United States 

Department of 

Agriculture

Animal and 

Plant Health 

Inspection 

Service

April

2013

Regulatory Impact Analysis &

Initial Regulatory Flexibility Analysis

Proposed Rule

APHIS-2009-0017

RIN 0579-AD41

Importation of fresh (chilled or frozen) beef 

from a region of Brazil

Policy & Program Development

Policy Analysis & Development
i

Summary

This analysis examines potential economic impacts of a proposed rule that would allow 

fresh (chilled or frozen) beef from a designated region in Brazil to be imported into the United 

States provided certain conditions are met. Expected benefits and costs are evaluated in 

accordance with Executive Orders 12866 and 13563. Expected economic impacts for small 

entities are also considered, as required by the Regulatory Flexibility Act. Economic effects of

the rule for both U.S. producers and consumers are expected to be very small. Producers’

welfare would be negatively affected, but not significantly. Gains for consumers would 

outweigh producer losses, resulting in a net benefit to the U.S. economy.

The United States is the largest beef producer in the world, and yet still imports a 

significant quantity. U.S. beef import volumes over the 10 years, 2002-2011, were equivalent 

to about 11 percent of U.S. production. Most of the beef imported by the United States is from 

grass-fed cattle, and is processed with trimmings from U.S. grain-fed cattle to make ground 

beef. Australia, Canada, and New Zealand are the main foreign suppliers of beef to the United 

States.

Effects of the proposed rule are estimated using a partial equilibrium model of the U.S. 

agricultural sector. Economic impacts are estimated based on interactions among the grain, 

livestock, and livestock product sectors. Annual imports of fresh (chilled or frozen) beef from 

Brazil are expected to range between 20,000 and 65,000 metric tons (MT), with volumes 

averaging 40,000 MT. Quantity, price and welfare changes are estimated for these three import 

scenarios. The results are presented as average annual effects for the five-year period, 2014-

2018. The model indicates that about two-thirds of the beef imported from Brazil would displace 

beef that would otherwise be imported from other countries. Thus, the net increase in beef
ii

imports corresponds to about one-third of the quantity supplied by Brazil under each of the three 

scenarios.

The model shows that if the United States were to import 40,000 MT of beef from Brazil, 

total U.S. beef imports would increase by less than 1 percent. Due to the increase in supply, it is 

estimated that the wholesale price of beef, the retail price of beef, and the price of cattle (steers)

would decline by 0.11 percent, 0.04 percent, and 0.14 percent, respectively. Changes in U.S. beef

production, consumption, and exports in response to these very small price declines would be

inconsequential: beef production would decrease by 0.01 percent, beef consumption would 

increase by 0.06 percent, and beef exports would increase by 0.11 percent. The 20,000 MT and 

65,000 MT import scenarios show similarly small quantity and price effects.

The fall in beef prices and resulting decline in U.S. production would translate into 

reduced returns to capital and management for producers in the livestock and beef processing 

sectors. Under the 40,000 MT import scenario, cattle producers and beef processors are 

estimated to incur declines in welfare of 0.68 percent and 0.14 percent, respectively.

The shift by consumers to beef due to the price decline would cause downward pressure 

on the prices of pork and other meats. The largest of these market declines, though still very 

small, would be for swine and pork. It is estimated for the 40,000 MT import scenario that the 

welfare of swine producers and pork processors would decline by 0.02 percent and 0.01 percent, 

respectively.

The decline in beef prices because of imports from Brazil would benefit consumers. It is 

estimated for the 40,000 MT import scenario that the welfare of beef consumers would increase 

by 0.16 percent. Consumers of pork and other animal products would benefit negligibly.
3

The model indicates that welfare gains of beef consumers net of producers’ welfare losses 

would be equivalent to about $185 million, whereas pork producer welfare losses would slightly

outweigh pork consumer gains. For all modeled sectors, the net welfare change would be

positive, with consumer gains of $354 million outweighing producer losses of $165 million.

Welfare effects for the 20,000 MT and 65,000 MT import scenarios are similar to those 

described. For all three scenarios, welfare gains are shown to be greater than welfare losses, 

with the net benefits increasing broadly in proportion to the quantity of beef imported from

Brazil; consumers benefit more and producers incur larger welfare losses, the greater the volume 

of imports. While most of the establishments affected by this rule would be small entities, based 

on the results of this analysis, APHIS does not expect the impacts to be significant. APHIS 

welcomes information that the public may provide regarding potential economic effects of the 

proposed rule.
4

Table of Contents

Summary.............................................................................................................................. i

Introduction......................................................................................................................... 1

U.S. Beef Production and Trade ......................................................................................... 1

Analytical Approach ........................................................................................................... 3

Expected Effects of the Rule............................................................................................... 5

Initial Regulatory Flexibility Analysis................................................................................ 8

Reasons Action is Being Considered.............................................................................. 9

Objectives of and Legal Basis for the Rule .................................................................... 9

Potentially Affected Small Entities............................................................................... 10

Small Business Administration Standards................................................................ 10

Small Family Farms and Farms with Operators who belong to Socially

Disadvantaged Groups.............................................................................................. 10

Organic Farms........................................................................................................... 12

Projected Reporting, Recordkeeping, and Other Compliance Requirements............... 12

Duplication, Overlap, or Conflict with Existing Rules and Regulations...................... 12

Alternatives to minimize Significant Economic Impacts of the Rule........................... 13

References......................................................................................................................... 14

Appendix........................................................................................................................... 15
1

Introduction

The Brazilian Government has requested that APHIS allow fresh (chilled or frozen) beef

to be imported into the United States from a designated region in Brazil.

1 Based on the results of

a risk assessment conducted by APHIS, the Agency has concluded that fresh beef can be safely 

imported provided certain requirements are met to ensure that the meat does not harbor foot-andmouth disease (FMD).

Expected benefits and costs of the proposed rule are examined in accordance with 

Executive Orders 12866 and 13563, which direct agencies to assess all costs and benefits of 

available regulatory alternatives and, if regulation is necessary, to select regulatory approaches 

that maximize net benefits (including potential economic, environmental, public health and 

safety effects, and equity). Executive Order 13563 emphasizes the importance of quantifying 

both costs and benefits, of reducing costs, of harmonizing rules, and of promoting 

flexibility. Expected economic impacts for small entities are also evaluated, as required by the

Regulatory Flexibility Act.

Economic effects of the rule for both U.S. producers and consumers are expected to be

very small. Producers’ welfare would be negatively affected, but not significantly. Gains for

consumers would outweigh producer losses, resulting in a net benefit to the U.S. economy.

In the following section, we provide a brief overview of the U.S. beef industry. The 

model used to estimate expected impacts of the rule is then described and the results of the 

analysis are presented. Lastly, expected effects for small entities are considered.

U.S. Beef Production and Trade

The United States is the largest beef producer in the world, producing primarily higher 

grade beef for the domestic and export markets. In 2011, the United States produced about 11.9
2

million MT, a quantity little different from the average quantity produced over the 10-year 

period, 2002-2011 (table 1). Despite the large quantity produced, the United States has until 

very recently been a net importer of beef. 

1 The designated export region is composed of the Brazilian States of Bahia, Distrito Federal, Espirito Santo, Goias, 

Mato Grosso, Mato Grosso do Sul, Minas Gerais, Parana, Rio Grande do Sul, Rio de Janeiro, Rondonia, Sao Paulo, 

Sergipe, and Tocantis.
3

with U.S. beef import volumes over the 10 years, 2002-2011, equivalent to about 11 percent of

U.S. production.

Annual quantities of U.S. beef exported, 2002-2011, varied widely, declining sharply in 

2004 because of export restrictions due to the December 2003 discovery of bovine spongiform 

encephalopathy (BSE). Net imports were at their highest levels at that time. Beef exports now 

exceed pre-BSE levels.

Table 1. U.S. beef production, consumption, exports, imports, and net imports,

2002-2011, million metric tons

Year Production Consumption Exports Imports Net Imports

2002 12.3 12.7 1.1 1.5 0.4

2003 11.9 12.3 1.1 1.4 0.3

2004 11.2 12.6 0.2 1.7 1.5

2005 11.2 12.6 0.3 1.6 1.3

2006 11.9 12.7 0.5 1.4 0.9

2007 12.0 12.7 0.7 1.4 0.7

2008 12.1 12.4 0.9 1.2 0.3

2009 11.8 12.2 0.9 1.2 0.3

2010 12.0 12.0 1.0

7

1.0 0.0

2011 11.9 11.6 1.2 0.9 -0.3

Ten-year

average 11.8 12.4 0.9 1.3 0.5

Sources: Production, exports, and imports – Livestock Marketing Information Center; consumption –

http://www.bls.gov/opub/mlr/2005/05/art3full.pdf and http://www.ers.usda.gov/news/BSECoverage.htm.

Outlook for U.S. Agricultural Trade/ AES-75/August 30, 2012 ERS, USDA APHIS

Most beef imported by the United States is from grass-fed cattle, and is processed with 

trimmings from U.S. grain-fed cattle to make ground beef. Australia, Canada, and New Zealand 

are the main foreign sources, with Australia and New Zealand each providing about one-third of 

U.S. beef imports over the 10 years, 2002-2011, and New Zealand supplying most of the rest 

(table 2). Uruguay and Nicaragua have acquired smaller U.S. markets. Beef imports from

Brazil would partly displace
4

imports from existing sources. In 2011, declining cattle inventories and reduced cow slaughter 

in the United States supported larger imports of cattle and beef.

2

Table 2. Percentage shares of U.S. beef imports, by source country, 2002-2011

Year Australia Canada New

Zealand Uruguay Nicaragua Other

2002 38.3 38.7 20.3 <0.1 1.4 1.3

2003 41.8 28.2 23.7 2.9 1.8 1.6

2004 33.7 32.1 19.2 11.6 2.0 1.4

2005 27.8 34.1 18.4 16.1 2.0 1.6

2006 32.7 31.9 20.7 10.2 2.3 2.2

2007 33.1 30.3 18.9 11.7 3.2 2.8

2008 29.1 37.8 23.0 2.6 4.4 3.1

2009 33.1 34.8 21.3 2.8 3.7 4.3

2010 25.6 35.7 22.6 1.7 6.4 2.2

2011 22.8 36.7 22.6 1.7 6.4 2.2

Ten-year

average

31.8 34.4 20.9 6.2 3.2 2.2

Source: U.S. Bureau of the Census, as reported by Global Trade Information Services, Inc., for HS codes 0201

(fresh or chilled meat of bovine animals) and 0202 (frozen meat of bovine animals).

Analytical Approach

Potential impacts of the proposed rule are examined using a partial equilibrium model of 

the U.S. agricultural sector. Principal characteristics of the model are described in the appendix 

to this analysis. A more in-depth discussion of the model, as applied in estimating the economic 

impacts of outbreaks of livestock diseases, is found in Paarlberg et al. (2008).

The model maps interactions among the grain, livestock, and livestock product sectors. 

Impacts are estimated based on the interactions. The model takes into account substitution 

among livestock products in response to relative price changes and incorporates foreign trade. 

Consumption levels for final goods (beef, pork, poultry meat, lamb and sheep meat, eggs, milk,

wheat, coarse grains, rice and soybean oil) are based upon current population and per capita

2 USDA ERS/FAS. “Outlook for U.S. Agricultural Trade,” AES-67, August 31, 2010. 

http://usda.mannlib.cornell.edu/usda/current/AES/AES-08-31-2010.pdf
5

consumption. Production of meats, eggs, and milk is assumed to occur during the current 

quarter, while production of animals and crops are lagged according to biological limitations. 

Market-clearing identities are kept consistent across time, given the biological lags. The model 

uses marketing margins to link farm prices for crops and livestock, wholesale prices for meats, 

milk and eggs, and retail prices for all final goods. Beef is modeled as a single commodity (as 

are the other agricultural products). The model does not distinguish between types of beef by 

grade or cut, or whether it is chilled or frozen. The price elasticities of supply and demand for 

beef that are used are 0.34 and -1.521, respectively.

Consumer welfare changes are computed according to the traditional consumer surplus 

definition, namely, the difference between what consumers would be willing to pay for a 

commodity and the price they actually do pay. Producer welfare changes are captured in terms 

of changes in returns to capital and management.

Annual imports of fresh (chilled or frozen) beef from Brazil are expected to range 

between 20,000 and 65,000 metric tons (MT), with volumes averaging 40,000 MT. U.S. 

producer and consumer welfare changes are estimated for these three import scenarios. The 

results are presented as average annual effects for the five-year period, 2014-2018, using as 

baselines for each of the years the production levels and prices as found in USDA Agricultural 

Projections to 2022 (USDA OCE 2012). The model indicates that about two-thirds of the beef 

imported from Brazil would displace beef that would otherwise be imported from other 

countries. Thus, the net increase in beef imports corresponds to about one-third of the quantity 

supplied by Brazil under each of the three scenarios.

 

1

Source of elasticities is Paarlberg (2008).
6

Expected Effects of the Rule

The results of the analysis in terms of price and quantity effects are shown in tables 3. If the

United States were to import 40,000 MT of beef from Brazil, total U.S. beef imports would 

increase by less than 1 percent. Due to the increase in supply, it is estimated that the wholesale 

price of beef, the retail price of beef, and the price of cattle (steers) would decline by 0.11 percent, 

0.04 percent, and 0.14 percent, respectively. Changes in U.S. beef production, consumption, and 

exports in response to these very small price declines would be inconsequential: beef production 

would decrease by 0.01 percent, beef consumption would increase by 0.06 percent, and beef

exports would increase by 0.11 percent. The 20,000 MT and 65,000 MT import scenarios show 

similarly small quantity and price effects.

Table 3. Baseline levels of average annual beef production, consumption, imports, exports, and prices,

2014-2018, and estimated quantities, prices, and percentage changes resulting from beef imports from Brazil 
7

of 20,000 MT, 40,000 MT, and 65,000 MT; quantities in 1,000 MT, beef prices in dollars per MT, and cattle 

prices in dollars per hundredweight

2014-2018

Average 

Annual 

Baseline 

Quantity or 

Price2

20,000 MT Import

Scenario

40,000 MT Import

Scenario

65,000 MT Import

Scenario

Quantity 

or Price

Percent

Change

Quantity 

or Price

Percent

Change

Quantity 

or Price

Percent

Change

Beef

production

11,738 11,737 -0.01% 11,737 -0.01% 11,737 -0.01%

Beef

consumption

11,807 11,811 0.03% 11,815 0.06% 11,819 0.10%

Beef imports 1,362 1,367 0.34% 1,371 0.69% 1,377 1.12%

Beef exports 1,292 1,293 0.064 1,294 0.11% 1,295 0.18%

Beef prices

Wholesale 4,266 4,264 -0.06% 4,262 -0.11% 4,259 -0.18 % 

0.18%00.180

.180.18%

Retail 12,912 12,909 -0.02% 12,906 -0.04% 12,903 -0.07%

Cattle prices

(steer)

 115.46 114.39 -0.06% 114.32 -0.14% 114.23 -0.20%

Expected welfare effects of the rule are shown in table 4 for the three import scenarios. The fall in 

beef prices and decline in U.S. production would translate into reduced returns to capital and 

management for producers in the livestock and beef processing sectors. Under the

40,000 MT import scenario, cattle producers and beef processors are estimated to incur declines 

in welfare of 0.68 percent and 0.14 percent, respectively.

The decline in the price of beef and resulting shift by consumers to beef and away from 

pork and other meats would cause downward pressure on the prices of these beef substitutes. The

largest of these declines, though still very small, would be for swine and pork. It is estimated for

the 40,000 MT import scenario that the welfare of swine producers and pork processors would 

decline by 0.02 and 0.01 percent, respectively. The decline in U.S. beef production would also 

affect the production of other livestock and livestock products and would cause a decline in the

demand for livestock feed. It is estimated that the impact of the rule for these other commodity

 

2

 Baseline quantities and prices are averages for the years 2014-2018, as found in “USDA Agricultural Projections to 

2019.”
8

sectors would be negligible. The combined welfare loss for all of these groups of producers is 

estimated to be 0.04 percent, equivalent to $165 million. By far, the largest share of the welfare

loss would be incurred by cattle producers, at $143 million.

The decline in beef prices because of the imports from Brazil would benefit consumers. 

It is estimated for the 40,000 MT import scenario that the welfare of beef consumers would 

increase by 0.16 percent Consumers of pork and other animal products would benefit negligibly. 

It is estimated that the combined consumer welfare gains under this scenario would be 0.03

percent, equivalent to $354 million.

Estimates of the net welfare impacts of the rule are shown at the bottom of table 4. The

model indicates that welfare gains of beef consumers net of producers’ welfare losses would be 

equivalent to about $185 million, whereas pork producer welfare losses would slightly outweigh 

pork consumer gains. For producers and consumers of other animals and animal products, the

results show a slight welfare gain. For all sectors, the net welfare change would be a gain of

0.02 percent, with consumer welfare gains of $354 million outweighing producer welfare losses

of $165 million.

The welfare effects under the 20,000 MT and 65,000 MT import scenarios are similar to 

those described. In all three cases, welfare gains are greater than welfare losses, with the net 

benefits increasing broadly in proportion to the quantity of beef imported from Brazil; consumers 

benefit more and producers incur larger welfare losses, the greater the volume of imports. For 

none of the scenarios, however, are the impacts shown to be significant. APHIS welcomes 

information that the public may provide regarding potential economic effects of the proposed

rule.
9

Base

20,000 MT Import Scenario 40,000 MT Import Scenario 65,000 MT Import Scenario

Net Change Net Change Net Change

Percent Percent Percent

Producer

welfare 

changes

1

Beef 12,828 12,819 -9 -0.07 12,810 -18 -0.14 12,797 -31 -0.24

Cattle 20,943 20,858 -85 -0.41 20,800 -143 -0.68 20,667 -276 -1.32

Pork 41,372 41,371 -1 0 41,370 -2 -0.01 41,368 -4 -0.01

Swine 19,103 19,101 -2 -0.01 19,100 -3 -0.02 19,095 - 8 -0.04

Other animal

products

97,529 97,529 0 0 97,529 0 0 97,530 1 0

Crops 201,046 201,047 1 0 201,047 1 0 201,048 1 0

Producer

welfare, all

sectors

 392,821 392,725 -96 -0.02 392,656 -165 -0.04 395,505 -316 0.08

Consumer

welfare 

changes

Beef 219,444 219,612 168 0.08 219,790 346 0.16 219,989 545 0.25

Pork 156,258 156,260 2 0 156,262 4 0 156,266 8 0.01

Other animal

products 476,972 476,974 2 0 476,975 3 0 476,978 6 0

Crops 275,993 275,993 0 0 275,994 1 0 275,994 1 0

8

8

Consumer

welfare, all

sectors

 1,128,667 1,128,839 172 0.02 1,129,021 354 0.03

 

 1,129,021 560 0.05

Net welfare

changes

Beef and

cattle 253,215 253,289 74 0.03 253,400 185 0.07 253,453 238 0.10

Pork and

swine

216,733 216,732 -1 0 216,732 -1 0.08 216,729 -4 -0.16

Other

animals and 

animal

products

 574,501 574,503 2 0 574,504 3 0 574,508 7 0

Crops 477,039 477,040 1 0 477,041 2 0 477,041 2 0

Net welfare, all

sectors

1,521,488 1,521,564 76 0.01 1,521,677 189 0.02 1,521,731 243 0.04

Table 4. Welfare effects of beef imports from Brazil of 20,000, 40,000, and 65,000 metric tons; million dollars

1Returns to capital and management.

Initial Regulatory Flexibility Analysis

The Regulatory Flexibility Act requires agencies to evaluate the potential effects of their 

proposed and final rules on small businesses, small organizations and small governmental 

jurisdictions. Section 603 of the Act requires agencies to prepare and make available for public
10

comment an initial regulatory flexibility analysis that describes expected impacts of a proposed 

rule on small entities.

Reasons Action is Being Considered

In response to a request from the Government of Brazil that fresh (chilled or frozen) beef 

be allowed to be imported into the United States from a region within that country, APHIS 

conducted a risk analysis of the proposed exporting region regarding the status of FMD. The 

Agency found that Brazil has the infrastructure and emergency response capabilities adequate to 

effectively contain FMD in the event of an outbreak, as well as meet all other import 

requirements. In order for imports to resume following an outbreak, Brazil would have to certify 

that the beef does not originate in any area that has been placed under restriction for FMD until

12 months after the last case in the area has been eradicated.

Objectives of and Legal Basis for the Rule

With few exceptions, the regulations in 9 CFR part 94 prohibit the importation of fresh 

(chilled or frozen) meat of ruminants or swine that originates in or transits a region where FMD 

is considered to exist. Except for the State of Santa Catarina, APHIS does not consider Brazil to 

be free of FMD because it vaccinates livestock against this disease. The proposed rule would 

make quarantine decisions by Brazil’s veterinary authorities the basis for determining whether 

beef imports from Brazil should be allowed. In accordance with the Animal Health Protection 

Act (7 U.S.C. 8301 et seq.), the Secretary of Agriculture has the authority to promulgate 

regulations and take measures to prevent the introduction of contagious animal diseases into the 

United States by means of import restrictions.
11

Potentially Affected Small Entities

Small Business Administration Standards

As shown in the analysis, entities that would be most affected by this rule are cattle 

producers and beef processors. Based on the Small Business Administration (SBA) small-entity 

standards and data from the 2007 Census of Agriculture, a majority of the entities that may be 

affected by the proposed regulation are small. Average sales of the 656,475 farms classified 

under the beef cattle ranching and farming category (NAICS 112111) was less than $42,000 in

2007, well below the SBA small-entity standard of $750,000. Cattle feedlots (NAICS 112112) 

are considered small if they have total annual sales of not more than $2.5 million. In 2009, more 

than 97 percent of cattle feedlots (80,000 out of 82,170 establishments) had capacities of less 

than 1,000 head and average annual sales of fewer than 50 head, clearly meeting the small-entity 

standard. Entities classified as animal (except poultry) slaughtering (NAICS 311611) with not

more than 500 employees are considered small. The 2002 Economic Census reports 1,869

establishments in this category.

3 Of this number, 1,796 establishments (96 percent) had fewer

than 500 employees. Thus, the majority of slaughter establishments are also considered small

under SBA guidelines.

Small Family Farms and Farms with Operators who belong to

Socially Disadvantaged Groups

The Census of Agriculture allows further examination of small entities that could be

affected by the proposed rule, namely, small family cattle operations and cattle operations for

3 2007 Economic Census data for the manufacturing sector have not been released.
11

which one or more of the principal operators belong to a socially disadvantaged group. Small

family farms are defined by USDA as family farms with gross sales of less than $250,000.

4 In

2007, nearly 88 percent of farms with cattle and calf inventories were small family farms.

Small family farms are further divided into retirement farms (operators reporting they are 

retired), residential/ lifestyle farms (operators reporting a major occupation other than farming), 

and farming-occupation farms (operators reporting farming as their major occupation). Farmingoccupation farms are classified as low-sales small family farms (sales less than $100,000) and 

high-sales small family farms (sales between $100,000 and $249,999). A fifth category of small 

family farms are limited resource farms, which have sales of not more than $100,000 and a total 

household income at or below the national poverty level for a family of four or less than 50

percent of county median household income.

The Census of Agriculture indicates that in 2007, 40 percent of small family cattle 

operations were residential/lifestyle farms. Any negative effects of the rule for these cattle 

operations would be of even less consequence than is indicated by the analysis because the 

owners have a major source of income other than their farms. With regard to the other categories 

of small family cattle operations, over one-fourth of the owners reported that they had already 

retired, limited resource farms and the low-sales farming-occupation farms each comprised about

15 percent of the operations, and about 6 percent were high-sales farming-occupation farms.

Socially disadvantaged groups are ones that historically have been subjected to bias and 

prejudice. They include women, persons of Hispanic origin, American Indians or Alaska 

Natives, Asians, African Americans, and Native Hawaiians or other Pacific Islanders. These

4 Any farm where the operator and persons related to the operator own a majority of the business is considered a 

family farm. For definitions and information, see: USDA ERS. Structure and Finances of U.S. Farms: Family 

Farm Report, 2010 edition, EIB-66, July 2010. http://www.ers.usda.gov/Publications/EIB66/EIB66.pdf
12

farm operators, themselves, may not have experienced bias or prejudice, but identify with one or

more of these gender, ethnic, and racial groups.

For more than 8 percent of cattle operations in 2007, the principal operator was a woman. 

About 5 percent of cattle operations had a person of Hispanic heritage and/or an American

Indian or Alaskan native as one of their top-three operators. Fewer than 2 percent of cattle 

operations have an African-American as a top-three operator.

Most cattle operations are small family farms and many of the operators belong to socially

disadvantaged groups. Economic effects of the rule for these farms are not expected to differ

from the effects for cattle producers generally. We do not expect the proposed rule to have a

significant impact on U.S. cattle producers regardless of the size of operation or an operator’s 

gender, ethnic, or racial classification.

Organic Farms

In 2008, 586 farms sold 7,213 head of organic beef cattle that had a total value of about

$6.1 million. Most organic beef operations are small in comparison to conventional operations. 

The beef imported from Brazil is not expected to be organic, so these operations should not be 

affected by the proposed rule.

Projected Reporting, Recordkeeping, and Other Compliance

Requirements

Reporting and recordkeeping requirements associated with the proposed rule are 

discussed in the rule under the heading "Paperwork Reduction Act."

Duplication, Overlap, or Conflict with Existing Rules and Regulations

APHIS has not identified any duplication, overlap, or conflict of the proposed rule with 

other Federal rules.
13

Alternatives to minimize Significant Economic Impacts of the Rule

Based on our review of available information, APHIS does not expect the proposed rule 

to have a significant economic impact on small entities. In the absence of significant economic 

impacts, we have not identified alternatives that would minimize such impacts.
14

References

Paarlberg, Philip L., Ann Hillberg Seitzinger, John G. Lee, and Kenneth H. Mathews, Jr. 

Economic Impacts of Foreign Animal Disease. Economic Research Report Number 57. USDA 

ERS, May 2008.

Small Business Administration. Table of Small Business Size Standards matched to North 

American Industry Classification System Codes. 

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf

Small Business Administration. Regulatory Flexibility Act. 

http://www.sba.gov/advo/laws/regflex.html

U.S. Census Bureau. Economic Census, 2002. http://www.census.gov/econ/census02/

USDA NASS. Cattle on Feed, February 19, 2012 

USDA NASS. 2007 Census of Agriculture. 

http://www.agcensus.usda.gov/Publications/2007/Full_Report/index.asp

USDA NASS. 2008 Organic Survey. 

http://www.agcensus.usda.gov/Publications/2007/Online_Highlights/Organics/

USDA OCE. USDA Agricultural Projections to 2022. Long-term Projections Report OCE2010-1, February 2010. 

http://www.usda.gov/oce/commodity/archive_projections/USDAAgriculturalProjections2022.pd

f
15

Appendix

Characteristics of the Model

Details of the partial equilibrium model used for this analysis are provided in Paarlberg et 

al. (2008). This appendix highlights some of its primary characteristics. In mapping interactions 

among the grain, livestock, and livestock product sectors, the model assumes price-taking 

economic decision-makers who maximize well-defined objective functions. Utility

maximization for consumers yields a set of per capita demand functions. Producers choose 

inputs and products that maximize profits using four types of factors of production:

• inputs that are mobile among production activities (e.g., labor, fuel) and for which price 

is treated as given (perfectly elastic supply)

• sector-specific intermediate goods (e.g., swine as the intermediate good in the production 

of pork)

• sector-specific primary factors (e.g., physical and human capital) and

• land, which is mobile across cropping activities.

The numerical solution of the model is obtained by logarithmically differentiating the 

behavioral equations for the livestock, meats, and crop production structures. Each commodity 

has a market-clearing condition for which the total differential includes derived demands for 

animals and feed ingredients. Linkages are maintained through the total differentials of the 

margin-markup equations. The logarithmic differential framework has the advantage of relying 

on elasticities, which are easier to obtain than specific functional forms, more intuitive than 

partial derivatives, and can be applied to baseline values.

Three sets of parameters drive the model: the livestock feed-balance calculator, the 

revenue shares for all industries, and elasticities used in the model solution. The livestock feedbalance calculators are critical because they relate the stocks and flows of animals for each
16

quarter to the feed supplies available, forming the critical vertical linkage between the animal 

agriculture component and the crop component.

Output commodities are also linked through the relationship between revenue and factor 

shares. Under the assumption of perfect competition, factor payments exactly account for the 

sectors’ total revenues. Thus the unit revenue shares are the proportion of unit revenue (price) 

represented by the cost of each factor of production. For live animals, the major revenue share is 

allocated to feed costs, followed by the residual return to capital and management. In general, 

meat industries show low residual returns to capital and management because the bulk of

revenue is allocated to animal costs. Crops show fairly equal allocations among exogenous 

inputs, land, and the residual cost of capital and management.

Elasticities are critical parameters and are grouped into several sets. Most own- and

cross-price elasticities of retail demand are based on estimates from econometric models. Crossprice elasticities are non-negative, implying that the commodities involved are substitutes.

Substitution elasticities describe derived demand behaviors and affect supplies of the 

output commodities in the equation from which they are derived. Substitution elasticities are 

either obtained from the literature or generated consistent with commonly accepted supply 

elasticity values.

Intra-sector trade is modeled using excess demand and supply functions. Excess demand 

elasticities for meats (beef, pork, and poultry meat), coarse grains, wheat, and soybeans and 

products are from policy simulators. With some exceptions, the other trade elasticities are 

assumed and set at either 0 or 1.