32

Beef and Cattle PPI Movements

Monthly Labor Review May 2005

Marta Norton

Beef and Cattle PPI Movements

Factors affecting beef and cattle

producer prices movements

In 2003, beef producer price movements demonstrated

changes in supply and demand;

previous liquidation, Mad Cow Disease,

steady demand, feed prices,

and slaughter weights all influenced these changes

Marta Norton is an

economist formerly in

the Division of

Industrial Prices and

Price Indexes, Office of

Prices and Living

Conditions, Bureau of

Labor Statistics.

E-mail:

mnorton@lecg.com

P

roducer prices for beef and veal rose 16.3

percent in October 2003, the largest

monthly gain since April 1975. October

slaughter cattle prices exhibited the largest

monthly gain since January 1974, rising 20.4

percent. The index for beef and veal was the

primary accelerator for the 2.0-percent gain in

the finished consumer foods index, which, in

turn, was a major force in the 0.5-percent jump

in overall prices for finished goods. The increase in prices for slaughter cattle heavily influenced the index for crude foodstuffs and

feedstuffs to climb 7.8 percent and push crude

good prices up 2.6 percent.1

The October gains, while more substantial

than earlier movements throughout the year,

were not complete anomalies in 2003. Prices

for beef and veal generally advanced in prior

months, moving up as much as 7.3 percent in

June. (See chart 1.) Likewise, 2003 prices for

slaughter cattle posted several noticeable gains,

increasing 9.1 percent in January, 5.7 percent

in August, and 11.4 percent in September. In

addition, the U.S. case of Mad Cow Disease

discovered in early December 2003 promised

more price movement. This article investigates

the influences behind 2003 price movements

for beef and veal and slaughter cattle indexes

by reviewing the trends and recent developments in the industry.

The cattle industry structure

The United States is the world’s dominant producer of beef, and maintains a large fed-cattle

industry that produces high-quality, grain-fed

beef.2 While the industry has evolved over the

years, growing more specialized, production

can still be considered in two general divisions:

cow-calf and cattle feeding.

The cow-calf sector of the beef industry

spans across the country on land that is not valued for crop production. At the cow-calf stage,

cattle are calved and maintained on pasture until they weigh about 400 pounds, the weight at

which a calf is typically weaned.3 Ranchers retain very few male calves for breeding purposes; most are castrated and sent to the feedlots when they weigh roughly 500 pounds.

However, once a female calf is weaned, the

rancher can either retain the female as a capital

good and add her to the breeding stock or send

her to slaughter along with her male counterparts as a consumption good.4

 Occasionally,

when additional forage is available after a male

or female calf has been weaned, the calf will be

retained by the rancher for grazing until the following spring.5

 Cow-calf operations need, on

average, 5 tons of forage on a dry matter basis

per cow per year. 6 An average beef-cow herd is

40 head, but the head size distribution is
Monthly Labor Review May 2005 33

skewed;7 more than half of the U.S. beef-cow inventory is

dominated by a small number of large producers.

Cattle feeding is the second sector of cattle production

and occurs on feedlots located mostly, although not exclusively, in the Great Plains. The aforementioned weaned

calves generally do not go directly to slaughter but instead

become feeder cattle and are moved to a feedlot when they

weigh between 500 and 750 pounds.8 Depending on conditions and desired results, the feeding period lasts approximately 90 to 300 days.9

 During this time, an animal is fed

grain and protein concentrates and gains, on average, 2.5 to

4 pounds a day. Cattle are generally sold from the feedlot to

the slaughter plant when they weigh between 950 and 1,250

pounds.10 According to the Economic Research Service of

the U.S. Department of Agriculture (USDA), the cattle feeding

industry is dominated by a small number of specialized feedlots, and is becoming increasingly vertically integrated with

the cow-calf farms and slaughter plants.11

Historical cattle trends

The cattle industry is cyclical. Herd size expands and contracts during an 8- to 12-year period due to cattle’s biological cycle and market changes.12 The biological cycle, for

example, forces a 3-year time lag between the time the producer receives a market signal to expand and the time when

the calves produced by additional retained heifers are slaughtered as added beef.13 Each cattle cycle is composed of a

period of herd expansion followed by a period of herd liquidation. USDA cites research that shows expansion generally

lasts for about 6 to 7 years, and liquidation lasts for roughly

3 to 4 years, with a 1- to 2-year period of consolidating cattle

numbers between the two stages.14 In order to drive production upward, producers must retain heifers for breeding purposes prior to and throughout the expansion period.15 Expansion signals include large supplies of forage from pasture

and range, favorable grain prices, and favorable cattle

prices.16

The cattle cycle is vulnerable to weather, changes in industry structure, cropping/commodity programs, inflation,

demand, grain prices, and imports/exports.17 Droughts often

extend liquidation phases by reducing available pasture for

cattle. During droughts, cattle producers can either sell cattle

to reduce the number of animals grazing, or they can feed

animals supplemental harvested forages, which increase operating costs. Producers choosing to sell cattle often force

more cattle to market than normal by selling younger cattle

at lighter weights, thus pushing down the prices they receive.

Chart 1. Slaughter cattle/beef and veal prices, October 2002 to January 2004

1 month

percent change

Beef and veal

Slaughter cattle

Oct2002

Nov2002

Dec2002

Jan2003

Feb2003

Mar2003

Apr2003

May2003

Jun2003

Jul2003

Aug2003

Sept2003

Oct2003

Nov2003

Dec2003

Jan2004

-20

-15

-10

-5

0

5

1 0

1 5

2 0

2 5

-20

-15

-10

-5

0

5

1 0

1 5

2 0

2 5

1 month

percent change

–10

–5

0

5

10

15

20

25

–20

–15

–10

–5

0

5

10

15

20

25

–20

–15

October December February April June August October December

2002 03 04

SOURCE: U.S. Bureau of Labor Statistics, Producer Price Indexes.
34

Beef and Cattle PPI Movements

Monthly Labor Review May 2005

The effects of droughts are often, though not always, seen in

late spring/early summer.

Aside from weather-related influences, the cattle industry

is often affected by several other variables. First, alterations

in industry structure and technological innovations have

changed recent cycles. For example, improved slaughter

plants allow for larger animals with higher weights. Cropping/commodity programs also affect the industry by providing incentives to use land either as cropland or as improved pasture. USDA cites research that shows cattle numbers are inversely related to changes in the number of harvested crop acres. In addition, inflation and changes in demand can increase incentives to move from expansion to liquidation or vice versa, while grain prices influence cattle production costs and decisions. Lastly, changes in imports/exports of beef and grain can have substantial effects on the

cattle cycle by encouraging either herd expansion or herd

liquidation.

The cattle cycles since the 1970s demonstrate the effects

of many of these forces. The 1970s cattle cycle was affected

by President Nixon’s beef price freezes, oil price shocks,

drought, and unusually high grain prices.18 A number of researchers note that demand has steadily decreased since the

1970s, demonstrating consumers’ growing health awareness

and changing preferences.19 The 1980s were affected by

drought and increased slaughter weights, and the 1980–90

cycle had an extremely short expansion period of 3 years.20

Average cattle weights increased and total inventory decreased with the introduction of new packing plants that allowed for larger animals. Also, since 1986, more fat has been

trimmed off primal cuts of beef than before, pushing quantity measures lower. 21

Liquidation began in 1996 after a severe drought and high

grain prices.22 Drought continued to plague the cattle industry, and producers reduced herds into 2002.23 (See chart 2.)

2003 price movements

Beef price movements in 2003 have demonstrated changes

in both supply and demand. Previous liquidation and

Canada’s Mad Cow Disease, steady demand, feed prices, and

slaughter weights appear to have influenced such changes.

Previous liquidation and Canada’s Mad Cow Disease. On

May 20, 2003, Canadian beef imports were banned by several countries, including the United States, because of the

discovery of an animal afflicted with Mad Cow Disease. Mad

Cow Disease, or Bovine Spongiform Encephalopathy (BSE),

Chart 2. Cattle on feed annual inventory and annual index values for slaughter cattle and beef and

veal, 1970–2003

Million head Index values

Total inventory

Beef and veal

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

8 0

9 0

100

110

120

130

140

40

50

60

70

80

90

100

110

120

130

140

80

90

100

110

120

140

130

80

90

100

110

120

140

130

40

50

60

70

1970 72 74 76 78 80 82 84 86 88 90 92 94 96 98 2000 02

Slaughter cattle

SOURCE: USDA's National Agricultural Statistics Service and the Producer Price Index.
Monthly Labor Review May 2005 35

is a degenerative neurological disease caused by an abnormal protein.24 Cattle become infected with the disease by

eating food contaminated with the infectious agent. Humans

cannot contract BSE, but eating the neural tissue (such as the

brain and spinal chord) of a BSE-infected animal can cause a

fatal disease described as variant Creutzfeldt-Jakob Disease.

While USDA efforts are designed to prevent domestic consumers from being exposed to Creutzfeldt-Jakob Disease, the

global cattle industry can be affected by a discovery of BSE

because countries may impose a ban on imported cattle. The

discovery may result in a reduced cattle supply and unpredictable public opinions toward the consumption of beef.

The ban on Canadian beef imports exacerbated an already

tight U.S. domestic supply for two reasons. First, the United

States has typically relied on Canada for many of its beef

products. In 2002, the United States imported a total of 2.5

million cattle from all sources, and 68 percent (1.7 million)

came from Canada alone.25 Canadian beef imports accounted for 3.9 percent of U.S. beef consumption. Once

Canadian imports were restricted and domestic supplies tightened, the market at most stages of production exp erienced

price increases.

Secondly, imports were restricted at a time when the U.S.

cattle inventory was already low due to years of liquidation.

In 2002, droughts had affected the cattle market for 4 consecutive years, worsening grazing conditions and depleting

forage supplies.26 Feeder cattle supplies in 2002 were high

partially as a result of low heifer retention for herd expansion, and slaughter weights remained low prior to May

2003.27 The ban on Canadian imports occurred at a time

when domestic supplies could not recover quickly enough to

lessen the impact on the market. (See chart 3.)

Consumer demand. Although some early articles expressed

concern that demand for beef would falter after the discovery of Mad Cow Disease in Canada, U.S. per capita beef

consumption remained relatively steady throughout most of

2003. In November 2003, USDA forecasted per capita 2003

beef consumption at 65 pounds, while the 2000, 2001, and

2002 final figures were 68, 66, and 68 pounds respectively.28

Many speculate that the improving economy and popular diets encouraging the consumption of foods high in protein

helped to maintain strong demand during a period of tightened supply.29 (See table 1.)

International demand for U.S. cattle products remained

strong for the greater part of 2003, and total beef and veal

exports continued their general trend by rising to 2,523,013

(1,000 pounds carcass weight).30 When taken together, the

Chart 3. Cattle on feed monthly inventory

Thousand head

SOURCE: USDA's National Agricultural Statistics Service.

Thousand head

December June December June December June December June December

9,500

10,000

10,500

11,000

11,500

12,000

9,500

10,000

10,500

11,000

11,500

12,000

10,000

10,500

11,000

11,500

12,000

10,000

10,500

11,000

11,500

12,000

9,500 9,500

December June December June December June December June December

1999 2000 01 02 03
36

Beef and Cattle PPI Movements

Monthly Labor Review May 2005

United States and Canada form the largest meat-exporting

region and share the same abundant resources.31 The two

countries also share similar international markets, as Mexico,

Japan, and South Korea are among the largest importers for

cattle products from both countries.32 (See chart 4.) After

May 20, 2003, U.S. beef exports rose significantly. For example, beef exports to Japan rose from 79,108 in May 2003

to 90,389 in October 2003 (1,000 pounds carcass weight).33

Exports to South Korea reached 65,542 in August 2003 after

a May value of 42,020, and then fell to 49,374 by October.

(See chart 5.)

SOURCE: USDA's Economic Research Service.

Table 1. U.S. beef consumption, 2000–04

 Consumption

Primary

market

Total, Pounds priceper

 Year million per carcass

pounds capita weight

2000 ....... 27,338 68 0.700 $69.65

2001 ....... 27,026 66 .700 72.71

2002 ....... 27,878 68 .700 67.04

2003 ....... 27,291 65 .700 85.10

2004 ....... 26,225 62 .700 85.00

Conversion

factor

SOURCE: USDA's Economic Research Service.

Japan

South Korea

Other

Mexico

Canada

Russia

Caribbean

Chart 4. Import countries of U.S. beef, 2003

Chart 5. U.S. beef and veal exports to Japan and South Korea, October 2002–October 2003

Thousand pounds

carcass weight

SOURCE: USDA's Economic Research Service.

Thousand pounds

carcass weight

October December February April June August October

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000 100,000

90,000

30,000

40,000

50,000

60,000

70,000

80,000

20,000

100,000

90,000

30,000

40,000

50,000

60,000

70,000

80,000

20,000

October December February April June August October

2002 03

Japan

South Korea
Monthly Labor Review May 2005 37

Chart 6. Total variable costs at three stages of

processing

Beef

backgrounding

Beef finishing

Beef cows,

sell feeders

1 Other costs include: labor hired; machine hire -

lease; farm organization fees/travel/publication; livestock

marketing/breeding; gas/fuel/oil; personal property tax;

general farm insurance; utilities; auto expenses; livestock

futures; interest paid; veterinary medicine/drugs; and

general machinery repairs.

Feed purchased Other costs Other costs1

 SOURCE: Livestock: Historical Budgets (Kansas State

University, Department of Agricultural Economics) on the

Internet at http://www.agmanager.info/farmmgt/

income/enterprise/2002/KS%20beef%20finishing%

2002.PDF; http://www.agmanager.info/farmmgt/

income/enterprise/2002/KS%20cows%20feeders%

2002.PDF; and http://www.agmanager.info/farmmgt/

income/enterprise/2002/KS%20backgr%2002.PDF

85.9

percent

14.1

percent

30.4

percent

35.6

percent

69.6

percent

64.4

percent

Feed prices. Favorable feed prices helped to keep operating

costs down. While the poor weather conditions in late 2002/

early 200334 reduced the 2003 crop supply, the price ratio of

steer/heifer prices to corn prices remained high for most of

2003. Corn prices do not represent all of the operating costs

in the cattle industry, but they are the most significant input.

According to a study conducted by the Kansas State University Agricultural Economics Department for the years 1997–

2001, State averages show feed as the most substantial input

at all stages of production.35 For instance, at the beef finishing stage, feed costs averaged roughly 85.9 percent of total

variable costs. (See chart 6.) A high price ratio of steer/heifer

prices to corn prices (a comparison between revenue received

and the greatest variable cost) is a strong incentive to produce fed beef. (See chart 7.)

Slaughter weights. Reduced cattle weights also contributed

to 2003’s tight processed beef supply. In an effort to maintain beef production levels, producers pushed animals

through production more quickly than usual, slaughtering

cattle at lower-than-normal weights.36 One consequence of

the reduced weights can be seen in the limited proportion of

high quality, grain-fed cattle. Retail prices of round steak

(USDA choice) sold at $2.45 in October 2002, and at $3.37 in

October 2003.37 Boneless sirloin steak (USDA choice) rose

from $4.36 in October 2002 to $5.02 in October 2003. In

November 2003, USDA assessed the current market situation

and predicted that beef prices in the hotel/restaurant sector

would continue to be high due to the tight fed-cattle supply.

(See chart 8.)38

U.S. Mad Cow Disease

On December 9, 2003, a nonambulatory dairy cow showing

signs of BSE was found in the State of Washington. 39 U.S.

authorities identified it as a case of BSE, and the BSE world

research lab in Weybridge, England, confirmed the diagnosis on December 25th. While this situation was yet to completely unfold, the effects of previous BSE episodes in Canada

and the European Union (EU) provided insights into potential

implications of this discovery in the United States.

After analyzing the effects from outbreaks of BSE in the

European Union, USDA research suggests that BSE effects on

EU beef consumption and trade volume were transitory.40 EU

total export volume has not remained strongly affected after

immediate shocks, and while domestic consumption first

sharply declined, it then increased to resume long-term

trends. While such research is encouraging, EU beef prices

failed to recover after the three cases of BSE, which implies

beef demand shifted downward and trade values were

strongly affected.

After the May 2003 discovery of BSE in Canada, that
38

Beef and Cattle PPI Movements

Monthly Labor Review May 2005

Chart 7. Feed price ratios: bushels of corn equal in value to 100 pounds of steers and heifers, live

weight, and Producer Price Index values for slaughter cattle

Slaughter cattle

index values

SOURCE: USDA's National Agricultural Statistics Service and the Producer Price Index.

Feed price ratios (steer

and heifer to corn)

January 2000 May 2000 September 2000 January 2001 May 2001 September 2001 January 2002 May 2002 September 2002 January 2003 May 2003 September 2003

9 0

100

110

120

130

140

150

160

2 5

3 0

3 5

4 0

4 5

160 5 0

150

140

130

120

110

100

90

50

45

40

35

30

25

January July January July January July January July

2000 01 02 03

Feed price ratios

Index values

Chart 8. Federally inspected average dressed weight and feed price ratios (bushels of corn equal in

value to 100 pounds of steers and heifers, live weight)

Average dressed

weight (pounds)

SOURCE: USDA's National Agricultural Statistics Service.

Feed price

ratios

Jan-00

Mar-00

May-00

Jul-00

Sep-00

Nov-00

Jan-01

Mar-01

May-01

Jul-01

Sep-01

Nov-01

Jan-02

Mar-02

May-02

Jul-02

Sep-02

Nov-02

Jan-03

Mar-03

May-03

Jul-03

Sep-03

Nov-03

720

730

740

750

760

770

780

2 5

3 0

3 5

4 0

4 5

5 0

720

730

740

750

760

770

780

25

30

35

40

45

50

January July January July January July January July

2000 01 02 03

Average dressed weight

Feed price ratios
Monthly Labor Review May 2005 39

country’s beef industry experienced significant difficulties.

The closure of international borders to beef exports crippled

the Canadian cattle and beef industry, as Canada had previously exported roughly 63 percent of total output on a beef

equivalent basis.41 Bans forced Canada to cope with an additional 750,000 to 1,000,000 head of live cattle that, prior

to the BSE discovery, was forecast to be exported to the United

States during the remainder of 2003. Although demand for

Canadian cattle and beef exports was virtually non-existent,

beef imported into Canada fell only moderately in 2003 and

helped to contribute to increased supply. The case of BSE in

May apparently did not weaken Canada’s domestic consumer

confidence. A September report from the Foreign Agriculture

Service suggested that Canadian consumption increased after

the discovery of BSE, and major fast food restaurants announced

that they would acquire 100 percent of their beef requirements

from Canada-source beef for the Canadian operations.42

International bans against U.S. cattle and beef products

were quickly instituted after the discovery of BSE in the State

Notes

1 All indexes mentioned are seasonally adjusted except slaughter cattle

(WPU0131) and beef and veal ( WPU022101), neither of which have been

seasonally adjusted since 1993 and 1996 respectively.

2 Briefing Room, Cattle: Background (U.S. Department of Agriculture, Economic Research Service), on the Internet at http://www.ers.

usda.gov/Briefing/Cattle/Background.htm

3 James M. MacDonald, Michael E. Ollinger,Kenneth E. Nelson, and

Charles R. Handy, Consolidation in U.S. Meatpacking,Agricultural Economics Report No. 785 (U.S. Department of Agriculture, Economic Research Service, March 1999), p. 4, on the Internet at http://www.ers.usda.

gov/publications/aer785/

4 David Aadland, “The Economics of Cattle Supply,” Computing in

Economics and Finance 2000, Reference number 57 (IDEAS, Research

Papers in Economics, July 2000) on the Internet at http://ideas.repec.org/

p/sce/scecf0/57.html

5 Ibid.

6 Beef Cow-Calf Enterprise, MF–266 (Kansas State University, Department of Agricultural Economics, Farm Management Guide, October

2002), p. 1, on the Internet at http://www.oznet.ksu.edu/library/agec2/

mf266.pdf

7 Briefing Room, Cattle.

8 MacDonald and others, U.S. Meatpacking, p. 5.

9 Briefing Room, Cattle.

10 MacDonald and others, U.S. Meatpacking, p.4.

11 Ibid., p.4.

12 Briefing Room, Cattle.

13 Steve Swigert, “Drought, Economy Have Affected Cattle Cycle,”

Ag News and Views (Noble Foundation, October 2002), on the Internet at

http://www.noble.org/Ag/Economics/DroughtEconomyCattleCycle/

index.htm

14 Kenneth H. Mathews, Jr., William F. Hahn, Kenneth E. Nelson,

Lawrence A. Duewer, and Ronald A. Gustafson, U.S. Beef Industry: Cattle

Cycles, Price Spreads, and Packer Concentration, Technical Bulletin No.

1874 (U.S. Department of Agriculture, Economic Research Service, April

of Washington, leading to a notable drop in international demand. Moreover, while officials reacted quickly and the USDA

attempted to encourage consumer demand, it was yet unclear

whether demand would continue to remain strong in the

United States as it did in Canada.

The December 2003 Producer Price Index (PPI) values

for beef and veal and for slaughter cattle did not fully reflect the discovery of BSE in mid-December, because the

initial discovery occurred on the PPI pricing date for the

month.43 However, in light of the Canadian and European

Union experiences with BSE, many analysts believed beef

and cattle prices would decline in 2004. Confirming these

beliefs, the PPI values for beef and veal dropped 17.7 percent and slaughter cattle dropped 20.6 percent, from November 2003 to February 2004. However, prices for beef

and cattle soon began to recover from those losses, rising

11.3 percent and 11.7 percent from February to April. The

causes behind this relatively quick reversal in prices warrants further investigation.

1999), p. 3, on the Internet at http://www.ers.usda.gov/publications/

tb1874/

15 Ibid.

16 Livestock, Dairy, and Poultry Outlook, LDP–M–113 (U.S. Department of Agriculture, Economic Research Service, November 25, 2003), p.

5, on the Internet at http://usda.mannlib.cornell.edu/reports/erssor/

livestock/ldp-mbb/2003/ldpm113f.pdf

17 Mathews and others, U.S. Beef Industry, pp. 5–6.

18 Ibid., p. 14.

19 Judith Jones Putnam and Jane E. Allshouse, Food Consumption,

Prices, and Expenditures, 1970–97, Statistical Bulletin No. 965 (U.S.

Department of Agriculture, Economic Research Service, April 1999), p.

17, on the Internet at http://www.ers.usda.gov/publications/sb965/

20 Mathews and others, U.S. Beef Industry, p.3.

21 Putnam and others, Food Consumption, p.17.

22 Livestock and Poultry: World Markets and Trade (U.S. Department

of Agriculture, Foreign Agricultural Service, March 1997), on the Internet

at http://ffas.usda.gov/dlp2/circular/1997/97-03/cattle.htm

23 Ibid.

24 Bovine Spongiform Encephalopathy (BSE) Q & A’s (U.S. Department

of Agriculture, Animal and Plant Health Inspection Website, December

24, 2003), on the Internet at http://www.aphis.usda.gov/lpa/issues/bse/

bse_q&a.html

25 Background Statistics on U.S. Beef and Cattle Industry (U.S. Department of Agriculture, Economic Research Service), on the Internet at

http://www.ers.usda.gov/News/BSECoverage.htm

26 Livestock, Dairy, and Poultry Outlook, LDP–M–106 (U.S. Department of Agriculture, Economic Research Service, April 22, 2003), p. 6, on

the Internet at http://www.ers.usda.gov/publications/ldp/Apr03/

LDPM106f.pdf

27 Ibid, pp. 5–6.

28 “Statistical Indicators,” Agricultural Outlook (U.S. Department of

Agriculture, Economic Research Service), table 10, on the Internet at http:/

/www.ers.usda.gov/publications/Agoutlook/AOTables/
40

Beef and Cattle PPI Movements

Monthly Labor Review May 2005

29 Articles from the Wall Street Journal, the Washington Post, and USA

Today suggest that fad diets have boosted the demand for beef. Examples:

Scott Kilman, “U.S. Beef Enjoys a Bull Market, Enriching Ranches and

Packers,” The Wall Street Journal, September 26, 2003; Blaine Harden,

“Protein Diet Craze, Thin Supply of Cattle Fatten Ranchers’ Wallets,” The

Washington Post, December 22, 2003; Barbara Hagenbaugh, “Beef Prices

May Have Hit Bottom,” USA Today, December 30, 2003.

30 Total U.S. Beef and Veal Red Meat Yearbook (U.S. Department of

Agriculture, Economic Research Service, Red Meat Yearbook), on the

Internet at http://usda.mannlib.cornell.edu/data-sets/livestock/94006/

usexports.xls

31 John H. Dyck and Kenneth E. Nelson, Structure of the Global Markets for Meat, Agriculture Information Bulletin No. ( AIB785) (U.S Department of Agriculture, Economic Research Service, September 2003), p. 4,

on the Internet at http://www.ers.usda.gov/publications/aib785/

32 Background Data on U.S. Beef Industry; and Cattle: Trade (U.S.

Department of Agriculture, Economic Research Service), on the Internet

at http://www.ers.usda.gov/News/BSECoverage.htm

33 Livestock, Dairy, and Poultry Outlook, LDP–M–115 (U.S. Department of Agriculture, Economic Research Service, January 27, 2004), p.

21, on the Internet at http://www.ers.usda.gov/publications/ldp/Jan04/

LDPM115f.pdf

34 Ibid.

35 Livestock: Historical Budgets (Kansas State University, Department

of Agricultural Economics), on the Internet at http://www.agmanager.

info/farmmgt/income/enterprise/2002/KS%20backgr%20finish%

2002.PDF

36 Livestock, Dairy, and Poultry Outlook, LDP–M–111 (U.S. Department of Agriculture, Economic Research Service, September 23, 2003),

p. 8, on the Internet at http://usda.mannlib.cornell.edu/reports/erssor/

livestock/ldp-mbb/2003/ldpm111f.pdf

37 Data: Retail Scanner Prices for Meat (U.S. Department of Agriculture, Economic Research Service), on the Internet at http://www.lmic.

info/meatscanner/meatscanner.shtml

38 Feed price ratios and the average dressed weight for cattle appear

graphically to maintain an inverse relationship over recent years, suggesting that the price of feed influences, to some degree, cattle weight.

39 Newsroom: BSE Chronology (U.S. Department of Agriculture, December 2003), on the Internet at http://www.usda.gov/wps/portal/!ut/p/

_s.7_0_A/7_0_1OB/.cmd/ad/.ar/sa.retrievecontent/.c/6_2_1UH/.ce/

7_2_5JM/.p/5_2_4TQ/_th/J_2_9D/_s.7_0_A/7_0_1OB?PC_7_

2_5JM_contentid=bse_chrono.xml

The PPI pricing date each month is the Tuesday of the week with the

13th in it. The pricing date for December 2003, therefore, was December

9, 2003, the same day the dairy cow was discovered. As a result, December prices reflect very little of the U.S. discovery of Mad Cow Disease.

40 Jean C. Buzby, ed., International Trade and Food Safety: Economic

Theory and Case Studies, Agricultural Economic Report No. ( AER828)

(U.S. Department of Agriculture, Economic Research Service, November

2003), p. 58, on the Internet at http://www.ers.usda.gov/publications/

aer828/

41 Canada Livestock and Products Annual 2003 (electronic edition)

(U.S. Department of Agriculture, Foreign Agricultural Service, September 3, 2003), pp. 3–4 on the Internet at http://www.fas.usda.gov/

gainfiles/200309/145985931.doc

42 Ibid., p.6

43 Each month, the Producer Price Index collects prices for the Tuesday of the week containing the 13th.