Changes in Foot and Mouth Disease Status
and Evolving World Beef Markets
Javier Ekboir
Economics Program, Centro Internacional de Mejoramiento de Mafz y Trigo
(CIMMYT)
Lovell S. Jarvis, Daniel A. Sumner, Jose E. Bervejillo
Department of Agricultural and Resource Economics, Giannini Foundation,
University of California, Davis
William R. Sutton
The World Bank
ABSTRACT
Argentina and Uruguay eradicated foot and mouth disease (FMD) in 2000 and 1995, and subsequently gained greater access to FMD-free markets. Although both South American countries
suffered from the reintroduction of FMD in late 2000, and had to temporarily cease exports to
FMD-free markets, they are expected to eradicate FMD again and will continue to increase exports
to FMD-free markets. This article analyzes the changes in international beef trade and, especially,
in beef prices that are expected. We use a simulation model that captures the effects of market
segmentation due to the FMD status and of the trade policies of exporting and importing countries.
The ongoing realignment of trade flows has potential to significantly affect prices in both the FMDfree and the FMD-endemic segments of the world beef market. We demonstrate how growing beef
exports from South America to FMD-free markets interact with other on-going changes in international beef markets. © 2002 Wiley Periodicals, Inc. [EconLit citations: QllO: Agriculture, Aggregate Supply and Demand; Q170: Agriculture, International Trade]
1.
INTRODUCTION
Argentina and Uruguay have recently eradicated foot and mouth disease (FMD) and, as
a result, they gained increased access to FMD-free markets that were previously denied
to them because of sanitary restrictions. I The resulting realignment of trade flows has
potential to significantly affect long-run prices in both the FMD-free and the FMDendemic segments of the world beef market. In this article we develop and use a partialequilibrium model to analyze these effects, taking account of differences in FMD status
and trade policies among exporting and importing countries.
In recent decades the world beef market has been divided into several, sometimes overlapping, segments. Principal among these segments are the FMD-free and FMD-endemic
I Several FMD outbreaks occurred in Argentina and Uruguay during late 2000 and early 200 I, resulting from
animals smuggled from Paraguay. Vaccination was reintroduced, and the two countries will need to regain their
FMD free status through a process that may last several years.
Agribusiness, Vol. 18 (2) 213-229 (2002)
© 2002 Wiley Periodicals, Inc.
Published online in Wiley InterScience (www.interscience.wiley.com).
001: 10.1 002/agr.1 0014
213
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EKBOIR ET AL.
markets, the grass-fed and grain-fed beef markets, the Atlantic and the Pacific markets,
and certain specialty cut markets such as the European Union's "Hilton" quotas, not to
mention the U.S. tariff rate quota system. Even though traders compete within each segment, competition between segments is more limited. The changes in the sanitary status
of Argentina and Uruguay, by switching beef trade flows from the FMD-endemic to the
FMD-free market, simultaneously is shifting beef from the Atlantic to the Pacific markets. It will also introduce more competition between grass-fed and grain-fed beef in the
Pacific market, and should generally reduce price differences among different market
segments.
In analyzing the effect of FMD eradication, it is important to note that this is only one
of several major developments that are changing world beef market equilibria, for example, prices, the quantity of beef produced, processed, and traded, and the pattern of international trade flows. Other developments include (Ekboir, Jarvis, & Sumner, 1996):
(1) the expansion and liberalization of beef trade following the Uruguay Round (UR)
agreement, including the continued opening of Asian markets and the reduction in
European Union (EU) beef export subsidies;
(2) the increase in international demand for differentiated qualities of beef, which is
causing an increase in the trade in cuts as opposed to trade in whole carcasses; by
supplying each market with the type of beef most sought by consumers, trade in
beef cuts could increase the average price of beef exports, the profitability of beef
trade, and the farm-gate price, while also benefiting consumers, and
(3) the emergence of NAFTA2 and MERCOSUR 3 is liberalizing beef trade within
these trade areas and thereby influencing flows outside these regions.
The developments identified are affecting the relative competitiveness of national beef
industries and the welfare of producers and consumers. For purposes of analysis, the forces
that shape international beef markets can be classified into three groups: international
trade regulations, market segmentation based on meat quality and sanitary barriers, and
economic and population growth. In general, the new international trade regulations will
allow for a freer trading environment. Beef trade is expected to grow rapidly due to the
reduction in price subsidies by several important developed countries, combined with
greater access to domestic markets agreed to in the UR.
The major immediate consequence of the recent change in rules governing access to
FMD-free markets, i.e., the Sanitary and Phytosanitary (SPS) protocol-which ensured
that sanitary barriers would not be used for commercial purposes and introduced the regionalization principle 4 -is Argentina's and Uruguay's growing access to FMD-free markets. These markets are expected to offer higher prices for beef than the FMD endemic
markets in which they previously sold. As Argentina and Uruguay penetrate new markets
and achieve a higher price of beef, domestic consumption should decline and their beef
output and exports should rise.
We simulate the effects of different scenarios that are based on different assumptions
regarding how these changes will evolve. The model does not specify separate demands
2Members are Canada, Mexico, and the United States.
3Members are Argentina, Brazil, Paraguay, and Uruguay, with Chile and Bolivia as Associate Members.
4The regionalization principle allows for beef exports from FMD-free regions within a country, even though
FMD is present elsewhere in the country, provided the disease can be contained within a quarantined area.
CHANGES IN FOOT AND MOUTH STATUS
215
for different beef qualities nor include policy variables such as tariff-quotas or export
subsidies. However, the model allows us to analyze the effect of the major developments
discussed, such as a reduction in EU beef export subsidies, growth in Asian beef demand,
an increase in the U.S. import quota, and full integration of the FMD-free and FMDendemic markets. The model is calibrated to data from 1993-1994, the year before Uruguay obtained certification as FMD free without vaccination and initiated shipments of
fresh beef to North America.5
2.
THE FMD AND THE WORLD BEEF MARKET
FMD is a highly contagious viral disease that can cause severe production losses in livestock with cloven hoofs. FMD is not dangerous to humans. The virus is easily disseminated via direct contact with infected animals. Some types of meat, offal, bones, and raw
hides from infected animals are potential sources of infection, though deboned beef is
generally FMD-free. Vaccinated animals can be carriers even if they manifest no clinical
symptoms. All countries whose herds are not infected by FMD restrict the movement of
animal products originating in FMD-endemic countries. The rules applied differ from
country to country. The EU allows import of boneless beef from FMD-endemic areas if
the beef has been matured for at least 48 hours at 10 degrees Centigrade. The United
States, Japan, and South Korea, among others, only allow imports of cooked meats and
processed animal products from countries with FMD.
Beef is a heterogeneous commodity, differentiated by characteristics that depend on
cattle breed, production technology (grass vs. grain fed), age at slaughter, meat cut, and
whether the meat is chilled or frozen. These characteristics are important determinants of
the prices paid for beef in international markets, although prices are also affected by policies in importing and exporting countries, including sanitary standards and regulations,
tariffs, subsidies, and intergovernment agreements that influence where beef will and will
not be marketed.
Historically, the presence or absence of FMD divided the world beef market into two
broad segments-FMD-free and FMD-endemic. Within each of these segments, but particularly the FMD-free segment, the market has been further divided between grass- and
grain-fed beef. Until recently, grain-fed beef was produced mainly in the United States,
South Korea, and Japan, with the balance of the world predominantly producing and consuming grass-fed beef. Since the opening of the Japanese and South Korean markets,
Canada and Australia have been able to export increasing quantities of grain-fed beef. In
fact, the opening of Japan and South Korea as major importers of grain-fed beef benefited
,
50ur approach differs from that used by Rae et al. (1999), who use a quadratic programming optimization
model to analyze possible short run changes in the Pacific Rim beef market assuming that Argentina and Uruguay eradicate FMD. Rae et al. also distinguish grain-fed beef from grass-fed beef, and they use 1995 data on
a set of eight countries/regions. The model is then used to simulate different scenarios for a projected 2001
year. They allow for a variation in: (a) the degree of FMD free market access by Argentina and Uruguay, i.e.,
whether these countries gain access only to North America or to North America and East Asian markets; (b)
freight costs; and (c) whether a free trade zone is created between MERCOSUR and NAFTA. Their model
allows for little outward shift in beef supply from Argentina and Uruguay, and for relatively little growth in
Asian beef demand. Thus, the observed effects come primarily from a shift of existing exports from FMDendemic markets to FMD-free markets, with corresponding smaller price changes than our model predicts in
the longer run.
216
EKBOIR ET AL.
almost exclusively Australia and the United States, who in the late 1990s jointly accounted for 94% of Japan imports and 85% South Korea's.
Producing grain-fed beef has been a risky business for new entrants who did not have
stable marketing channels. Grain-fed beef is almost exclusively demanded in Japan, South
Korea, and the United States. The fat content demanded by each market, however, is
different. If beef prepared for a certain market is sold in that market, it commands a high
price; however, if for any reason it must be sold in another market, it receives a significantly lower price. There is limited substitution between market segments, although the
potential for substitution has been increased in recent years through greater use of processing technologies.
As a result of the restrictions imposed on beef imports from FMD-endemic countries,
a significant price gap-perhaps as large as 50-60% for manufacturing beef-existed
between the FMD-endemic and FMD-free markets. The avoidance of large production
losses that can be up to 10% of annual output was the main incentive for eradication. In
beef-exporting countries, there was an added incentive of accessing more profitable markets. Following development of a new vaccine, producers in Argentina and Uruguay decided to attempt eradication, with the encouragement and support of their governments.
Eradication required major organizational effort, substantial expense, and considerable
time. The Office International des Epizooties (OlE) declared Uruguay free ofFMD, with
vaccination, in 1993, and FMD free, without vaccination, in 1995.6
The Sanitary and Phytosanitary (SPS) protocol,? which committed subscriber countries not to use sanitary barriers as commercial barriers, has helped Argentina and Uruguay access FMD-free markets previously closed to their fresh beef exports. Under the
new rules defined by the World Trade Organization (WTO), sanitary barriers cannot be
used for commercial purposes. Thus, certification of a country as being FMD-free without vaccination allows that country to ship fresh beef to countries having zero-tolerance
for the disease. Certification by the United States that Argentina and Uruguay are FMDfree also helped Argentina and Uruguay negotiate access to other FMD-free markets such
as those in Asia, for example, Japan and South Korea.
3. ARGENTINA AND URUGUAY IN THE INTERNATIONAL
BEEF MARKET
World beef output in 1998/2000 was 49 million tons (cwe)8 per year. The main producing countries/regions were NAFTA(31%); MERCOSUR (19%); European Union (15%);
China (11 %); the former Soviet Union (6%); and Australia plus New Zealand (5%). Most
major beef-producing nations are also major consumers. For several years, international
trade has represented about 12% of world beef and veal production. Australia was the
major worldwide exporter during the 1990s. Excluding the volumes of beef traded within
the major economic blocs (EU, NAFTA, MERCOSUR), total world exports were about
4.6 million tons cwe, and the major participants were Australia 27%, MERCOSUR 21%,
6The OlE is an international agency that utilizes scientific criteria to certify the livestock disease status of
individual countries. Importing countries carry out their own evaluations when deciding whether to accept beef
imports from other countries, but their evaluations are likely to be influenced by the OlE.
7The SPS protocol was negotiated during the Uruguay Round (UR) Agreement on Agriculture.
8The use of carcass weight equivalent (ewe) measures makes it possible to aggregate different types of meat
into comparable statistics. For example, I ton of boneless beef is equivalent to 1.59 tons of beef in ewe, while
I ton of processed (cooked) beef equals approximately 2.8 tons of ewe.
~
CHANGES IN FOOT AND MOUTH STATUS
217
NAFTA 17%, EU-15 16%, and New Zealand 11%. By the same token, worldwide imports are about 4 million tons cwe, with the main importers being Japan 24%, NAFTA
18%, Russia 13%, EU-15 8%, the Middle East 7%, and South Korea 5%. (FAOa,9
USDA-FAS 10).
Australia, NAFTA, and New Zealand sell in the FMD-free market, while MERCOSUR
and the EU used to sell mainly in the FMD-endemic market. Argentina and Uruguay
export about one-half of MERCOSUR's volume. The opening of the FMD market to
these two countries will substantially reduce the supply in the FMD-endemic market.
During the 1990s, beef trade within the Pacific basin grew steadily, while trade within
the Atlantic basin shrunk. Australian beef exports grew at 3.5% per year between 1988
and 1998, U.S. beef exports grew at 12.2% and East Asian countries' imports grew at
9.3% annually. In the Atlantic basin, during the same period of time, EU and MERCOSUR exports decreased slightly, and imports by Middle East, African, and East European
countries decreased by more than 27%. After the EU introduced reforms to the Common
Agricultural Policy (CAP) in the late 1980s, it greatly reduced its subsidized beef exports, and the Former Soviet Union (FSU) reduced its meat consumption as personal
income shrank and consumption subsidies were reduced. The traditional division between the Atlantic and Pacific basins could soon become less dramatic. MERCOSUR
countries have begun to sell beef to some Asian countries, and the United States has sold
meat to the Russian Federation. Nevertheless, a high percentage of world beef trade is
concentrated in the Pacific basin.
Argentina and Uruguay are already important international beefexporters. During 19971999, Uruguay exported about 256,000 metric tons of beef per year (cwe) (INAC 11 ), and
Argentina exported 353,000 metric tons (cwe) (SAGPYA, 2000). Together, these exports
represent about 11% of total world beef exports. Until the early 1970s, Argentina and Uruguay exported chilled beefprimarily to the United Kingdom, Germany, and Italy, while they
exported thermoprocessed meats 12 mainly to the United States because of its ban on imports of fresh beef from FMD-endemic regions. The European Union is still an important
importer of chilled beef, despite the EU's significant protection of beef production, because EU policy allows for quota imports of high-quality, boneless beeffromArgentina and
Uruguay under the Hilton quota. Hong Kong, Singapore, and Malaysia apply the same
sanitary policies as the EU and import from Argentina, as well as from Australia and New
Zealand. Argentina's share of the Taiwanese market has grown steadily, and Uruguay is
exporting increasing volumes of frozen beef, specialty cuts, and byproducts to Japan
and South Korea, despite the comparatively higher costs of transportation to Asian
markets. Because Argentina and Uruguay have low production costs, U.S. producers face
increased competition from cheaper beef in domestic and also in foreign markets. Following agreement on the SPS protocol, Argentina and Uruguay each negotiated a 20,000 metric ton beef tariff rate quota with the United States in 1995. Uruguay fulfilled its quota for
the first time in 1996, while Argentina did so in 1999. Australia and New Zealand receive
much larger quotas for the U.S. market, 378.2 thousand tons and 213.4 thousand tons,
9FAO(a): AgroStat Data Base. United Nations, Food & Agriculture Organization. Access on line: www.fao.org.
IOUSDA-FAS. Dairy, Livestock and Poultry division. Access on line: www.fas.usda.gov/dlp/beef/
Beefpage.htm.
IIINAC: Instituto Nacional de Carnes, Anuario Estadistico de Existencias, Faena y Exportacion, Montevideo, various issues. Access on line: www.inac.gub.uy.
12Thermoprocessing involves cooking beef up to 80 degrees Centigrade in the middle of the piece. Although
thermoprocessing eliminates the risk of FMD, meat quality is also reduced.
218
EKBOIR ET AL.
respectively. Exports under these quotas pay a 4% tariff on high-quality cuts and a 10%
on all other cuts. Overquota exports pay a tariff that currently is about 26%.
Australia and New Zealand have not been filling their U.S. quota because East Asian
markets have been more remunerative. Argentina and Uruguay are negotiating with the
United States to obtain part of the unused quota from Australia and New Zealand, although these countries have resisted. If the quota were reallocated, exports from Argentina and Uruguay countries to the United States would surely increase. However, the effect
on markets may not be as great as suggested. Currently, the U.S. quota diverts Argentine
and Uruguayan exports to Canada, Mexico, and, increasingly, to East Asia. Australia and
New Zealand have already lost significant market share in Canada and, as they lose market share in East Asia, they export more to the US. The U.S. is also facing increased
competition from Argentina and Uruguay in the grass-fed beef segment of the East Asian
market. Thus, these effects might be somewhat offset if Argentina and Uruguay receive
higher U.S. quotas.
4.
EXPORT POTENTIAL OF ARGENTINA AND URUGUAY
Livestock production grew steadily in Argentina in the 40 years prior to 1975, and producers there and in Uruguay were poised to increase exports when the EU, in a sharp
change of policy, increased domestic protection and began to subsidize beef exports. Growth
in Argentine beef production essentially ceased, and exports fell as domestic consumption rose. There are no precise figures for the number of beef cattle in Argentina. Herd
numbers peaked at about 60 million head in the late 1960s and early 1970s, and subsequently declined to about 50 million head. Productivity rose, slightly offsetting the decline in herd numbers. Slaughter averaged about 12 million head per year during the
1990s, with beef production decreasing from 3.5 million tons in 1989, to 2.3 million tons
in 1998, and partially recovering to 2.6 million tons in 2000. Historically, livestock and
grain competed for the same land in Argentina. During the 1970s and 1980s, grain production increased in the areas with the best soils as farmers massively incorporated new
products (i.e., soybeans) and grain technologies. Grain yields rose sharply. In contrast,
productivity in the livestock sector remained mostly stagnant. During the 1980s and 1990s,
additional livestock technologies were adopted, for example, intensive grazing of improved pastures, inclusion of grain supplements in livestock diets, and a limited experiment with feedlots. The eradication of FMD is another aspect of the gradual modernization
of the livestock sector. An increase in cattle prices, as might occur with greater access to
higher priced FMD-free markets and/or greater efficiency in services linked to trade (e.g.,
ports, banking, etc.), could trigger more widespread adoption of improved technologies.
This would expand production and exports.
The Uruguayan cattle herd has fluctuated around 10 million head during the last 20
years. Slaughter has averaged about 1.6 million head per year, with substantial year-toyear fluctuation, from 1.2 million to 2.1 million head. In contrast to Argentina, livestock
production has not suffered major competition from cropping because Uruguay is mainly
a pastoral nation. It also has been adopting new technologies, and livestock production
has been growing at an average of 1.8% per year during the last 2 decades. Uruguay
exports a larger share of its beef production than Argentina (55% vs. 15%), so that an
increase in output will have a smaller proportional impact on its exports, cet. par. Argentina and Uruguay can significantly expand beef exports by expanding production and/or
by reducing domestic absorption, and they may begin to produce higher quality grain-fed
CHANGES IN FOOT AND MOUTH STATUS
219
beef. Argentina and Uruguay have traditionally produced grass-fed beef using extensive
ranching techniques. Argentina and Uruguay also each have the capability to produce
grain-fed beef because Argentina produces grains at very low cost. The absence of a secure, remunerative market for grain-fed beef has been the main restriction in the past.
Within the context of MERCOSUR and certification as FMD-free regions, the two countries can also integrate livestock operations, for example, if Uruguay were to specialize in
cow-calf operations and export feeder steers to Argentina for finishing, or if Uruguay
imported cheap Argentine grain to fatten steers at home. However, live cattle exports
from Uruguay to Argentina have been erratic in the last decade, and feedlots are still not
an attractive investment.
Lower domestic consumption should also free up additional exports. Beef is the traditional staple in Argentina and Uruguay, and per capita beef consumption in these two
countries is the highest in the world, about 61 kg per capita. Beef consumption dropped
substantially during the last 3 decades, with declining relative prices of chicken explaining much of the fall in beef consumption. The opening of MERCOSUR should accelerate
this trend, as cheaper Brazilian pork and chicken becomes available for domestic consumption. Given the relatively small share of beef output that is exported in Argentina,
relatively small increases in output and/or decreases in consumption would permit quite
sizable increases in exports.
The degree to which foreign markets accept and/or prefer South American beef will
influence the price of such beef and, thus, the amount produced and exported. South
American beef is leaner than U.S. beef, contains little marbling and, because it is range
fed, has a different taste. This kind of beef is preferred in some markets, and in others it
obtains a lower price. In the United States, Japan, and South Korea, such beef is not well
known, and it is thus too early to determine its market acceptance. If South American
beef does become widely accepted, trade should expand, lowering prices in FMD-free
markets and raising them in the FMD-endemic segment.
Increasing participation of Argentina and Uruguay in the FMD-free market would affect both the FMD-free and FMD-endemic markets. In the FMD-endemic segment, supply should fall. In the FMD-free market the supply of grass-fed beef should grow, causing
prices of frozen and manufacture beef to fall. It is unlikely that the market for grain-fed
beef will be strongly affected in the near future. These adjustments in international beef
markets should reduce the importance of quality differences based on the FMD status,
and will increase the importance of quality based on the intrinsic characteristics of the
meat (e.g., feeding techniques, age at slaughter, breed, etc.). That is, the price differential
between the FMD-free and FMD-endemic markets for the same quality of meat should
decline. As a result of the lower beef prices in the FMD-free market caused by the entry
of Argentina and Uruguay, output should decline more or increase less in countries that
currently make up the FMD-free market, and consumption should increase more or decline less, holding all else equal. Thus, consumers in the FMD-free countries should benefit from the changes, while producers should lose.
5. FORECASTING THE ADJUSTMENT OF
INTERNATIONAL MARKETS
Although our focus is on the effects of FMD eradication in Argentina and Uruguay, these
effects are occurring concurrently with those caused by other developments in international beef markets. The interaction of these events can produce results that are not
220
EKBOIR ET AL.
wholly intuitive because of their complexity. Given assumptions regarding the price response of imports and exports, the model provides estimates of the percentage changes in
beef imports, exports, and equilibrium prices for a number of countries and regions resulting from specified shocks to beef markets.
The model assumes that the elasticity of beef trade for any particular country depends
on the interaction of several variables, including whether the country is a net importer or
a net exporter, the elasticity of domestic beef supply and demand, and the share of beef
trade in domestic beef production and consumption. These relationships are summarized
in equation (1):
e
s
= (T.--
s-d
d
s-d
-1J'--
(1)
where e is the elasticity of beef trade (exports or imports) with respect to the beef price,
is the price elasticity of domestic supply, s is quantity of domestic supply, d is quantity
of domestic demand, and 1J is the price elasticity of domestic demand. The impact of
changes in any particular country also depends on the magnitude of changes in other
countries engaged in trade.
Equation (I) shows that the price elasticity of trade is a weighted average of the price
elasticity of domestic supply and demand, the weights being the inverse of the ratios of
trade (s - d) to quantities of domestic supply and demand. For an exporting country, the
larger the share of exports relative to domestic supply, the closer the export supply resembles the total domestic supply. In the extreme case where there is no domestic consumption, the price elasticity of exports is equal to the price elasticity of supply. Conversely,
when exports are a relatively small share of domestic production, small changes on either
supply or demand can cause major changes in the volume exported, assuming price is
exogenous.
In addition to changes in the volume of exports and imports, price movements affect
the economic welfare of the countries engaged in trade. The most common measures of
welfare are consumer and producer surplus (Varian, 1992). The relationship between domestic supply and domestic demand determines the trade and welfare effects of changes
in international beef markets. The relative change in the volume traded will be larger for
countries that either export a small share of their production or import a small share of
their consumption. The welfare effects, however, will be larger for those countries that
export a large share of their production or import a large share of their consumption. This
article does not attempt to estimate welfare effects.
Our model discriminates between the FMD-endemic and FMD-free segments of the
world market, but does not discriminate between grass-fed and grain-fed markets. The
model specifies net export and net import functions for the largest beef traders; smaller
countries are aggregated into regional demands or supplies. When the imports and exports for a single country are both large and their volumes are determined by substantially
different variables, separate functions are specified for imports and exports for the same
country. Such cases arise when specific regulations determine imports and exports (such
as the CAP) and/or there are substantial quality differences between imports and exports
(as is the case with the United States and Canada). The import or export functions have
the form:
(T
(2)
CHANGES IN FOOT AND MOUTH STATUS
221
where qj is the quantity traded by country i, j = FMD-endemic or FMD-free, A j is a
constant, Pi is the price in the relevant market (FMD-free or FMD-endemic), and ej is the
price elasticity of trade for country i [e in (I)].
6.
•
DATA AND PROCEDURES
Construction of the model requires assumptions regarding the elasticities of domestic
supply and demand for all countries participating in world beef trade, as well as knowledge of the quantities traded, consumed and produced. For most countries this information is known only approximately. FAD (b,13 c 14) publishes trade and production statistics
for most member countries, although for some particular countries there are some inconsistencies. FAS I5 publishes estimates of exports, imports, and meat production for only
the major importers and exporters. The FAS estimates are more consistent, but have a
more limited geographical coverage. In the simulations presented below, FAS data for
1994 were used whenever they were available. For the rest of the countries and regions,
FAD data for 1993 were used.
There are few recent estimates of export or import elasticities for beef, particularly for
developing countries. Accordingly, and following equation (I), the export (import) elasticity for each country was set proportional to the inverse of the ratio of its exports (imports) to domestic production. The larger the share of trade to domestic production, the
smaller the elasticity of imports or exports with respect to beef prices.
Table 1 shows the ratios of exports and imports to domestic beef production for each
country or region in the world, expressed as a percentage. Some countries both import
and export, selling relatively small quantities of beef to neighboring countries or to the
EU under concessionaire quotas. Most of these countries export only minor quantities;
for this reason only a few developing exporters were explicitly modeled. The groups
"Rest of Africa," "Rest of America," and "Rest of Asia" represent the poorest countries in
the model. According to the initial trade figures, these countries together accounted for
only 6% of total world imports and 2% of the world's exports. These countries are assumed to trade only in the FMD-endemic market. Note that Argentina, Uruguay, and the
EU together provided 63% of total exports in the FMD-endemic market in 1994.
In the base scenario, the model was calibrated to achieve consistency between actual
and simulated results for 1994, for both the quantities traded in the FMD-endemic and
FMD-free markets, and also for the prices that equated aggregate supply with aggregate
demand in each market. In this scenario, it was assumed that there was no trade between
the FMD-free and FMD-endemic markets. The calibration was achieved by setting the
constant A in equation (3) equal to the logarithm of the observed volume of beef exported
or imported for each country. According to the trade data 16 for the initial scenario, world
supply (at current prices) was fairly evenly distributed between the FMD-endemic and
the FMD-free markets (2.5 and 2.6 million tons, respectively). However, the amount of
beef demanded in the FMD-endemic market at the prevailing world prices was substantially lower than the amount demanded in the FMD-free market (2.1 vs. 3.2 million tons,
respectively).
13FAO(b): Production Yearbook, United Nations, Food & Agriculture Organization, Rome, various issues.
14FAO(c): Trade Yearbook, United Nations, Food & Agriculture Organization, Rome, various issues.
ISFAS: Livestock and Poultry: World Markets and Trade. USDA/Foreign Agricultural Service, Washington,
DC, various issues.
160btained from USDA for 1994 and FAO for 1993.
222
EKBOIR ET AL.
TABLE 1.
Trade as a Share of Domestic Production
World
Africa
Egypt
South Africa
Rest of Africa
N. & C. America
Canada
Mexico
USA
Rest of N. & C. America
South America
Argentina
Brazil
Chile
Paraguay
Uruguay
Rest of South America
Asia
China
Indonesia
Japan
Malaysia
Hong Kong
India
Kazakhstan
South Korea
Middle East
Rest of Asia
Europe (a)
EU-12
Eastern Europe
Ukraine
Oceania
Australia
New Zealand
Rest of Oceania
Russian Federation
Imports
Exports
25.92
16.39
49.45
4.20
12.24
14.92
31.40
9.50
10.29
37.00
3.45
0.00
1.06
17.17
0.27
0.00
2.37
48.33
8.97
5.55
123.27
455.64
1463.94
0.00
0.00
75.00
31.78
85.46
5.21
5.30
4.60
0.00
5.88
0.00
0.00
542.70
4.76
26.87
2.24
0.00
0.00
3.02
18.59
22.21
0.00
5.46
16.49
12.22
10.98
8.62
0.00
16.32
33.98
21.05
13.88
6.63
2.88
0.00
0.00
0.00
12.7
27.97
0.00
0.00
34.36
12.37
13.77
2.48
18.35
77.78
62.82
77.91
7.57
0.00
(a) Includes intra Europe trade
Source: Author construction from FAS, FAO.
In the base simulation, the assumed trade elasticities were adjusted to achieve equilibrium. The resulting elasticities are lower than are most published estimates of freely tradable goods, but use of higher elasticities resulted in equilibrium results that were
implausible. These results indicate that the effective import and export elasticities of most
countries are relatively small, presumably because, in practice, policy interventions significantly impede trade flows. Thus, the model implicitly accounts for restrictions to trade.
Table 2 contains the parameters used in the model and the share of each country's trade in
the model's total imports and exports.
CHANGES IN FOOT AND MOUTH STATUS
TABLE 2.
Trade Data Used in the Simulation Model
Elasticities
Argentina
Australia
Brazil
Canada
China
Eastern Europe
Egypt
EU-12
Former Soviet Union
Hong Kong
India
Japan
Malaysia
Mexico
Middle East
New Zealand
Rest of Africa
Rest of America
Rest of Asia
Rest of the World FMD free
Russian Federation
Singapore
South Africa
South Korea
Taiwan
USA
Uruguay
TOTAL
,
223
Volume
(Million Tons)
Volume
(% of World)
Import
Export
Import
Export
Import
Export
0.00
0.00
-1.00
-0.80
0.00
-1.00
-0.50
-0.40
0.00
-1.00
0.00
-0.80
-1.00
-1.00
-1.00
0.00
-1.00
-1.00
-1.00
-1.00
-1.00
-0.80
-1.00
-0.80
-1.00
-0.80
0.00
1.00
1.00
1.00
1.00
0.50
1.00
0.00
0.00
1.00
0.00
1.00
0.00
0.00
0.00
0.00
1.00
1.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.00
1.00
0
0.00
0.12
0.29
0.00
0.05
0.15
0.43
0.00
0.07
0.00
0.84
0.06
0.09
0.30
0.00
0.20
0.05
0.10
1.00
0.37
0.02
0.08
0.17
0.06
1.08
0.00
0.38
1.18
0.36
0.22
0.09
0.02
0.00
1.07
0.33
0.00
0.11
0.00
0.00
0.00
0.00
0.47
0.12
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.73
0.15
0.00
0.00
2.12
5.17
0.00
0.90
2.77
7.69
0.00
1.27
0.00
15.23
1.16
1.63
5.43
0.00
3.62
0.90
1.81
18.09
6.69
0.43
1.50
2.98
1.16
19.45
0.00
7.18
22.58
6.89
4.21
1.80
0.44
0.00
20.40
6.30
0.00
2.11
0.00
0.00
0.00
0.00
8.92
2.30
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
13.97
2.91
5.53
5.23
1.00
1.00
The equilibrium prices obtained in the base simulation for the FMD-endemic and the FMDfree segments were $0.77 per kg and $1.21 per kg, respectively. The FMD-free price was
thus about 63 % higher than the FMD-endemic price. No cardinal importance should be placed
on these prices. The emphasis in the simulations is on the percentage variations in the prices
and the quantities produced, consumed, and traded rather than on absolute quantities or
values. The results obtained from the model should, therefore, be interpreted as orders of
magnitude of the expected changes in international beef trade flows.
Important variables are omitted from our model, such as sanitary and commercial trade
barriers and transportation costs. It was impossible to include all of these aspects directly
in a model that would deal with the entire world. Thus, there was a tradeoff between
developing a model that was fairly highly disaggregated by country, but that could not
include detailed policy information, or a more aggregated model in which the policy variables would also have to be aggregated. We decided that a disaggregated model estimating changes in prices and trade flows on the basis of reasonably chosen elasticities was
preferable for our purposes. Our approach implicitly assumes that the relevant policy and
224
EKBOIR ET AL.
transportation variables are embodied in the import and export elasticities used. As noted
above, the model employs elasticities that are well below those published in the economic literature for freely traded goods. These elasticities thus account for trade barriers
and other factors that impede trade. This approach made the model more tractable in
terms of data requirements and calculation, and yields results that we believe are of similar magnitude as a model that would have involved more policy detail.
7.
ANALYSIS
We simulated 10 scenarios. The results for each simulation are presented in Table 3, measured relative to the base scenario, i.e., 1994. All results should be treated as long-run
equilibria. The scenarios incorporate the following assumptions.
TABLE 3.
Simulation Results (% Change in Quantities and Prices from Base Scenario)
Scenario
Argentina (E)
Australia (E)
Brazil (E)
Brazil (I)
Canada (E)
Canada (I)
China (E)
Eastern Europe
Eastern Europe (I)
Egypt (I)
EU-12 (I)
Former Soviet U.
Hong Kong (I)
India (E)
Japan (I)
Malaysia (1)
Mexico (1)
Middle East (I)
New Zealand (E)
Rest of Africa (E)
Rest of Africa (I)
Rest of America
Rest of Asia (1)
Rest of the World
Russian Fed. (I)
Singapore (I)
South Africa (I)
South Korea (1)
Taiwan (1)
USA (E)
USA (I)
Uruguay (E)
FMD Endem. Price
FMD Free Price
1
41.06
-9042
16.86
-9042
-8.23
8.10
16.86
-7.49
-6.04
16.86
10040
16.86
8.23
10.40
10040
-9042
16.86
10.40
8.23
8.23
10040
-9042
8.23
41.06
16.86
-9042
2
3
19.05
0.00
0.00 -0.68
19.05
0.00
0.00
0.00 -0.68
0.00
0.55
-9.11
0.00
19.05
0.00
0.00
-8.35
0.00
-6.74
0.00
19.05
0.00
0.00
0.69
19.05
0.00
0.00
0.55
0.00
0.69
0.00
0.69
0.00
0.00 -0.68
19.05
0.00
0.00
0.00
0.00
0.00
0.69
0.00
0.55
0.00
0.00
0.55
0.00
0.00
0.69
0.00 -0.69
0.00
0.55
19.05
0.00
19.05
0.00
0.00 -0.68
4
5
6
7
8
9
10
41.06
-9042
44.54
30.82
-9042
8.23
20.22
44.54
-30.82
-16.82
-13.70
44.54
10040
44.54
8.23
10.40
10040
-30.82
-9.42
44.54
-30.82
-30.82
-30.82
10.40
-30.82
8.23
-30.82
8.23
10040
-9042
8.23
41.06
44.54
-9.42
0.11
-35.71
0.11
-0.11
-35.71
42040
0.05
0.11
-0.11
-0.54
-0.04
0.11
55.56
0.01
42040
55.56
55.56
-0.11
-35.71
0.11
-0.11
-0.11
-0.11
55.56
-0.11
42040
-0.11
42040
55.56
-35.71
42040
0.11
0.01
-35.71
8.58
-30.27
8.58
-7.91
-30.27
33043
4.20
8.58
-7.91
-4.03
-3.24
8.58
43041
8.58
33043
43041
43041
-7.91
-30.27
8.58
-7.91
-7.91
-7.91
43.41
-7.91
33043
-7.91
33.43
43.41
-30.27
33043
8.58
8.58
-30.27
90.28
-38.9
-4.86
5.11
-38.90
48.32
-2046
-4.86
5.11
2.52
2.01
-4.86
63.68
-4.86
48.32
63.68
63.68
5.11
-38.90
-4.86
5.11
5.11
5.11
63.68
5.11
48.32
5.11
48.32
63.68
-38.90
48.32
42.71
-4.86
-38.90
5.68
-32.13
5.68
-5.37
-32.13
36.36
2.80
5.68
-5.37
-2.72
-2.19
5.68
47.35
5.68
77.26
47.35
47.35
-5.36
-32.13
5.68
-5.37
-5.37
-5.37
47.35
-5.37
36.36
-5.37
77.26
47.35
-32.13
36.36
5.68
5.68
-32.13
116.22
-30.58
8.11
-7.50
-30.58
33.90
3.94
8.10
-7.44
-3.82
-3.07
8.11
44.04
8.11
74.07
44.04
44.04
-7.50
-30.58
8.11
-7.50
-7.50
-7.50
44.04
-7.50
33.90
-7.50
74.07
44.04
-30.58
-33.90
62.16
8.11
-30.58
8.16
-30.54
8.16
-7.54
-30.54
33.85
-4.84
8.16
-7.54
-3.85
4.05
8.16
43.97
8.16
54.31
43.97
43.97
-7.54
-30.54
8.16
-7.54
-7.54
-7.54
43.97
-7.54
33.85
-7.54
54.31
43.97
-41.85
54.31
8.16
8.16
-30.54
(E): Exports; (I): Imports.
(I): In stimulations 5 through 10, the price change is calculated as the price in the single market relative to the
price in the corresponding market (FMD-endemic or FMD-free), when the markets were separated.
#
CHANGES IN FOOT AND MOUTH STATUS
225
1. All Argentine and Uruguayan beef exports shift from the FMD-endemic market to
the FMD-free market, while the FMD-free and FMD-endemic markets remain
separated.
2. No change occurs in the destination or amount of Argentine and Uruguayan beef
exports, but the EU's subsidized exports are reduced by 50%, while the FMD-free
market and the FMD-endemic market remain separated.
3. Argentina and Uruguay each shift 20,000 tons of beef exports to the United States
from the FMD-endemic market, while the FMD-free market and the FMDendemic market remain otherwise separated.
4. Subsidized beef exports by the EU are reduced by 50% and all Argentine and
Uruguayan beef exports shift to the FMD-free market, but the FMD-free market
and the FMD-endemic market otherwise remain separated.
5. Restrictions are eliminated on beef trade between the FMD-free market and the
FMD-endemic market so that the price in the two markets is the same.
6. Restrictions are eliminated on beef trade between the FMD-free market and the
FMD-endemic market so that prices in the two markets are equal and subsidized
beef exports by the EU are reduced by 50%.
7. Restrictions are eliminated on beef trade between the FMD-free market and the
FMD-endemic market, and the beef supply curves of Argentina and Uruguay shift
outward 20%-reflecting an increase in the rate of technological change-so that
their beef exports rise.
8. Restrictions are eliminated on beef trade between the FMD-free market and the
FMD-endemic market so that prices in the two markets are equal, and Asian beef
demand increases by 20%.
9. Restrictions are eliminated on beef trade between the FMD-free market and the
FMD-endemic market so that prices in the two markets are equal, the beef supply
curves of Argentina and Uruguay shift outward by 20%-reflecting an increase in
the rate of technological change-so that their beef exports rise, Asian demand
increases by 20%, and subsidized EU beef exports decrease by 50%.
10. Trade liberalization occurs in several important importing and exporting countries. This liberalization is represented by an increase in the import elasticities of
Japan, the United States, and South Korea, and in the export elasticities of the
United States and China. It is assumed that the EU does not liberalize its trade
regulations.
•
1
,
In the first four scenarios, the FMD-free and the FMD-endemic markets remain separated, i.e., equilibrium in each market is a function only of the beef supplied and demanded in that market. In the fifth scenario, trade between the two broad markets is allowed,
i.e., integration occurs, without any additional change. In scenarios 6-9, the two markets
remain integrated, i.e., they face a common price, and a number of other changes in beef
supply and demand are added. In the last scenario, a significant degree of trade liberalization is assumed to occur in several key beef importing or exporting countries.
Results from the simulation of scenario 1 indicate that the eradication of FMD in Argentina and Uruguay has the potential to significantly alter beef prices and the quantities
traded throughout the world (see Table 3, column 1). If Argentina and Uruguay were able
to export as much as was profitable to the FMD-free market, the model predicts that their
prices and the quantities traded would rise by roughly 40%. In this scenario, the increased
sales on the FMD-free market would cause prices in that market to decline by roughly
226
EKBOIR ET AL.
9%, while decreased sales on the FMD-endemic market would cause prices to rise by
about 17%. Although beef production, consumption, and trade are not large as a proportion of economic activity in most countries, the estimated price changes of 9-17% offer
scope for important welfare effects, particularly on producers.
In scenario 2, a 50% reduction in the EU's subsidized exports is predicted to have
about the same effect on the countries remaining in the FMD-endemic market as would
FMD eradication in Argentina and Uruguay. The result is no surprise because in both
cases the supply of beef in the FMD-endemic market falls by a similar amount, but it
serves to emphasize the point that the occurrence of both events will significantly affect
countries in the FMD-endemic market. Most of the countries in the FMD-endemic market are developing nations. Imports from developing countries decrease by 14% in scenario 1, and by 16% in scenario 2. Consumers within the FMD-endernic market would be
negatively affected, but producers would benefit significantly. Beef exporting countries
within the FMD-endemic region, most of which are in Africa, would increase beef exports significantly. The difference between these two scenarios occurs mainly in the FMDfree market, because the markets remain separated except that in scenario 1 the exports of
Argentina and Uruguay shift from one market to the other. In scenario 1, aggregate FMDfree supply increases by 23%, while in scenario 2 it remains constant. The FMD-free
equilibrium price falls by 9% in scenario 1, inducing similar decreases in the exports of
Australia, New Zealand, and the United States.
Scenario 3 indicates thatthe effect of eradicating FMD in Argentina and Uruguay has
much less effect on world markets if Argentina and Uruguay are able to sell only 20,000
tons, the current expected U.S. quota for beef imports. In this scenario, the FMD-endemic
market price is unaffected by the small decrease in sales to that market and the FMD-free
price declines only marginally. This result is the basis for the conclusion that eradicating
FMD in Argentina and Uruguay is not likely to affect world markets until additional FMDfree countries accept imports from the two countries and/or unless the two countries
export significant amounts of beef to the United States.
The assumptions underlying scenario 4 produce the largest impact on the poorest countries of any of the possible scenarios considered. As a result of the simultaneous 50%
decrease of subsidized European exports and the full shift of Argentine and Uruguayan
exports to the FMD-free market, the supply in the FMD-endemic market falls by approximately 40%, and the FMD-endernic beef price increases by 44%. Exports from African
exporting countries increase sharplyP
The integration of the FMD-endemic and FMD-free markets occurs when total world
supply equilibrates with total world demand, thereby leading to a single world beef price.
This equilibrium can be achieved either because the price in the FMD-endemic market is
so high that FMD-free exporters find it profitable to sell in the FMD-endemic market
even though sanitary restrictions remain in the FMD-free market, or because sanitary
restrictions are eliminated. The integration of the two markets (cases 5 through 10) has a
relatively minor effect on the imports and exports of the poorest countries in the simulations. If the integration occurs without any other shock, i.e., without any other change
17In this simulation, the price in the FMD-free market falls by 9%, resulting in a price in the endemic market
that is 3% higher than the price in the FMD-free segment. As previously noted, the price in the FMD-free
market in actuality cannot be lower than the price in the FMD-endemic market because the sanitary barrier
works only in one direction. FMD-free exporters are always free to sell in the FMD-endemic market, which
they will do if the price in that market rises above that in the FMD-free market.
J
t
CHANGES IN FOOT AND MOUTH STATUS
•
•
•
•
,
•
227
in market structure, beef imports in the poorest countries fall by 0.1 % and African exports
grow by the same proportion.
The strongest consequences of integrating the markets are felt by the traditional exporters in the FMD-free market because the value of their exports falls by 36% in response to the large decrease in the price in this market (see scenario 5). The decrease in
price in the FMD-free market is larger when markets integrate than when only Argentina
and Uruguay become FMD-free because of the presence of other suppliers in the FMDendemic sector whose production and exports also expand when markets are integrated.
It should be clear, however, that market integration is only feasible if the very real threat
from FMD can be greatly reduced by eradication campaigns in FMD-endemic countries,
coupled with improved sanitary controls. A reduction of subsidized European exports by
half, when markets are integrated, increases prices in the FMD-endemic market by about
9% and reduces imports in countries in that market by the same proportion (see scenario
6). The price increase is only about half what the impact would be if the markets remain
segregated when EU exports are reduced (scenario 2). The larger number of exporters in
the integrated market causes the weaker response, because the elasticity of supply increases with the number of suppliers. In this scenario, other suppliers would increase
their exports in response to the decline in European exports.
In scenario 7, Argentine and Uruguayan exports are assumed to increase exogenously
as a result of the adoption of technical change, after achieving access to higher priced,
FMD-free markets, and to have decreased domestic consumption. The FMD-endemic and
FMD-free markets are assumed to remain segregated so that the prices in each market are
distinct. Because no other countries shift supply from the FMD-endemic market, and
because most of the increased supply to the FMD-free market is a result of expanding
supply in Argentina and Uruguay, under this scenario the price in the FMD-free market
falls by nearly 40%. The price in the FMD-endemic market rises only about 5%.
In scenario 8, Asian beef demand is assumed to increase substantially as a result of
economic growth, while the FMD-endemic and FMD-free markets are assumed to have
become integrated. This scenario attempts to capture the possibility that rising demand in
the FMD-free market from Asia will offset the increase in supply to that market from
Argentina and Uruguay. The result shows a rise in the FMD-endemic price and a decline
in the FMD-free price. These results, clearly, depend on the magnitude of the shifts. The
greatest effect is from market integration which, with only moderate growth in Asian
demand, still results in a decline in the FMD-endemic price.
In scenario 9, the increase in Asian beef demand is combined with an increase in
Argentine and Uruguayan beef exports (with access to FMD-free markets), and a decrease in subsidized exports by the EU. The results are similar to those for scenario 8,
only more pronounced. With Argentina and Uruguay increasing their exports to the
FMD-free market, and the EU cutting back their subsidized exports to the FMDendemic market, the beef price increase in the FMD-endemic market will be even greater
than in scenario 8.
Trade liberalization with integrated markets (scenario 10) is estimated to reduce the
price in the FMD-free market by about 8% while increasing the price in the FMDendemic market by about 31%. Imports decline in FMD-endemic countries, which suffer
a welfare loss because beef imports exceed beef exports before and after the price changes
by a considerable amount. Exports originating in the former FMD-endemic market increase by 8% while exports originating in former FMD-free countries fall by 31%. Imports by developing countries fall by 8%.
228
EKBOIR ET AL.
We believe that scenario 9 captures the most likely future outcome, although obviously
only in the most general of terms. The results show that beef prices in the FMD-endemic
and the FMD-free markets could be essentially equal even if a significant number of
countries have not eliminated FMD, provided that Argentina and Uruguay significantly
expand exports and shift them from the FMD-endemic to the FMD-free market, and if the
EU greatly reduces subsidized beef exports. The near equality occurs even with increased
demand in the Pacific basin. The parameters used here result in a "world price" 8% higher
than the initial price in the FMD-endemic segment and 31 % lower than the initial price in
the FMD-free market.
8.
4
CONCLUSIONS
The simulation results depicted in Table 3 show that there is a wide range in the plausible
outcomes that may result from the-beef market developments that are beginning to emerge.
Regardless, the eradication ofFMD in Argentina and Uruguay will significantly affect prices
in the FMD-free and the FMD markets ifArgentina and Uruguay gain access to the FMDfree market for a significant amount of their beef, as seems highly likely. Argentina and Uruguay have the potential to increase production, including that ofhigh-quality grain-fed beef
that can enter the highest quality markets, and they can further increase exports by reducing consumption. Although increased exports to the United States are currently constrained
by the existence of relatively small tariffquotas,Argentina and Uruguay may ultimately negotiate larger quotas or find it profitable to export more beef than their current quotas by
paying the 26% tariff on above-quota imports. This is unlikely to occur at current levels of
production and export because other NAFTA and East Asian markets provide more remunerative markets. However, if technological change allows for a significant expansion of
exports, and as the tariff quota declines over time, overquota exports may be possible.
None of the simulations undertaken estimate the effect of somewhat greater, although
still partial integration of markets if additional FMD-free importing countries begin to
accept beef from Argentina and Uruguay. Such an event would result in a more rapid and
total shift of Argentine and Uruguayan beef exports from the FMD-endemic to the FMDfree market, with a correspondingly greater price increase in the former and price decrease in the latter. Still, the longer run result is captured through the simulation that
assumes the full integration of the FMD-free and the FMD-endemic markets.
The reduction in EU beef export subsidies will also increase beef prices in FMDendemic markets, but this development will not greatly affect the FMD-free market price. IS
The results suggest that most developing countries could face a significant increase in the
price of imported beef in the foreseeable future, perhaps by as much as 20%. This price
increase should provide producers with greater incentive to increase output, but will harm
consumers. The degree to which they suffer will depend importantly on the ability of
other producers to supply beef or other meats.
Rising Asian demand in relatively poorer countries like China and Indonesia is likely
to be for relatively lower cost cuts than those that are consumed in Japan, South Korea,
and Taiwan. There may be scope for Argentina, Uruguay, as well as other countries, to
increasingly differentiate beef exports by cuts, with higher priced cuts aimed at the United
States and the higher income Asian countries, and with lower priced cuts destined for the
181t currently seems unlikely that Eastern Europe, Russia, and other countries from the ex-USSR will sufficiently increase beef exports so as to playa major role in world markets.
t
•
,
CHANGES IN FOOT AND MOUTH STATUS
229
lower income countries, especially those in Asia. If this differentiation can be achieved,
it should be of benefit to producing and consuming countries in both the FMD-free and
the FMD-endemic markets.
REFERENCES
•
•
,
1
Ekboir, J., Jarvis, L.S., & Sumner, D.A. (1996). Evaluation of the impact on world meat markets of
the recognition of Argentina and Uruguay as free of foot-and-mouth disease. Working Paper,
Department of Agriculture and Resource Economics, UC Davis.
Rae, A., Nixon, C., & Gardiner, P. (1999). Foot-and-mouth disease and trade restrictions: Latin
American access to Pacific Rim beef markets. The Australian Journal of Agriculture and Economics, 43(4), 479-500.
SAGPYA. (2000). Panorama Ganadero, Secretaria de Agricultura, Ganaderia, Pesca y Alimentaci6n; Buenos Aires. Access on line: www.sagpya.mecon.gov.ar.
Varian, H. (1992). Microeconomic analysis, 3rd ed. New York: Norton.
Javier M. Ekboir holds a PhD in Agricultural Economics from the UC Davis (1994), an MSc in
Agricultural Economics from the Hebrew University ofJerusalem (1983), and Licenciatura in Economics from the University of Buenos Aires, Argentina (1976). He is currently an economist for
Latinameria, CIMMYT (Centro Internacional de Mejoramiento de Maiz y Trigo). His current interests include economics ofinnovation and technical change, economics ofresearch, and economics of natural resources (in particular, conversation tillage).
Lovell S. Jarvis received a PhD in economics from the Massachusetts Institute of Technology in
1969, and a BA in economics from the University of Kansas in 1964. He is currently Professor,
Department ofAgricultural and Resource Economics and the Giannini Foundation, University of
California, Davis, and Associate Dean for Human Sciences, College ofAgricultural and Environmental Sciences, University of California, Davis. His current interests include agriculturally related policy issues in developing countries, such as the effect ofinternational commodity agreements
(coffee), analysis of seasonal labor force adjustment in Chile, economic effect offoot and mouth
disease, effect of nutrition, and public health policies on child development.
Daniel A. Sumner has a BSfrom the California State Polytechnic University (1971), an MAfrom
Michigan State University (1973), an MAfrom the University of Chicago (1977), and a PhD from
the University of Chicago (1978). He is currently Frank H. Buck, Jr. Professor, Department of
Agricultural and Resource Economics and the Giannini Foundation, and Director ofthe University
ofCaliforniaAgricuitural1ssues Center. His current interests include agricultural policy, including
commodity programs, trade policy, human resources, and regulations. Emphasis is on agricultural
trade in the Pacific Rim (especially Korea), dairy industry issues, and rice policy.
Jose E. Bervejillo has an MSc in Agricultural Economics from the University ofMinnesota (1993),
and a BS in Agronomy and Range Sciences from the Universidad de Ie Republica, Uruguay (1987).
He is currently a postgraduate researcher for the Department of Agricultural & Resources Economics, UC Davis. His current interests include foot and mouth disease in world beefmarkets, and
California's agriculture and energy-related issues.
William R. Sutton received an MS in Agricultural and Resource Economics from the UC Davis in
1996, and a BA in Economicsfrom the University of California, Irvine, in 1989. He is currently an
Agricultural & Resource Economist at the World Bank. His current interests include natural resource and environmental economics, agricultural development, wildlife management, nonmarket
valuation, land-use policy, and water resources management.