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International Livestock Model

The FAPRI International Livestock Model examines and projects the area, production, usage, stocks, prices, and trade for beef and veal, pork, and poultry meat for several countries and regions of the world.

Structure of the FAPRI/CARD International Livestock and Poultry Model

Like all the other FAPRI models, the FAPRI/CARD International Livestock and Poultry Model is a partial equilibrium, econometric, non-spatial policy model. That is, all other sectors of the economy outside of the relevant commodities are considered as given; parameters in the model are either directly estimated, surveyed from the literature, or obtained from consensus of expert opinion; and country sources and destinations of trade are not monitored.

Figure 1

Figure 2

The structure of the model considers carefully the biological processes involved in livestock and meat production and richly captures the investment, production, and consumption decisions of significant economic agents. Both figure 1 and figure 2 provide a sample schematic description of the model structure for cattle and beef. They show the relationship of the biological processes and economic decisions as well as the relationship of stock and flow variables in the evolution of animal and meat production and consumption. In general, the demand side is driven by relevant prices, income, and population, while the supply side is driven by relevant prices, cost of production, and technology. When not a residual, trade is expressed as a function of the domestic price relative to the world price.

The specification of the model is based on five principles. The first is a clear differentiation of stock and flow variables. Animal inventory is an example of a stock variable, while animals slaughtered is a flow variable. Second, in the specification of the model, except for the breeding herd, all stock variables are derived in an accounting identity from the changes in the flow variables. Third, flow variables are generally the only ones with behavioral specification representing economic decisions of significant agents in the sector. Fourth, flow variables are specified in terms of rates rather than levels. Rates normally give a more stable behavior to the model compared with levels and lend easily to comparison across countries and time periods. Finally, price determination in individual country submodels is specified as either price transmission from the world price or market clearing when there are significant restrictions in trade flow, such as the case of the quantitative quota of broilers in Russia. The entire model solves with a market-clearing world price that balances world trade and equates supply and demand in individual countries.

The model strives to capture policy instruments that influence the incentives faced by economic agents. This includes domestic policies (for example, price support) and border policies (for example, duties, tariff rate quotas, export subsidies). Other policies that are difficult to represent quantitatively, such as environmental regulations, are accounted for exogenously.

View the current FAPRI-ISU 2011 World Agricultural Outlook.

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