A dynamic econometric-simulation model of the U.S. livestock industry

Agricultural policy makers have shown an increased inclination to utilize large-scale computerized models to help evaluate alternative policy proposals. Recent advances in computer technology make it possible for agricultural economists to provide policy makers with detailed multicommodity models which are microcomputer based. These models offer high portability and rapid access to information and at the same time provide analysis of the direct and indirect economic impacts of policies as well as the resulting distributional and welfare impacts.This study presents such a model for the U.S. livestock industry. Behavioral supply relationships were econometrically estimated to explain the primary production emanating from beef, dairy, hog, broiler, turkey, egg and sheep subsectors and the resulting supply of fed beef, nonfed beef, pork, broilers, turkey, eggs, milk, veal and lamb. Farm-level demand equations were also estimated and incorporated, along with the supply relationships, into a simulation model that solves for annual prices, production and inventories in each livestock subsector.Supply response functions for each livestock production enterprise are driven by expected returns. The supply specification provides a direct link between micro-level decision environments and the resulting aggregate supply response. Direct linkage between livestock and crop sectors is achieved by endogenously calculated feed cost for each livestock enterprise.The simulation model allows users to exogenously specify livestock production cost parameters, policy variables such as milk and wool support price, import and export levels and feed prices which characterize alternatives policy. Comparing simulations with and without these exogenous changes provides quantitative estimates of aggregate direct and indirect market impacts and provides the basis for quantitative estimates of the distributional and welfare impacts of the policy.U of I OnlyETDs are only available to UIUC Users without author permissio