of the calf balance, and also takes nutrients out
of the nutrient balances. These nutrient requiremen·ts were
calculated as a fraction of those required to raise an
.'
'
68
a~
animal a£ this type to maturity. I£, for example, 80%
'
those animals that die do so in the firs·t quar·ter, nu·trien·t
requirements in the second quarter will be 20% a£ those
required for a live animal.
For cattle raised as breeders, for 3.5 years, the death
loss requirement is 26%. For buffalo Winrock's loss numbers
are 21% the first 6 months, 4% the second, and 4% for latter
years. The .loss coefficients are 27% for feeders and 31% for
breeders.
The 4% loss rates also apply to ·the breeding animals,
·thus to maintain them a certain number a£ replacements are
needed annually. Winrock repbrted that the normal culling
ages were 9 for ,cattle and 11 for buffalo.
I calcula·ted ·the
proportion of relacements needed by calculating losses over
the time in the herd and then adding the loss of t,he animals
at culling age. The results were that to maintain a constant
size herd 18% of the cattle and 14% o£ the buffalo had to be
replaced anually. In reality the herds have been growing in
recent years.
F~tch(1981)
suggests a rate of 2.5% for cattle
and 3% for buffalo, although the data are poor. Since each
breeding female in the cat·tle herd produces 4.
27
calves over
her lifetime, or .776 per year, this suggests the breeding
herd (HERD) is growing at 2.5 /
.776
= 3.2%.
For buffalo the
number is 4.5%. These numbers were added to the above
replacement requirements to get .22 and .19, the proportions
69
of the cattle and buffalo herds which must be new breeders
each year.
Growth Rates
This was one of the less scientific parts of the
procedure. Data on birth and cull weigh·ts was available f l."om
Winrock, along with some sketchy information on the weigh·ts
of feeder animals, from Soliman(1982) In addition Winrock
gave average gain rates for immature animals. The Winrock
study also reported that animals were not fed sufficient
feed for weight gain except during the six month season
(winter) when berseem was available. From this information
tables were constructed that allowed animals to reach their
mature weight at the specified age, while not growing during
the summer, exc,ept in the case of the young. The grow·th
rates used assumed that
gro~th
would occur at an initially
increasing, then decreasing rate.
Milk
Milk Production Coefficients
Data on milk comes from the Winrock study, the 1977 Farm
Management Survey, FA0(1977.), and NRC(1980).
70
Winrock data gives average milk production as 1080 kgs.
of 7% fat for Buffalo and 666 kgs. of 3.5%
fat for cattle,
per lactation. This was assumed to be spread over a seven
month lactation period, with the 2nd ·through 4th months
having production roughly 1. 7 times that of the o·ther four
months. If calves are kept, versus sold for veal, a certain
amoun·t of the cows milk is consumed by the calf. There was
not data on what these quantities typically are, or on
Egy;ptian weaning ages. I made the arbitrary assump·tion,s '·that
all the first months milk goes to the calf, along with one
kg. a day for the subsequent six months. The result was as
follows.
TABLE 12. Milk Coefficient.s. Kilograms.
Period
Birth month
+ 1 quarter
+ 2 quarters
Production
72
378
216
Cat·tle
Calf req.
Production
Buffalo
Calf req.
120
600
360
120
90
90
72
90
90
In the model, the calving activities add the production less
calf requirements to the balances, while sell{ng the calf
for veal adds the calf requirement back.
Milk Prices
These vary according to farm size, the averages for my
two farm sizes from the FMS are reported here.
71
TABLE 13. Dairy Product Prices. L.E. per Kilogram.·
Product
Raw Milk
Ghee
Raw Cattle Milk
Raw Buffalo Milk
Skim Milk
Farm Size
Small
Large
.154
1.264
.14
.15
.12
.143
1. 452
.15
.16
.13
Buffalo milk has a higher fat percen·tage and is worth more.
Anecdotal evidence in Soliman, El-Zaher, and Fitch(1983) was
that small farms recieved lower prices than large. As a
result of these facts I rather arbitrarily made up some
prices for the model, as shown above in Table 12. Prices in
reality will vary greatly with distance from cities, this
was ignored.
Ghee Production Coefficients
The FMS provided substantial da·ta on this subject,
though some assumptions about the yields of different types
of milk had to be made. These were based on fat percentages.
Cattle Milk: 1 kilo milk yields .15kg cream and .85 skim
milk. The cream then gives .066kg butter and .084
buttermilk. The butter produces .042kg ghee.
Buffalo Milk: 1 kilo milk yields .15kg cream and .85
skim milk. The cream then gives .132kg butter and .018
buttermilk. The butter produces .084kg ghee.
72
Milk Labor Requirements
I guessed that the equivalent o£ 3 days per month were
spent milking
d~ring
lactation. Producing ghee from milk
took .05 days per kg. of milk.
73
APPENDIX C
Labor Coefficients
Labor is supplied to the model in several forms. First,
certain quantities of male and female (I included children
in this category) laboz: come from the farm fami.lies. These
supplies are assumed to be fixed. Additional .quanti·ties of
male labor can be hired, at rates which vary according ·to
the season. As well, male and female labor can be transfered
back and forth. This appendix will attempt to explain the
derivation of the quantities of available labor,
~he
prices
for hiring labor, and the coefficients which determine the
rates at which different kinds of labor act as substitutes
for each other.
Quantities of Labor on the Farms
Several attempts to get reasonable
estim~tes
for these
numbers were made, but it was not to be. Mohie-Eldin(1982),
reports data from various farm surveys, but includes stern
caveats on their use. I made the simple assumption that one
male laborer and 2 female/child laborers were available for
each farm, and that these workers could each provide 20 days
per month for the types of crop and livestock labor tha·t are
74
included in the model. These quantities are rather low, but
the model includes only part of the actual labor required to
run
a
farm. These quanti ties were mul·t.iplied by the number
of farms in each size category, and the results were used as
right hand side values in the model.
Wage~
for Hired Labor
This data comes from MOA data cited in Mohie-Eldin, p.
254.
TABLE 13. Male Labor Costs. L.E. per Day
Month
J
F
M
A
M
J
J
A
s
0
N
D
Wage
.76
.77
.80
.83
.84
.88
.92
.92
.92
.92
.93
.93
Transfer Coefficients for Labor
This also comes from Mohie-Eldin. He argues, based on
the wage difference, that female labor is half as productive
for field work as male. I have assumed in addition that when
75
male labor is used for such tasks as tending livestock,
milking, and producing ghee it is no more productive than
female.
76
APPENDIX D
Computer Program
The results in this thesis were calculated using MINOS,
a linear and nonlinear minimization program for problems
with linear constraints. The program was developed for the
Navy by Bruce Murtagh and Michael Saunders of the Stanford
Department of Operations Research.
:MINOS uses a version of the revised simplex method for
linear problems. For nonlinear problems, additional
"superbasic" variables can be used, which vary to improve
the objective function while the basic variables change to
keep the solution feasible. For problems with few nonlinear
varibles, such as mine, the quasi-Newton method is used to
pick the direction and size of the change in the superbasic
variables. Details are available in
MINOS~
N0nlinear Programming System (For Problems
A Large Scale
~ith
Linear
Constraints) User's Guide, report SOL 77-9, Department of
Operations Research, Stanford University, Stanford
California.
l