Abstract:
Production and marketing are two important activities of the
U.S. beef industry. Spatial differences in these activities result
due to the existing cost differences in production and marketing of
beef. The overall objective of this study is to determine simultaneously
interregional and interseasonal equilibrium, with respect
to beef production and marketing in the U.S., with special emphasis
on the Pacific Northwest region.
Market equilibrium was defined as the stage at which demand
was exactly equal to supply for each product in each season and in
each region. The reactive programming algorithm was used as
the computational means. The CDC 3300 computer was used to
obtain the results.
The continental U.S. was divided into 12 regions. Fed and
nonfed beef were defined as two products available in two seasons
in 1967. Supply estimates were made for each product for each
region in each season. Demand equations were defined for each
product in each season and in each region. Transfer costs were
also estimated.
The equilibrium shipment patterns, and market prices were
obtained for each product in each region during each season. It
was concluded that, subject to the restrictions imposed on the
equilibrium solution, the shipment patterns obtained approximated
the actual industry observations fairly well. Comparison of simple
average seasonal market prices and computed equilibrium prices
showed that computed prices were in reasonable proximity with
actual market prices.
Possible reasons behind discrepancies existing between the
equilibrium solutions obtained from the model and actual observations
were, discussed in detail. It was pointed out that the analytical
model could be useful provided the supply and demand estimates,
coefficients of demand functions, feed and nonfeed costs estimates,
and transportation rates were reasonably accurate.
Effects of changes in truck transportation rates, availability
of backhauls, and increase in slaughter demand for fed beef in
Washington on equilibrium flows of fed and nonfed beef and prices
were analyzed.
The study revealed that interregional flows and prices of
fed and nonfed beef were very sensitive to truck transportation
rates. The effects of backhauls analyzed in this study indicated
that Idaho will lose some of its competitive advantage to Montana-
Wyoming, and Arizona-New Mexico regions in supplying fed beef
to either Oregon or Washington, and nonfed beef to Colorado.
Idaho, Montana-Wyoming, and Colorado are expected to meet
Washington's increased slaughter demand for fed beef.
