Kenneth H. Mathews

The Diverse Structure and Organization of U.S. Beef Cow-Calf Farms

Beef cow-calf production in the United States is widespread, occurring in every State. Nearly 765,000 farms, about 35 percent of the 2.2 million farms in the United States, had a beef cow inventory in 2007. Most of these were small, part-time operations. About a third of farms that raise beef animals had a beef cow inventory of less than 10 cows, more than half had fewer than 20 cows, and nearly 80 percent had fewer than 50 cows. In this study, ERS uses data from USDA’s 2008 Agricultural Resource Management Survey for U.S. beef cow-calf operations to examine the structure, costs, and characteristics of beef cow-calf producers. Many small operations are “rural residence farms” that specialize in beef cow-calf production, but their income from off-farm sources exceeds that from the farm. Most beef cow-calf production occurs on large farms, but cow-calf production is not the primary enterprise on many of these farms. Findings suggest that operators of beef cow-calf farms have a diverse set of goals for the cattle enterprise.

A Simple Multiperiod Minimum Risk Hedge Model

A multiperiod hedging model is developed that is simpler than other multiperiod models in the literature. The model permits periodic adjustment of the hedge while minimizing the producers profit variance. Minimum risk hedge ratios are calculated for steers, cows, hogs, com, and soybeans using the full model with hedge adjustments every two months. These ratios are compared to those using the model without periodic hedge adjustments and to a simple single-period model. The results suggest that simple models may work well for simple hedges, while the full model is best for more complex hedging situations such as cross hedges.

Economic dimensions and directions of animal disease policy

Widely publicised incidents of transboundary animal diseases (TADs), devastating to local livestock industries, have occurred worldwide creating a greater awareness of the role of response policy selection on TAD spread risk and risk of initial introduction into previously disease free areas. In particular, drawing on past TAD outbreaks, the literature and the intrinsic characteristics of the issues, potential policy directions and economic information needs are discussed in an attempt to provide an update on the status of economic research addressing animal disease and identify key areas where additional research is needed. In particular, the focus is on policy implications with the understanding that these policies exist as risk management tools.

Source-differentiated analysis of exchange rate effects on US beef imports

The non-linear Inverse Almost Ideal Demand System is used in estimating the impact of exchange rates on source-differentiated import demand for beef in the USA. We estimate scale, own and cross-price flexibilities for six major beef suppliers and the rest of the world, incorporating exchange rates exogenously. Results indicate that beef imports from Canada and ROW were own-price flexible but the remaining countries - Argentina, Brazil, Uruguay, Australia and New Zealand - were own-price inflexible. Though exchange rate pass-through differs among sources, nearly all of the exporting countries had a near complete exchange rate pass-through. All own exchange-rate effects are negative and significant, except beef imported from Uruguay while nearly all cross exchange-rate effects are insignificant.