• TABLE OF CONTENTS
HIDE
 Copyright
 Title Page
 Abstract
 Table of Contents
 List of Tables
 List of Figures
 Preface
 Introduction
 The GATT arrangement regarding...
 World cattle cycles
 The meat import act of 1964
 The meat import act of 1979
 Projected effect on the United...
 Projections of per capita beef...
 Discussion
 Reference
 Appendices






Group Title: Economic information report 152
Title: An assessment of the United States' Meat Import Act of 1979
CITATION PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00027242/00001
 Material Information
Title: An assessment of the United States' Meat Import Act of 1979
Series Title: Economic information report
Physical Description: vi, 69 p. : ill. ; 28 cm.
Language: English
Creator: Simpson, James R
Publisher: Food and Resource Economics Dept., Agricultural Experiment Stations, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville
Publication Date: [1981]
 Subjects
Subject: Meat industry and trade -- United States   ( lcsh )
Meat industry and trade -- Law and legislation -- United States   ( lcsh )
Meat industry and trade   ( lcsh )
Import quotas -- United States   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
bibliography   ( marcgt )
statistics   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Bibliography: p. 51-52.
Statement of Responsibility: James R. Simpson.
General Note: Cover title.
Funding: Florida Historical Agriculture and Rural Life
 Record Information
Bibliographic ID: UF00027242
Volume ID: VID00001
Source Institution: Marston Science Library, George A. Smathers Libraries, University of Florida
Holding Location: Florida Agricultural Experiment Station, Florida Cooperative Extension Service, Florida Department of Agriculture and Consumer Services, and the Engineering and Industrial Experiment Station; Institute for Food and Agricultural Services (IFAS), University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: aleph - 000404904
oclc - 10146073
notis - ACF1123
lccn - 82622064

Table of Contents
    Copyright
        Copyright
    Title Page
        Title Page
    Abstract
        Page i
    Table of Contents
        Page ii
        Page iii
    List of Tables
        List of Tables 1
        Page v
    List of Figures
        Page vi
    Preface
        Page 1
    Introduction
        Page 2
    The GATT arrangement regarding bovine meat
        Page 2
    World cattle cycles
        Page 3
        Page 4
        Cattle cycles: An explanation
            Page 5
        International cattle cycles
            Page 6
            Page 7
            Page 8
            Page 9
    The meat import act of 1964
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
    The meat import act of 1979
        Page 16
        Page 17
        Page 18
        Page 19
        Live cattle imports
            Page 20
            Page 21
    Projected effect on the United States of the 1979 law versus the 1964 law
        Page 22
        Page 23
        Data for the projections
            Page 24
            Page 25
            Page 26
            Page 27
        Production projections
            Page 28
            Page 29
            Page 30
        Cow beef projections
            Page 31
            Page 32
            Page 33
            Page 34
        Calculations of annual quotas, 1981-1990
            Page 35
        Results
            Page 35
            Page 36
            Page 37
            Page 38
            Page 39
    Projections of per capita beef and veal consumption
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
    Discussion
        Page 45
        Page 46
        Page 47
        Page 48
        Page 49
        Page 50
    Reference
        Page 51
        Page 52
    Appendices
        Page 53
        Page 54
        Appendix I: Public law 88-482 - Aug. 22, 1964
            Page 55
            Page 56
        Appendix II: Public law 96-177 - Dec. 31, 1979
            Page 57
            Page 58
            Page 59
            Page 60
        Appendix III: Cattle inventory in 37 selected countries and total for the world, 1953-1980
            Page 61
            Page 62
            Page 63
            Page 64
        Appendix IV: Calculation of annual quota, 1981-1990, under assumption that cattle inventory is the same as in the previous cycle
            Page 65
            Page 66
            Page 67
        Appendix V: Calculation of annual quota, 1981-1990, under assumption of slow growth in cattle inventory
            Page 68
            Page 69
Full Text





HISTORIC NOTE


The publications in this collection do
not reflect current scientific knowledge
or recommendations. These texts
represent the historic publishing
record of the Institute for Food and
Agricultural Sciences and should be
used only to trace the historic work of
the Institute and its staff. Current IFAS
research may be found on the
Electronic Data Information Source
(EDIS)

site maintained by the Florida
Cooperative Extension Service.






Copyright 2005, Board of Trustees, University
of Florida





James R. Simpson


Economic Information
Report 152


An Assessment of the


United


States'


Meat Import Act


of 1979


HUME LIBRARY
UMAR 1 9 13id
R.A.S. Univ. of Florida


Food and Resource Economics Department
Agricultural Experiment Stations
Institute of Food and Agricultural Sciences
University of Florida, Gainesville 32611


December 1981














ABSTRACT


This report's purpose is to analyze the potential effect of the new
United States meat import law under two radically different assumptions
about buildup in United States cattle inventory. Particular emphasis is
placed on drawing together, in one document, all of the data required
for such an analysis. A description is given of the 1964 and 1979 meat
import laws as well as U.S. and world cattle cycles.

The analysis shows that the so-called "countercyclical bill" is
quite insensitive to radical changes in assumptions about herd growth
buildup because of the rather long periods of weighted averages in the
new formula, three and ten years in the case of domestic production, and
five and two years in the cow beef supply portion. The countercyclical
aspect of the bill will apparently function quite well if inventory, and
subsequent production, follow a pattern similar to the previous cycle,
but the countercyclical aspect would completely disintegrate if production
were to continue to increase throughout the 1980s, albeit at a slower
rate than occurred in the previous cycle. In the latter case the trigger
level continues to increase even though production increases. In effect,
it acts in a fashion similar to the 1964 bill. In this respect, the bill
is not truly "countercyclical" in nature as it only operates that way
under certain circumstances.

Key words: Beef, imports, beef law, import law, trade, cattle
cycles, cattle.





















TABLE OF CONTENTS


ABSTRACT . . . .

LIST OF TABLES . . .

LIST OF FIGURES . . .

INTRODUCTION . . .

THE GATT ARRANGEMENT REGARDING BOVINE

WORLD CATTLE CYCLES . . .

Cattle Cycles: An Explanation. .

International Cattle Cycles .

THE MEAT IMPORT ACT OF 1964 . .

THE MEAT IMPORT ACT OF 1979 . .

Live Cattle Imports . .

PROJECTED EFFECT ON THE UNITED STATES
THE 1964 LAW . . .

Data for the Projections . .

Production Projections .. ...

Cow Beef Projections . .

Calculations of Annual Quotas, 1981

Results . . . .

PROJECTIONS OF PER CAPITAL BEEF AND VE

DISCUSSION . . .

REFERENCES . . .


ME
















OF










-19




AL
*

*


:AT . .
















STHE 1979 LAW










90 . .




CONSUMPTION


Page



iv


* vi

S 2

S 2

3

* 5

S 6

S 10

S 16

. 20


. I

* <
. -


. .
. .



* I

V E I
* <

. '

. <





VERSUS
* *

* *









* *



* *

* *













APPENDIX I .. . . . . . . 55

APPENDIX II . . . . . . 57

APPENDIX III................... ......... .61

APPENDIX IV .................... ....... 65

APPENDIX V. ......... ... . ....... 68










































iii1
















LIST OF TABLES


Table Page

1 United States production of beef, veal, mutton and goat,
and total meat subject to the 1964 meat import law, carcass
weight basis, 1959-1979 with estimates for 1980. .... 11

2 United States beef and veal imports, product weight basis,
1959-1979a . . . . .. .. .. .. I.

3 United States meat imports (product weight basis), and
actions taken under the Meat Import Act of 1964. . ... 14

4 United States live cattle imports, 1968-1979 . . 18

5 United States cow beef production per capital, beef produc-
tion, and cow beef production per head of inventory,
1960-1980. . . . . ... ....... 19

6 United States live cattle imports from Mexico and Canada,
1968-1979 .. . . .. . ... 23

7 Comparison of United States meat imports subject to the
meat import law, under the 1964 and 1979 laws, from 1980
to 1989. . . . . . . .25

8 Projections of United States' cattle production per head
of inventory, and total production of beef and veal,
1959-1980 with projections to 1990 . . ... 27

9 Projections of United States' beef and veal production,
1980-1990 . . . . ... . .. 32

10 Projections of cow beef production, United States,
1980-1990 . . . . ... .. .. .36

11 Projections of United States per capital cow beef production,
1981-1990 . . . . . . 38

12 Projections of United States meat import trigger level,
1980-1990, under two assumptions . . ... 39













13 United States commercial production of beef and veal, total
consumption and per capital consumption, 1965-1979. .... .43

14 Determination of total United States beef and veal consumption
minus production as a percent of meat import trigger level,
and imports as a percent of consumption, 1965-1979 .. 46

15 Calculation of per capital consumption of beef and veal in
the United States, 1980-1990 . . . ... 47

16 Projections of trigger level as a percent of total United
States beef and veal consumption, 1980-1990 . . 49














LIST OF FIGURES


Figure Page

1 Cattle cycles, prices and inventory since 1930 . 4

2 Cattle inventories of Australia, New Zealand, United
Kingdom and United States, 1953-1980 . .. ... 7

3 Cattle inventory of Europe, EEC, Argentina and South
America compared with the United States, 1953-1980 . 9

4 United States meat import quota, trigger level and actual
imports, 1965-1979 . . . . . 15

5 United States live cattle imports, 1968-1979 . .21

6 Relation between production of beef and veal, and all
cattle inventory, United States, 1959-80, and projections
of production and inventory to 1990 . . ... 29

7 Beef production per head of cattle inventory in the
United States from 1959-80 with projections to 1990. . 30

8 Relation between numbers of cows slaughtered and all
cattle inventory, United States, 1959-80 . ... 33

9 Relation between cow beef production per head of all
cattle inventory, and all cattle inventory, United
States, 1959-80 with projections to 1990 . . 34

10 United States cow beef production compared with all
cattle inventory, 1959-80, with cow beef production
projections to 1990 . . . .. 37

11 Trigger level on United States meat imports, 1965-1980
with projections to 1990 . . . . .. 41

12 Projections of United States beef and veal production
compared with meat import trigger level under two
assumptions about inventory growth, 1980-1990. .. .42

13 United States beef and veal imports, production and
consumption, 1964-79 with projections to 1990. . 44


















AN ASSESSMENT OF THE UNITED STATES'
MEAT IMPORT ACT OF 19791


James R. Simpson


Two documents with potentially wide-reaching implications were prom-
ulgated in 1979. One was the arrangement regarding bovine meat which was
negotiated in the Tokyo Round of the Multilateral Trade Negotiations.
The other was the United States' Meat Import Act of 1979, the so-called
"countercyclical" meat import bill, signed into law on the last day of
that year by President Carter. Both documents reflect a desire to sta-
bilize, to a greater extent, the violent fluctuations that have taken
place in cattle inventory numbers and prices in many of the major beef
trading countries. The United States is the dominant country in world
trade in beef by virtue of being the world's leading producer as well
as the leading beef importer by absorbing about one third of the beef
entering world trade. Paradoxically, the United States also has the
potential to become a leading exporter of "high quality" beef. Further-
more, there is evidence that the United States is a price maker at the
international level as a result of holding this dominant position. Con-
sequently, a major change in its meat import law can be expected to have
a tangible influence on international trade in beef, and the policies set
by both beef exporting and importing countries.





This publication reports the synopsis of seminars presented at the
Bureau of Agricultural Economics, Government of Australia, by Dr. Simpson
in September 1980. The author is'grateful to a number of Bureau staff
for their suggestions and review of earlier drafts. Any errors are, of
course,,jhe sole responsibility of the author.

JAMES R. SIMPSON is associate professor of food and resource economics.










INTRODUCTION


The purpose of this study is to analyze the potential effects of the
new United States meat import law under two racially different assump-
tions about buildup in United States cattle inventory. Particular emphasis
is placed on drawing together, in one document, all of the data required
for such an analysis. This study goes beyond the earlier work of Weeks
[1979] and the documents prepared by the U.S. Congress [1979] for,its
hearings in which the concern was a comparison with the 1964 law. It
also builds on the work of Reeves [1980], Nelson, et al. [1980] and
Conable [1980] in which they clarify and examine various aspects of the
new law. Great complementarity is found in this study and ones done by
Reeves [1979], and Longmire, Main and Reynolds [1980] who have been con-
cerned with econometrically modeling structural relationships in the beef
business between Australia and the United States. Finally, the results
of this study will prove useful for further refinements of work on trade
being done by Adams [1980], and for developing means by which the GATT
Secretariat can provide a more useful service in the bovine meat arrange-
ment.

THE GATT ARRANGEMENT REGARDING BOVINE MEAT


The arrangement on bovine meat, effective January 1, 1980 for those
participating countries that have accepted it, is designed to promote the
expansion and ever greater liberalization and stability of the inter-
national meat and livestock market [U.S. Congress, 1979a]. This is to
be carried out by the Secretariat of the arrangement (the GATT Secretariat)
regularly monitoring variations in market data to permit early detection
of the symptoms of any serious imbalance in the world supply and demand
situation.
The Secretariat is instructed to maintain an inventory of all me --
affecting trade in bovine meat and live animals. This is to be done by
creating an Intermational Meat Council which is to meet twice a year and,
as a result of its deliberations, provide an evaluation of the world
supply and demand situation, and outlook. If the Council finds evidence
of a serious imbalance or a threat thereof in the international meat
market, they are instructed to "identify, for consideration of governments,










INTRODUCTION


The purpose of this study is to analyze the potential effects of the
new United States meat import law under two racially different assump-
tions about buildup in United States cattle inventory. Particular emphasis
is placed on drawing together, in one document, all of the data required
for such an analysis. This study goes beyond the earlier work of Weeks
[1979] and the documents prepared by the U.S. Congress [1979] for,its
hearings in which the concern was a comparison with the 1964 law. It
also builds on the work of Reeves [1980], Nelson, et al. [1980] and
Conable [1980] in which they clarify and examine various aspects of the
new law. Great complementarity is found in this study and ones done by
Reeves [1979], and Longmire, Main and Reynolds [1980] who have been con-
cerned with econometrically modeling structural relationships in the beef
business between Australia and the United States. Finally, the results
of this study will prove useful for further refinements of work on trade
being done by Adams [1980], and for developing means by which the GATT
Secretariat can provide a more useful service in the bovine meat arrange-
ment.

THE GATT ARRANGEMENT REGARDING BOVINE MEAT


The arrangement on bovine meat, effective January 1, 1980 for those
participating countries that have accepted it, is designed to promote the
expansion and ever greater liberalization and stability of the inter-
national meat and livestock market [U.S. Congress, 1979a]. This is to
be carried out by the Secretariat of the arrangement (the GATT Secretariat)
regularly monitoring variations in market data to permit early detection
of the symptoms of any serious imbalance in the world supply and demand
situation.
The Secretariat is instructed to maintain an inventory of all me --
affecting trade in bovine meat and live animals. This is to be done by
creating an Intermational Meat Council which is to meet twice a year and,
as a result of its deliberations, provide an evaluation of the world
supply and demand situation, and outlook. If the Council finds evidence
of a serious imbalance or a threat thereof in the international meat
market, they are instructed to "identify, for consideration of governments,













possible solutions to remedy the situation consistent with the principles
and rules of GATT" [p. 591].
The arrangement, which is designed to remain in effect for three
years with three year extensions, is useful as a policy document, and
the Council can potentially fulfill an extremely important function if
guidelines can be promulgated for specific ways in which forthcoming
supply anddemand imbalances can be corrected. Such action requires a
thorough understanding of causes for international market disequilibrea.
In addition, long-term projections of production, consumption and trade
are necessary to design realistic recommendations to involved governments.
The next section provides background on world production, and one of the
most destabilizing influences--cattle cycles.

WORLD CATTLE CYCLES


Cattle cycles, defined as the period from one low point in cattle
numbers to the next low point, have become one of the most disrupting
factors in all phases of the livestock industry in countries which are
major beef importers and exporters. The United States probably has the
longest history of regular cattle cycles of any country in the world as
cycles have been traced out since the late 1800s. The lowest inventory
in the last cycle (number 8) was January 1, 1979, so that 1980, the first
year of increasing numbers, is the beginning of a new cycle. Although
the true definition of the cattle cycle refers to inventory numbers,
price cycles accompany the inventory changes.
The five United States' cycles since 1930 are shown in Figure 1.
The shaded sections are periods of herd rebuilding while the other areas
are the deceleration phase during which liquidation takes place. The
cycles since World War II have run about 10 years with the last cycle of
12 years being an exception. The primary reason for the added length of
that cycle is the ferocity with which prices increased in the 1973-74
period coupled with the rapid, spectacular, drop in 1974-75. The up-swing
of United States cattle cycles has varied from six to eight years while
the down-side--the liquidation or deceleration phase--takes about four
years.

















Cattle and Calves on Farms January 1 Price Received by Farmers for Beef Cattle
MILLION S/CVVT
140 4- 7 -- 70









8 0 __. ---- -- --4_

120 6_-- - 30


Received ____--_ -
o40 ~-~-7 Z2___20

2 __----_ 10



0 I Ii I I I I I I I I it i" t1 I : I I I1 II1 I 0
1930 40 50 60 70 80

Protected range




Figure l.--Cattle cycles, prices and inventory since 1930


Source: [USDA, August 1978, Farmers' Newsletter: Livestock, with data for
later years added].
40F -20-
















later years added].









5


Cattle Cycles: An Explanation


Cattle cycles are the result of a lagged response in production to
a favorable or unfavorable profit situation. For example, about 2-3 years
after beef prices fall, there is sufficient cattle liquidation such. that
a relative shortness of supply develops. Prices are bid up slowly at
first, and then more rapidly. As cattlemen become more optimistic they
start to hold from market heifers which causes prices to advance even
more. The initial price spurts take place in items such as ground beef
which are primarily related to nonfed cattle. Prices of lower grades of
beef start up, followed by higher priced cuts. Signals of optimism are
flashed through the industry as slaughter cattle prices improve. Cattle
feeders bid up feeder cattle reckoning that fed cattle prices will advance
along with nonfed beef.
Price cycles are inversely related to inventories (Figure 1). The
production cycle lags behind the turning point in inventory numbers by
about two years while the turning point in cow numbers falls behind the
turning point in feeder prices from zero to two years. The final result
is that the production cycle follows prices by as much as four years.
As confidence develops in the industry that a new cycle has really
begun, those producers who have resources available for new or additional
livestock production hold back even more females they might have sold, or
invest in breeding stock, which causes prices to increase even more and
the price-inventory spiral is firmly established. This holding action
signals the beginning of the "buildup" or "acceleration" phase. The lag
between producers' decisions to increase cattle numbers and the actual
increase in numbers may be from about three to five years. Inventory
numbers eventually reach a point where an equilibrium is reached between
production (essentially slaughter) and consumption. But, by this time
the breeding herd, i.e., production capacity or capability, is overextended
and, as the supply curve continues to shift out, prices start to drop.
Heavy selling then begins and prices rapidly drop as breeding herd liq-
uidation begins.
The major variable related to changing cattle numbers is a biological
one. Suppose that a rancher decides to increase production by holding
back ranch-raised females. There is a nine-month gestation period and a
15 to 24 month grow-out before a heifer enters the breeding phase. Then,












after that heifer is bred, there is another nine-month gestation, and
another 15 to 36 month grow-out period before her progeny becomes beef.
In areas of intensive beef production, such as Europe or the United States,
there is a four year time lapse. In extensive operations such as those
found in Argentina or Australia, where cattle are finished on forage, it
can take six years from the time a decision is made to increase herd
numbers until the additional beef is ready to eat. On the down side the
only way to reduce cattle numbers is by increased cattle slaughter.
There are other impacts on cattle cycles such as climatic factors,
competing meat supplies, and social, political and economic instability.
Also, worldwide depressions or domestic recessions, and the so-called
"energy crisis" influence cycle severity and length. Nevertheless the
major factor is a biological one which is related to decisionmaking based
on price changes [Simpson, 1978].

International Cattle Cycles


European cattle inventories, as well as those in Australia, New
Zealand and several Latin American countries appear to be strongly
associated with the United States cycle, at least during the past 30
years.a A hypothesis could be advanced that this occurs because of the
United States importing nearly one third of the beef entering world trade.
Figure 2, for example, shows that the United Kingdom has a beef cycle,
with the 1975 high point in numbers corresponding quite well with the
United States peak at that time. The subsequent declines have also
paralleled each other. Australian inventories, which have doubled since
a 1966 low, peaked out in 1976 with declines since that time. Further-
more, there is a strong relationship between the United States and
Australian turning points as far back as 1953. Although New Zealand has
a strong dairy orientation, her inventories have about doubled in the
past 20 years with the most recent peaks also corresponding to the United
States cycles.


2It has been argued there is no Australian cycle because there are
no long-term (more than 20 or 25 years) regular fluctuations. The same
argument probably could be made for nearly all other countries. But,
the important factor for trade policy is that an apparent cycle has
developed over the past 30 years.







































I I0 -
S11United States




. 100-




C 90 Low point
--- U.S. cycle %
S40
4J

30
-.


Australia /
20 -

United Kingdom .-.

10 -- *

. . . . . . . .

New Zealand

1950 52 54 56 5 610 62 64 66 68 2 74 76 lB


Figure 2.--Cattle inventories of Australia, New Zealand, United Kingdom
and United States, 1953-1980
Source: Compiled from various issues of USDA, Livestock and Meat.











It is much more difficult to trace out cycles for European countries
like France and West Germany as most European cattle production is charac-
terized by a mixed milk/beef system with substantial numbers of dual
purpose cattle which provide both milk and meat. In some countries such
as France and Italy, the milk/meat production system co-exists with
specialized beef production. Nevertheless, beef cattle numbers in Europe
as a whole have paralleled the United States quite well (Figure 3). Both
areas had significant rises from 1971 up to 1975, with declines ever
since. The EEC has also followed the United States pattern fairly well
despite the very high levels of protection both in the form of quotas
and producer subsidies. The major inventory changes are in countries
with the largest composition of beef type herds.
There does not appear to be a beef cycle for South America as a
whole (Figure 3). On the contrary, cattle numbers have increased dra-
matically and constantly, from about 140 million head in 1960 to over
210 million head in 1980. The main country responsible for the increase
is Brazil, which has accounted for approximately two-thirds of the total
cattle increase in South America. There is no Brazilian cycle although
cycles corresponding to United States inventory changes can definitely
be traced out for Argentina and Uruguay, the two largest South American
beef exporters. The Argentine cattle cycle is largely related to weather
and government policy although inventory numbers follow patterns similar
3
to the United States. Long-term cycles cannot be traced out for other
Latin American importing and exporting countries such as Costa Rica,
Honduras or Nicaragua, despite the close market ties they have with the
United States, largely because inventory estimating procedures are less
than satisfactory, and there are weather and internal economic conditions
and policies that override the external cyclical influence [Simpson and
Farris, 1982].
The conclusion which can be drawn is that many of the larger import-
ing and exporting countries have well-developed cycles and that their
inventory changes have become more pronounced since the United States
instituted their beef import quotas in 1964. Given the close relationship


3It is possible to trace out some shorter term (4-7 years) regular,
apparent, fluctuations in inventory numbers for many Latin American coun-
tries such as Colombia by studying changes in slaughter levels and
relating these to inventory levels.





































: 140
0 Low point
U.S. cycle .
fi Europe
Sz120o- --- /

*" --.
S* "* ." United States
S100 -



80


60..**.............
.**.*'*'**, ..*
60 ..*-" *" '
EEC


40



0
1950 52 54 56 58 60 62 64 66 68 70 72 74 76 78

Figure 3.--Cattle inventory of Europe, EEC, Argentina and South America
compared with the United States, 1953-1980

Source: Compiled from various issues of USDA, Livestock and Meat.










in turning points it appears likely that the United States is a leader
in price making and inventory adjustment in the major beef exporting
countries. This is also supported by the slight lead of United States'
prices on other countries prices [Hinchy, 1978].

THE MEAT IMPORT ACT OF 1964

The first major piece of United States meat import quota legislation
was the Meat Import Act of 1964'(P.L. 88-482), a law which was enacted
to curtail the rapidly increasing imports of beef.4 A copy is presented
as Appendix I.
The formula used for determining the adjusted base quantity (annual
quota) under the 1964 law was:
3 year moving average of
Average domestic beef production
Annual annual x
quota imports 5 year average (1959-63) of
(1959-63) domestic beef production
The 5 year-average, 1959-63,' used in the formula, was 14,703 million
pounds. United States beef production (commercial, i.e., excluding farm
production) increased from about 13 billion pounds (carcass weight basis)
in 1959, to 25 billion pounds in the late 1970s (Table 1). The table
also gives production of veal, mutton and goat meat, the sum of which
provides the total which was subject to the 1964 meat import law. Beef
and veal accounted for about 99.6 percent of the total meat subject to
the law in the early 1960s, and increased to 99.9 percent by the late
1970s. Only beef and veal are used in the projections given in later
sections.
Total United States meat imports increased almost continuously from
about 800-900 million pounds (product weight basis) to 2.1 billion pounds
in 1979 (Table 2). Beef and veal remained about three quarters of all
meat imports over most of this period, increasing to 80 .percent of meat
imports in the latter 1970s.


4United States' beef imports increased from less than 50 thousand
metric tons in the mid 1950s to 238 thousand tons in 1959, 258 thousand
tons in 1961, 392 thousand tons in 1962 and 448 thousand tons in 1963.
This was partially the result of a rapidly growing United States market
in terms of population and per capital income. On the supply side, the











Table l.--United States production of beef, veal, mutton and goat, and total
meat subject to the 1964 meat import law, carcass weight basis,
1959-1979 with estimates for 1980


Commercial productiona Total subject Beef and veal
to meat as proportion
Year Beef Veal Mutton Goat import 141 of total

-------------------Million lbs------------------- Percent

1959 13,233 929 35 14 14,211 99.66
60 14,374 1,025 47 15 15,461 99.60
61 14,930 960 47 17 15,954 99.60
62 14,931 936 50 18 15,935 99.57
63 16,049 847 42 14 16,952 99.67
64 18,037 928
65 18,325 936 Not available
66 19,493 862
67 19,991 749
68 20,662 696 37 27 21,422 99.70
69 20,960 640 39 22 21,661 99.72
70 21,472 558 38 29 22,097 99.70
71 21,697 516 43 25 22,281 99.69
72 22,218 429 36 18 22,701 99.76
73 21,088 325 44 16 21,473 99.72
74 22,844 442 30 14 23,330 99.81
75 23,673 827 29 12 24,541 99.82
76 25,667 813 23 11 26,514 99.87
77 24,986 794 28 12 25,820 99.85
78 24,010 600 20 11 24,641 99.87
79b 21,141 412 19 11 21,583 99.86
19: c 20,925 320 20 11 21,276 99.85

1959-63 14,703 939 44 16 15,703 99.61
63-77 22,527 604 35 18 23,184 99.77
78-80 22,500 --


aSource: [USDA, 1973-79[ and communications with personnel of the National
Economics Division, ESCS-USDA. This is the data series used in formula computation.
Includes only commercial production (i.e., excludes farm production).

bEstimated (USDA).


CForecast (USDA).


















Table 2.--United States beef and veal imports, pro--:t weight basis, 1959-1979a


Ir::rts--b~ef and veal
T-- -al, Beef and veal
Fresh or Canned beef Other prepared Other all meat as a percent of
Year frozen and sausage and preserved Subtotal meat imports all meat imports

---------------------------. -Million lbs-------------------------------- Percent

139 524.5 94.7 103.2 722.4 233.9 *>. 3 75.5
60 413.8 76.5 22.2 512.5 222.9 735.4 70.0
.61 569.0 95.6 24.8 689.4 231.6 921.0 74.9
62 860.0 83.7 23.7 967.4 285.0 1,252.4 77.2
63 "985.3 113.5 22.8 1,121.6 300.9 1,422.5 78.9
64 706.5 83.6 10.4 800.5 268.4 1,068.9 74.9
65 585.5 92.8 22.7 701.0 323.9 1,024.9 68.4
66 764.8 93.6 34.9 893.3 401.2 1,294.5 69.0
67 841.8 98.0 39.3 979.1 397.6 1,376.7 71.1
68 940.4 118.0 69.7 1,058.4 502.0 1,560.4 67.8
69 1.03?.3 117.6 66.7 1,216.6 442.0 1,658.6 73.4
70 1,;.. 119.5 74.0 1,350.2 469.3 1,819.5 74.2
71 1,141.9 92.5 76.2 1,310.6 455.9 l,7.6.5 74.2
72 1,324.2 100.5 56.2 1,480.9 516.9 1,997.8 74.1
73 1,348.5 93.9 54.3 1,496.7 464.2 1,960.9 76.3
74 1,078.7 94.0 45.2 1,217.9 405.2 1,623.1 75.0
75 1,210.5 63.8 40.4 1,314.7 372.6 1,687.3 77.9
76 1,299.0 118.8 68.3 1,486.1 371.6 1,857.7 80.0
77 1,237.2 95.1 56.5 1,388.8 345.6 1,734.4 80.1
78 1,489.3 105.1 61.3 1,655.7 404.2 2,059.9 80.4
1979 1,572.9 103.7 60.9 1,737.5 431,4 2,168.9 80.1


various Sipple cents,


Source: Beef and veal imports and all meat imports from 1959-62 from [L'SC-, 19583, 1-23-7 from
[USDA, 1978]; 1977-79 from [USDA, 1979 and 1980].


aTotals are slightly different than those shown in Livestock and Meat Statistics,
due to rounding errors in converting from metric units to pounds.












United States meat imports and actions taken under the Meat Import
Act of 1964 are given in Table 3. The actual imports subject to the act
increased from 614 million pounds (product weight basis) in 1956 to 1.5
billion pounds in 1979. Import quotas were only imposed in 1 of the 15
years in which the law was in effect although they were imposed and then
suspended in 5 other years. The data are graphed in Figure 4.
The formula in the 1964 law to determine the quota level requires
an estimate of the average annual imports from 1959-63. This number,
calculated at 725,400,000 pounds, plus the 14,703 million pound average
U.S. production level for that period are the two pieces of data, in
addition to the 3-year moving average of domestic beef production, which
were used to calculate the quota. The quota was set ex-ante, given its
purpose of determining the amount of meat which can be imported, so the
results of using ex-post data will not exactly equal the adjusted quota
level shown in Table 3. The term "adjusted" refers to the quota level
after any presidential action during that year, and not to an actualiza-
tion of estimated with actual production levels used in the formula.
The 1980 meat quota would be calculated as follows if the old law
were still in effect. Considering all volumes in millions of pounds,
then:
22,500
Annual = 725.4 x 2
quota 15,703
= 725.4 (1.4328)
= 1,039 million pounds

The trigger level, at 10 percent above, would be 1,143 million pounds.






widespread adoption of feedlots resulted in a shift toward a higher fat
to lean ratio in slaughter cattle, thus increasing the demand for lean
beef. On the trade side, improved refrigeration facilities permitted
long distance shipments from Oceania. Also, in the early 1950s, Mexico,
Central America and Panama were declared free of hoof-and-mouth disease,
and thus eligible to ship uncooked beef to the United States. It only
took a few years for the Central American countries to take advantage of
this change in status and begin shipping to the United States. The South
American countries are still considered to be hoof-and-mouth disease
endemic and thus can only ship cooked beef to the United States [Simpson,
1980].



















Table 3.--United States meat imports (product weight basis), and actions taken under the Meat Import Act of 1964


Adjusted base Trigger Actual
Year quantity level imports Import program

1965 848.7 933.6 613.9 No restrictions.
1966 890.1 979.1 823.4 No restrictions.
1967 904.6 995.1 894.9 No restrictions.
1968 950.3 1045.3 1001.0 Formal VRA's with Australia and New Zealand negotiated in August; other
exporters asked not to exceed scheduled shipments.
1969 .988.0 1086.8 1084.1 VRA's negotiated with all suppliers except Canada and the United Kingdom.
1970 998.8 1098.7 1170.6 VRA program negotiated below trigger level; quotas imposed and suspended
at midyear and new restraint levels established for participating coun-
tries. Section 204 used to control transshipments through Canada.
1971 1025.0 1127.5 1132.6 Quotas imposed and suspended; VRA program negotiated at revised 1970
level.
1972 1042.4 1146.6 1355.5 VRA program negotiated, but program suspended at midyear to encourage
imports.
1973 1046.8 1151.5 1355.6 Quotas imposed and suspended; no restrictions.
1974 1027.9 1130.7 1079.1 Quotas imposed and suspended; no restrictions.
1975 1074.3 1181.7 1208.9 VRA program negotiated with most supplying countries.
1976 1120.9 1233.0 1231.7 VRA program negotiated, but quotas required in last quarter.
1977 1165.4 1281.9 1250.2 VRA program negotiated, supported by letter of understanding, with Canada.
1978 1183.9 1302.3 1485.5 VRA program negotiated at beginning of year, but, quotas imposed and
suspended to allow a 200-million-pound increase in the VRA program in June.
1979 1131.6 1244.8 1533.7 Quotas imposed and suspended, VRA program negotiated above trigger level.
1980 1516.0 1667.6 No restrictions.


aP.L. 88-a42 from 1965, replaced by P.L. 96-177 in 1980.

bCountercyclical law (P.L. 96-177) in effect.

source: [Conable, Daniel B., 1980].



















/
Imports subject
I to Meat Act
I
I
I
I
I

S Trigger level


Adjusted
quota


'I
'I
'I


1964 65 66 67 68


.72 73 74 75 76 77 78 79 1980


Figure 4.--United States meat import quota,
actual imports, 1965-1979


Year


trigger level and


Source: Table 3.


1,600 -


1,500 -

1,400 .


1,300 .


1,200


1,100


1000


900

800


700 -


600 -
4


I I I -










THE MEAT IMPORT ACT OF 1979


It became apparent rather quickly that the 1964 law had some de-
stabilizing effect, as imports were positively related by formula to
production so that as production increased so did imports; exactly the
opposite situation which logically holds for promoting price and produc-
tion stability. The financial disaster invoked upon United States cattle-
men by the 1973-74 price crash along with clear recognition of consumer
anger over rapid rises in prices in early 1973 just before the crash,
as well as the impact of wage and price controls on the cattle industry
during 1971-73, brought the necessary impetus to have Congress take action
on a so-called "countercyclical" meat import bill. One bill, H.R. 11545,
the so-called Meat Import Act of 1978, was vetoed by President Carter
because it would have severely restricted presidential authority to
increase meat imports outside the formula. In addition, the import floor
of 1.2 billion pounds was considered by the president to be unduly low.
Immediately after the president's veto a large number of bills were
introduced, with the final one adopted being H.R. 2727 introduced by
Representative Ullman. Outside the United States the new law is generally
called the "Ullman Document." After considerable political maneuvering,
the president signed Public Law 96-177 into law on December 31, 1979,
just a few hours ahead of the deadline required to make it become effective
for 1980. The law is shown in Appendix II.
The Meat Import Act of 1979 (PL 96-177) provides a compromise on the
earlier bill by allowing the president to suspend any proclamation in the
act or increase the total quantity of imported meat by giving 30 days
notice through publication in the Federal Register. The bill, which has
a floor of 1,250,000,000 pounds, would permit more imports of meat over
the cattle cycle than under the 1964 law provided presidential intervention
is not taken into account. The new law was designed to permit.greater
imports of meat when domestic supplies are low and consumer prices high,
thus supposedly moderating the rise in beef prices. Finally, it is
intended to reduce meat imports when domestic supplies are abundant and
consumer prices low, thus purportedly moderating the decline in prices
for producers.
The law covers fresh, chilled or frozen cattle, goat and sheep meat.
Lamb and pork are excluded as are cooked, preserved and prepared meats












and "high quality" beef specially processed into fancy cuts. However,
non-cooked portion control and prepared meats are included in the formula.
A major change is the exclusion of live cattle imports (other than breeding
stock) as part of the quota.
The new formula for determining the annual import quota is computed
as follows:


Average
annual
= imports
(1968-77)


3-yr. moving average
of domestic production

10-yr. average of
domestic production
(1968-77)


5-yr. moving aver-
age of domestic
cow beef production
x
2-yr. moving average
of domestic cow beef
production


The average annual imports of meat subject to quota for 1968-77 has
officially been set at 1,204.6 million pounds (546,304 metric tons).
The 10-year average of domestic production of quota meats for 1968-77
is 23,184 million pounds (Table 1). From this the total carcass weight
of live imports for 1968-77 (220 million pounds) is subtracted (Table 4).
The moving average of domestic production of quota meats (1978-80) is
22,500 million pounds (Table 1) from which the average total carcass
weight of live cattle imports for that period must be subtracted (Table 4).
The 5-year moving average of domestic cow beef production, calculated on
a per capital basis, is 17.4 pounds, while the 2-year moving average (1979-80)
is 13.4 pounds (Table 5). The result is that the formula for the 1980
quota more specifically becomes:


Average
annual
imports
(1968-77) x


3-year moving average of domestic
production of quota meats (1978-
1980) minus 3-year moving average
of total carcass weight of live
cattle imports (1978-80)

10-year average of domestic pro-
duction of quota meats (1968-77)
minus 10-year average total car-
cass weight of live imports
1968-77


5-year moving aver-
age of per capital
domestic cow beef
supply (1976-80)
x
2-year moving aver-
age of per capital
cow beef supply
(1979-80)


which, in millions of pounds is:
22,500 243 17.4
AQso= 1,204.6 x x-
23,184 220 13.4


Annual
quota


Annual
quota










Table 4.--United States live cattle imports, 1968-1979


Head imported
Total Average
Under 200 200-699 700 pounds carcass weight weight
Year pounds pounds and over Total equivalentsb per head

-------------------- Number-------------------- 1,000 Ibs Lbs

1968 147,396 802,547 58,509 1,008,452 213,866.5 212.07
69 159,143 792,356 46,679 998,178 197,983.3 198.34
70 168,933 906,992 31,824 1,107,749 214,778.4 193.89
71 158,689 748,873 25,583 933,145 177,131.8 189.82
72 173,336 939,168 31,363 1,143,867 222,093.5 194.16
73 143,825 779,990 77,260 1,001,075 226,224.2 225.98
74 77,602 413,777 55,308 546,697 129,966.0 237.73
75 10,145 220,851 161,932 382,928 150,534.6 393.11
76 119,814 562,707 290,098 972,619 315,490.3 324.37
77 133,067 731,149 257,294 1,121,510 349,295.0 311.45
78 154,972 873,519 211,280 1,239,771 352,659.8 284.46
79 146,133 430,726 137,467 714,326 139,801.5 195.71
1980 235,195.0

Average
1968-77 921,572 219,736.4 238.44
1978-80 242,552.1


[National Cattlemen's Association, 1980].


(Data do not include breeding stock.)


bounce: Data from National Economics Divison, ESCA U.S. Dept. of Agriculture.
Source: Data from National Economics Divison, ESCA U.S. Dept. of Agriculture.


aSource:














Table 5.--United States cow beef production per capita,'beef production, and cow beef production per head of inventory,
1960-1980


Number
slaughtered
1,000 head
4,441
4,033
4,250
4,154
5,324
6,645
6,120
5,540
5,785
5,998
5,373
5,627
5,402
5,659
6,794
10,421
9,704
9,129
7,912
5,546
HA


Average
dressed weight
Lbs

503.7
499.9
498.5
502.6
501,7
478.3
484.3
499.1
497.0
502.9
510.6
509.7
518.9
515.1
493.7
477.3
487.0
472.7
489.1
518.7
NA


Total
production
,Million Ibs

2,236.9
2,016.1
2,118.6
2,087.8
2,671.1
3,178.3
2,963.9
2,765.0
2,875.1
3,016.4
2,743.5
2,868.1
2,803.1
2,915.0
3,354.2
4,973.9
4,725.8
4,315.3
3,869.8
2,876.7


United
States
Population
Millions

178.1
181.1
183.7
186.5
189.1
191.6
193.4
195.3
197.1
199.1
201.7
204.3
206.5
208.1
209.7
211.4
213.0
214.7
216.6
218.5
220.5


aFederally inspected.

bForecast.

Source: Cow beef production data provided by National Economics Division, ESCS USDA. United States population
data from (total civilian population 50 states) [USDA, 1980].


1960
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
1980

Avg. 1976-80
Avg. 1979-80


Cow beef
production
per head of
inventory
Lbs
23.2
20.6
21.1
20.0
24.8
29.2
27.2
25.4
26.3
27.4
24.4
25.0
23.8
24.0
26.2
37.7
36.9
35.1
33.3
25.9


Per capital
cow beef
production
Lbs
12.6
11.1
11.5
11.2
14.1
16.6
15.3
14.2
14.6
15.2
13.6
14.0
13.6
14.0
16.0
23.5
22.2
20.1
17.9
13.1
13.7

17.4
13.4












which means
AQao= 1,204.6 x 0.9692 x 1.2985

from which
AQo8= 1,515.9966 or 1,516 million pounds

Thus, the trigger level = 1,515.9966 x 1.1 = 1,667.5962 or 1,668 million
pounds.

A "positive quotient (greater than one) means that imports can
increase. Section (h) stipulates that the president may suspend the
quota by giving 30 days notice (if certain conditions are met) when the
quotient is positive, but the president may not increase the quota when
the quotient is "negative" (less than one) except under quite stringent
circumstances (see Appendix II).

Live Cattle Imports


As noted, the 1979 law requires that the average carcass weight of
commercial (excluding breeding stock) live cattle imports be subtracted
from the 3 and 10 year averages of domestic production in the first part
of the formula. The effect of adding this quantity in is to decrease the
size of the coefficient. Excluding live cattle imports means the 1980
quota would have been about two million pounds higher than it actually
was.
United States live cattle imports have varied in direct proportion
to U.S. cattle prices. In 1974-76, a period when prices were quite low,
numbers were down to about 400,000 head as compared with 1.2 million head
in previous years. Most cattle weigh 200-699 pounds and are destined for
backgrounding on pastures or go into feedlots (Table 4 and Figure 5). As
United States prices increased, live cattle imports also increased sub-
stantially, with a record number being imported in 1978. Then, in 1979,
imports suddenly declined as Mexico, the principal exporter of live cattle
to the United States with about 55-65 percent of all commercial cattle


5For 1980., the coefficient under the law was 0.9692, while it would
have been 0.9705 if live cattle imports were not included. The net result
of including live cattle imports would-have been a quota of 1,518.03
million pounds:or 2.03 million pounds more allowable imports. This is
an increase of-about 0.1 percent.



















1,300


1,200


1,100 Total


1 ,000 -

900 -


800 -


700 -

600 -


500 -
500 200-699

400 -


300 -
Under 200 /
2.00 /


100 -



1968 69 70 71 72 73 74 75 76


Figure 5.--United States live cattle imports, 1968-1979

Source: Table 6.


77 78 1979
Year












imports (Table 6), changed policies in response to impending beef imports.
This situation has developed due to a relatively stagnant production, but
rapid increase in consumption resulting from high population growth and
improvement in real per capital incomes. Furthermore, since 1955, the
relation in Mexico between cattle inventory and population has declined
from 0.675 cattle per person in 1955 to 0.451 cattle per person in 1979
.[Banamex, 1979].
The decision to allocate export licenses is a political decision and
thus subject to reversal, but it appears likely that Mexico will concen-
trate on expanding their feedlot industry and will hold export numbers
down to a minimum, only permitting cattle from the most northern areas
to enter the U.S. The result would be cattle imports from Mexico and
Canada of approximately 400,000 head, or about 160 million pounds carcass
weight.
If trade in live cattle declines, there is an increase in the amount
of meat which can be imported. As an example of the impact, if the 3
year moving average (numerator) in the quota formula for 1980 were at
160 million pounds rather than the 243 million pounds established by USDA
for 1980, then the coefficient for that part of the formula would be
0.9728 rather than 0.9692. The net result is that the 1980 quota would
be 1,521.6 million pounds or about 5.6 million pounds more than the actual
quota. However, this is only about a four tenths of one percent increase
in the quota level; i.e., a relatively large error in the coefficient
would have little impact on the final quota estimate. Overall, if less
live cattle are indeed imported, more carcass beef can enter. Subtracting
the 160 million pounds from 243 million gives 83 million which, when addec
to 6 million more imports, means that about 90 million more pounds should
be available to other suppliers during the 1980s, roughly an increase of
5-6 percent depending on the year analyzed.

PROJECTED EFFECT ON THE UNITED STATES OF THE
1979 LAUI VERSUS THE 1964 LA!

Prior to assessing the impact at the world level from the 1979 law,
it is necessary to make an estimate of the effect on the United States.
A good base to start from is a report by the House of Representatives
Ways and Means Committee which was made to the full House. Part of this
document [U.S. Congress, p. 9] contains a comparison of the imports which



















Table 6,--United States live cattle imports from Mexico and Canada, 1968-79


Canadian feeders Mexican feeders
Canada as a percent of Mexico as a percent of
Total all cattle all cattle
Year cattle imports Feeders Other Total imported Feeders Other Total imported


--------.--.Head----------Hea--- -------- Percent ---------Head------------ Percent

1968 1,008,452 306,117 30,514 336,631 30 702,308 164 702,472 70
69 998,178 187,733 43,529 231,262 19 810,387 65 810,452 81
70 1,107,749 170,947 59,874 230,821 15 936,583 0 936,583 85
71 933,145 180,721 57,319 238,040 19 752,209 232 752,441 81
72 1,143,867 227,850 42,526 270,376 20 915,767 62 915,829 80
73 1,001,075 330,340 33,642 363,982 33 672,654 192 672,846 67
74 546,697 111,266 21,529 132,795 20 434,700 43 434,743 80
75 382,928 183,390 8,660 192,050 48 196,043 37 196,080 52
76 972,619 448,156 26,960 475,116 46 507,768 49 507,817 54
77 1,121,510 527,520 11,166 538,686 47 593,996 60 594,050 53
78 1,239,771 424,756 12,803 437,559 35 815,015 0 815,015 65
1979 714,326 333,946 17,902 351,848 47 379,949 48 379,997 53


Source: Unpublished data developed by Foreign Agricultural Service, USDA.











would be allowed at the quota trigger level (formula plus 10 percent)
under the 1964 and 1979 laws for the period 1980 through 1989. These
estimates run through 1989 with the assumption that the buildup or accel-
eration phase of the cycle continues through 1985, at which time there is
a Wudden increase in production (which is essentially slaughter) resulting
from primary producers culling their breeding herds quite heavily. Under
the 1964 law, production would have increased through 1988 and, since
imports were positively related to production, the trigger level would
have registered a modest decline in the early 1980s, but would have picked
up after that.

Data for the Projections


The 1979 law allows for substantially more imports in the early 1980s
than would have taken place under the 1964 law due to its countercyclical
nature. In fact, the trigger level in 1980 is 506 million pounds higher
than it would have been under the 1964 law (Table 7). This net advantage
declines gradually until 1985 when the trigger level would have been
slightly higher under the 1964 law. The net result for the period 1980-89,
according to the House Ways and Means document, is that total imports for
the 10 year period 1980-89 would be 1.2 billion pounds higher under the
1979 law than under the 1964 law. Apparently, this would benefit con-
sumers by providing a greater supply of beef, domestic producers would
benefit by a reduction in the amplitude of the cattle cycle, and countries
exporting to the United States would be better off as more of their product
would be taken. There is, however, considerable concern by some exporting
countries that exporters would be worse off rather than benefiting.
An analysis of the impact the "Ullman document" will have on beef
trading nations can be carried out using either historical data or projec-
tions of future events. Various specialists concerned with world trade,
in determining the net benefits on exporting countries from the Act, have
applied it to the 1973-75 period, a time which was disastrous for both
U.S. and foreign producers and traders, because of the price declines and
prolonged levels of low prices. The argument is that under the 1964 law
the U.S. actually absorbed more beef in 1974 (1,200 million pounds) than
in 1973 (1,1151.1 million pounds) despite the price slide, because of
U.S. imports being positively correlated with production. In other words,












Table 7.--Comparison of United States meat imports subject to the meat
import law, under the 1964 and 1979 laws, from 1980 to 1989


Imports (Trigger level)

1964 1979 Difference
Year law law 1979 law-1964 law


----------------Million Ibs----------------


1,687.43
1,507.44
1,388.78
1,333.40
1,305.67
1,290.18
1,246.57
1,240.45
1,439.84
1,714.16


1965
66
67
68
69
70
71
72
73
74
75
76
77
78
79

80
81
82
83
84
85
86
87
88
89
Total


(The historical


933.6
979.1
995.1
1,045.3
1,086.8
1,098.4
1,127.5
1,146.6
1,151.1
1,200.0
1,181.7
1,233.0
1,281.9
1,302.3
1,244.8

1,180.71
1,143.11
1,151.81
1,189.23
1,241.04
1,296.92
1,358.75
1,432.87
1,473.60
1,467.68


+ 506.72
+ 364.33
+ 236.97
+ 144.17
+ 64.63
6.74
112.18
192.42
33.76
+ 246.48
+ 1,216.20


Source: [U.S. Congress, House of Representatives, 1979a],
data are from Table 3.)











despite a severe drop in world trade due to reduced imports by the EEC
(as a result of substantially increased petroleum prices absorbing much
of their foreign exchange reserves) international beef prices supposedly
did not drop as much as they would have under the 1979 law. Critics of
the new law maintain that if the 1979 law had suddenly been applied at
the time, international beef trade would have been absolutely chaotic,
with prices essentially only covering transportation and handling costs.
This is because the previous bill allowed for ease of presidential inter-
vention while the president would have little authority to act under the
new bill in cases like this one. The argument is a strong one, and very
real to those people involved with trade during that period. But, there
is one aspect that could offset the new restrictions on presidential
authority--timing of the law's introduction. It is being introduced at
a time when U.S. inventories, and those in most of the countries exporting
or importing beef, are just beginning to increase (see Appendix III for
cattle inventories in the 37 major beef producing countries) and not at
a time of high inventories. In effect, since production was at a very
low level in the U.S. in 1980, then the law has a chance to become ol
thus preventing a disastrous situation from developing, especially if
careful attention is given at the international level to policies which
would act as warning signals to prevent undue herd buildup in exporting
countries.
The projections presented by the House Ways and Means Committee
documented in the last section show the relation between imports under
the 1964 and 1979 import laws are interesting, but of limited value in
discussing the effect of the law, as it is not possible to reconstruct
production levels from them. Furthermore, only one situation is presented
which precludes evaluation under various cattle inventory growth situa-
tions. As a consequence, two radically different, yet possible, national
herd growth scenarios are evaluated. The first one simulates a situation
in which cattle inventory grows in a fashion similar to the last cycle,
with a peak of 132 million head in 1986 declining to 111 million head in
1980 (Table 8). The second scenario simulates a situation in which there
is a slow increase in inventory all the way through the 1990s, with a
level of only 128 million head that year. In all likelihood, the actual
situation will fall somewhere between these two extremes. The point,
however, is testing the extent to which the quota would change under












Table 8.--Project ions of 2"nit'd StA ltes cttl :r o i, with pr-'jections to 1990,


Inventory, all cattle

Projection

iSimiliar to Slow
Historical previous cycle increase


Beef and
veal production
per head of
inventory


Inflator
or growth
rate


Inflated
production
per head of
inventory


Production per head
of inventory with projection:

Similar to Slow
previous cycle increase


MJon l --------------1000 head----------------


15,500
1' 5.,
16,896








21,413
21 .62.
' ,'";30

22,647
21,413
23,286
24,500
26,480
25,780
24,610
21,553
21,245


93,322
96,236
97,700


109,000
108,862
108,783
1 .?, :71
110,015
112,369
1 .', -2
1:1',7U

127,980

11.' ?-.


1959
60
61,
62
-63
64
65
66
67
68
69
70
71
72
73
74
75
76-
77
78
79
80
81
82
83
84
85
86
87
88
89
1990


114,000

120,000
122.000
*124,000
126,000
127,000
128,000


151.75
160.00
162.64
158.09
161.70
175.76
176.71
186.98
190.65
195,28
196.34
196,05
193.87
192.15
176.18
182.22
185.57
205.91
209.92
211,47
194.41
191.46


1.08294
1,07435
1.06582
1.05736
1.04897
3.04065
1.03239
1.02419
1.01606
1.00800
1.00000
1.00800
1.01606
1.02419
1.03239
1.04065
1.04897
1.05735
1.06582
1.07435
1.08294


.--....----------- Lbs ..--------------


212.31
208.28
204.80
186.29
191.14
193.11
213.61
215.00
214.87
195.97
191.46


191.46
200,00
206.00
211,50
215,50
219.00
222,00
224,00
226.00
209.00
207,00


191.46
205.00
212,00
216.09
220,00
224,00
227.00
230,00
232,00
234.00
235,00


aSource: Table 1.

sv,.-c' [tUSDA, ''-' .

0Based on trend in Figure 7,


Beef and
veal
'')1uct


112,000
115,000
113 CC

128,000
132,000
128,000
123,000
116,000
111,000


I-" -- ~~------












radically different situations, and nqt predicting what will actually
happen.

Production Projections

The amount of production, over the long-run, is largely a function
of inventory which, in turn, is a function of cattle.--.n's expectations
about future profits from cattle raising. Their expectations are based
on current net income, net income over the past several years, level of
interest rates, projected net profits, land appreciation values, profits
from alternative uses of land and other resources, e:-per.ctions of po"
moves, and projections of consumer demand for beef, just to mention a
few decision-making criteria. The point is that even though there are
regular cattle cycles, researchers have not been able to predict their
length or rate of annual change with any reasonable accuracy [Reeves,
1980].
The first step in determining the United States' annual meat import
quota for 1981-19'0 is projecting total production of beef and veal for
those years. Because beef and veal make up about 99.85 percent of all
:eat falling under the meat quota, beef and veal are considered to be
equivalent to the quota for purposes of this analysis. The relation
between the inventory of all cattle and total pr-3dujtion for 1959-80 is
provided in Table 8 and Figure 6. Production closely parallels inventory,
with the peak in production lcingng inventory by about one year. Total
production has been divided by inventory to arrive at production per head
of inventory, growing at an apparent rate of about eight-tenths of one
percent annually (Figure 7). This growth is a crude approximation of
technological change (including m --..3gaInt) in cattle production.6 Pro-
jections of beef productivity per head of inventory are made for the two
alternative; largely on the basis of past teids. For example, projec-
tions for the previous cycle alternative show production increasing until
1988 and declining rapidly as herd inventory reaches the bottom of the
cycle. The slow growth assumption portrays productivity continuously
above the other alternative, and growing at an .ulinterrupted rate. This


6Dairy cattle inventory is decreasing which inflates the growth rate
slightly over what it would be if only beef cattle inventory were used.










Production
based on
previous


Procd'ct 2"
based on
slow growth
in invento-
ry -
'N"


Production


inventory i
Inventory
same as
previous
cycle


- 130

- 125 |

120 o

115 1 -
a0
- 110 1

- 105 U
a
100

- 95

- 90 =


- 85


I I I I I I I I i II I


64 66 68 70


72 74 76 78 80 82 84 86 88 1990


Year


Figure 6.--Relation between production of beef and veal, and all cattle
inventory, United States, 1959-80, and projections of produc-
tion and inventory to 1990
Source: Tables 8 and 9.


Inventory


1958


~g-- -- ~1--1~111 ---


















235

230

220

210 -

200

190

180.

170

160

150

140

0

1958 60 62 64 66
1958 60 62 64 66


Slow increase
in inventory


Productivity
per head


/ Growth rate is
0.8 percent
Based on annually
previous
cycle


68 70 72 74 76 78 80 82 84 86 88 1990
Year


Figure 7.--Beef
with


production per head
projections to 1990


of cattle inventory in the United States from 1959-80












would occur since there is less incentive to hold back females early in
the cycle (inventory expands slower), but inventory continues to grow due
to herd numbers never reaching a "critical" level. The projections of
beef and veal productivity per head are multiplied by inventory projec-
tions to arrive at projections of total production (Table 9). Under the
past cycle assumption it peaks out at 29.3 billion pounds in 1986, while
under the slow growth assumption it continues to climb, reaching a maximum
of 30 billion pounds in 1990.

Cow Beef Projections

The second part of the annual quota formula requires projections of
cow beef production. The relation between the number of cows slaughtered
and the inventory of all cattle is generally positive, with no lags
(Figure 8). In the early part of the acceleration phase of the cycle,
slaughter trends down even though all cattle inventory increases rather
rapidly (Table 8). In the last cycle, inventory increased slowly from
1967 to 1969 and then accelerated rapidly with a peak in January 1975.
Cow slaughter trended steadily downward until 1973, a period of about
7-8 years.7 It is apparent that slaughter can continue downward for
the majority of the acceleration phase if there is rapid inventory buildup.
Total production of cow beef for 1959-79 (Table 5) has been divided
by total cattle inventory (Table 8) to arrive at cow beef production per
head of inventory (Table 5). The historical data show a clear upward
trend (Figure 9) which is largely due to a decline in numbers of dairy
cows as a result of rapid increases in milk production per cow, reduced
slaughter of calves (a drop of over 40 percent in the last 25 years),
increased weaning weights, higher calf crops (about a 5 percent increase
in the last 25 years), the remarkable expansion of the feedlot industry
(fed cattle increased from 47 percent of total cattle slaughter in the
middle 1950s to a high of 77 percent in the early 1970s), and increased
weights of beef carcasses [Simpson, 1978a].
Production of cow beef per head of all cattle inventory will, in all
likelihood, continue to increase during the 1980s, but probably at a



Some caution must be exercised about turning points since inventory
is for January 1, while slaughter is for the entire calendar year.

















Table9.--Projections of United States' beef and veal production, 1980-1990


Total production
Similar to Slow
previous cycle growth


3 year moving average
of domestic beef
and veal production
Similar to Slow
previous cycle growth


------------------------Million bs-------------------------


21,245
22,400
23,690
24,957
26,291
28,032
29,304
28,672
27,798
24,244
22,977


21,245
22,960
24,168
25,056
25,960
26,880
27,694
28,520
29,232
29,718
30,080


22,500
21,733
22,445
23,682
24,979
26,427
27,876
28,669
28,591
26,905
25,006


22,500
22,919
22,791
24,061
25,061
25,965
26,845
27,698
28,482
29,319
29,677


of quota:


only includes beef and veal as they make up 99.9 percent


1980
81
82
83
84
85.
86
87
88
89
1990


" ~'-~-~1--~---~


Year
































11 \ 130
I \
10 I \ 125
All cattle /\
9 inventory 'Is/ \ 120-
8 115
7 lll5 \
I / \\ S




0 4
6 105 U

4-



S* trend
1965-1973 -
3 90

2 85


1 80

0 .. 0

1958 60 62 64 66 68 70 72 74 76 78 1980
Year

Figure 8.--Relation between numbers of cows slaughtered and all cattle
inventory, United States, 1959-80

Source: Tables 5 and 8.















Inventory


All cattle
inventory


Inventory,
same as
previous
cycle


60



50



40 -



30-



20 -



10 -


Production of cow
beef per head of all
cattle inventory


based on previous
cycle


66 68 70 72 74 76 7 80
66 68 70 72 74 76 78 80


Figure 9.--Relation between cow beef production per
and-all cattle inventory, United States,


-a __ ~ .1i--~* C I I


1990


- 135

- 130

. 125

- 120 -"

.115 c

110
4-
105 3


00 m
4-

0
95
0
90 |

85

80

0

Year


head of all cattle inventory,
1959-80 with projections to 1990


Production,
based on
slow growth


1958
1958


60











slower rate than during the past 25 years. Due to a lack of studies on
this factor, two projections have been made, one in which production of
cow beef per head of inventory follows a similar growth pattern to that
found in cycle number 8, with the highest level (1986-1989) at the same
output (about 40 pounds of cow beef per head of cattle inventory) as in
1978 (Table 10). This projection corresponds to the all-cattle inventory
projection based on the past cycle. The second projection involves a
slow growth in inventory and, as a consequence, production of cow beef
per head of inventory increases continuously during the entire period,
reaching a peak of 42.5 pounds in 1990. Each of the total cow beef pro-
duction projections given in Table 10 is graphed in Figure 10.

Calculations of Annual Quotas, 1981-1990


The projections of total beef production developed in Table 8 are
translated into 3-year moving averages in Table 9 for both the previous
cycle and slow growth assumptions. This data is used in the numerator
in the first term of the quota formula. In all cases, it is assumed that
the imports of live cattle are equivalent to 160 million pounds of beef
on a carcass weight basis.
Projections of cow beef production per head of cattle inventory are
multiplied by-projections of all cattle inventory to arrive at projections
of total cow beef production under each of the two assumptions (Table 10).
The formula requires that cow beef production be calculated on a per
capital basis, so each of the production projections has been divided by
projections of U.S. population to arrive at production per capital of
inventory (Table 11). From there, 5-year and 2-year moving averages are
calculated as required in the second term of the formula.


Results


The final results of the assumptions developed in the two scenarios
are given in Table 12. The trigger level (110 percent of the base quota)
is considered the relevant figure as imports have generally been much
closer to it than the base quota. Under the assumption that the cattle
inventory growth follows a pattern similar to that in the previous cycle,
the trigger level follows a rather erratic course with a low point in











slower rate than during the past 25 years. Due to a lack of studies on
this factor, two projections have been made, one in which production of
cow beef per head of inventory follows a similar growth pattern to that
found in cycle number 8, with the highest level (1986-1989) at the same
output (about 40 pounds of cow beef per head of cattle inventory) as in
1978 (Table 10). This projection corresponds to the all-cattle inventory
projection based on the past cycle. The second projection involves a
slow growth in inventory and, as a consequence, production of cow beef
per head of inventory increases continuously during the entire period,
reaching a peak of 42.5 pounds in 1990. Each of the total cow beef pro-
duction projections given in Table 10 is graphed in Figure 10.

Calculations of Annual Quotas, 1981-1990


The projections of total beef production developed in Table 8 are
translated into 3-year moving averages in Table 9 for both the previous
cycle and slow growth assumptions. This data is used in the numerator
in the first term of the quota formula. In all cases, it is assumed that
the imports of live cattle are equivalent to 160 million pounds of beef
on a carcass weight basis.
Projections of cow beef production per head of cattle inventory are
multiplied by-projections of all cattle inventory to arrive at projections
of total cow beef production under each of the two assumptions (Table 10).
The formula requires that cow beef production be calculated on a per
capital basis, so each of the production projections has been divided by
projections of U.S. population to arrive at production per capital of
inventory (Table 11). From there, 5-year and 2-year moving averages are
calculated as required in the second term of the formula.


Results


The final results of the assumptions developed in the two scenarios
are given in Table 12. The trigger level (110 percent of the base quota)
is considered the relevant figure as imports have generally been much
closer to it than the base quota. Under the assumption that the cattle
inventory growth follows a pattern similar to that in the previous cycle,
the trigger level follows a rather erratic course with a low point in











Table 10.--Projections of cow beef production, United States, 1980-1990


Cow beef production, inventory
similar to previous cycle


Inventory,
all cattle

1,000 head

110,961

112.000

115,000

118,000

122,000

128,000

132,000

128,000

123,000

116,000

111,000


Production
per head of
inventory

Lbs

30.00

30.00

30.00

30.00

30.00

30.00

40.00

40.00

40.00

40.00

30.00


Total
production

Million lbs

3,328.8

3,360.0

3,450.0

3,540.0

3,660.0

3,840.0

5,280.0

5,120.0

4,920.0

4,640.0

3,330-0


Inventory,
all cattle

1,000 head

110,961

112,000

114,000

116,000

118,000

120,000

122,000

124,000

126,000

127,000

128,000


Production
per head of
inventory

Lbs

30.00

30.50

31.00

32.00

33.00

34.50

36.00

37.50

39.00

41.00

42.50


Total
production

Million lbs

3,328.8

3,416.0

3,534.0

3,712.0

3,894-.

4,140.0

4,392.0

4,650.0

4,914.0

5,207.0

5,444.0


Year


1980

81

82

83

84

85

86

87

88

89

1990


I---


----


I--


-----















All cattle
inventory \

/

^' "


/ Production
S~~,\ based d
on on
previous
cycle


Production
based on
slow growth


Cow beef
production


1958 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 1990
1958 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 1990


Figure 10.--United States cow beef production compared with
1959-1980, with cow beef production projections


all cattle inventory,
to 1990


Source: Tables 5, 8 and 10.


135

- 130

-125

-120

- 115

- 110

- 105

- 100

. 95

-90

- 85

80


0

Year




















Table IT.--Projections of United States per capital cow beef production, 1981-1990


Production b 5 year moving 2 year moving
per capital of cow beef average average
United States Inventory same Slow growth Inventory same Slow growth Inventory same Slow growth
Year populationa as previous cycle in inventory as previous cycle in inventory as previous cycle in inventory


Millions -------------Lbs ---------------- -------------Lbs---------------- --------------Lbs---------------

1980 222.0 15.0 15.0 18.6 18.6 15.1 15.1
81 224.2 15.0 15.2 17.2 18.6 15.0 15.1
82 226.4 15.2 15.6 16.3 16.4 15.1 15.4
83 228.6 15.5 16.2 15.2 15.4 15.3 1F5
84 230.8 15.9 16.9 15.3 15.8 15.7 16.6
85 233.0 16.5 17.8 15.6 16.3 16.3 17.4
86 235.2 22.5 18.7 17.1 17.0 19.5 18.3
87 237.4 21.6 19.6 18.4 17.8 22.1 19.2
88 239.6 20.5 20.5 19.4 18.7 21.1 20.2
89 241.8 19.2 21.5 20.1 19.6 19.9 21.0
1990 244.0 13.7 22.3 19.5 20.5 16.5 21.9


aSource: [Statistical Abstract, 1977]. The projections given therein are Series II, for 1980, 1985 and 1990. Other years are inter-
polated.


Based on total supplies in Table 10.






Table 12.--Projections of United States meat import trig nir ivel 19pn-1'0 ; under t'.no a;i.,:nin,



Base quota Trigger level

Inventory Inventory Congressional
growth similar Slow growth growth similar Slow growth projections
to previous in cattle to previous in cattle of trigger
Year cattle cycle inventory cattle cycle inventory level a

-------------------------------------------Million Ibs-----------------------------------

1980 1,516.0 1,516.0 1,668.0 1,668.0 1,687.4
81 1,300.9 1,496.6 1,431.1 1,616.6 1,507.4
82 1,349.2 1,264.8 1,484.1 1,391.3 1,388.8
83 1,216.7 1,288.9 1,338.3 1,417.8 1,333.4
84 1,264.8 1,240.7 1,391.3 1,364.8 1,305.7
85 1,313.0 1,264.8 1,444.3 1,391.3 1,290.2
86 1,276.9 1,301.0 1,404.6 1,431.1 1,246.6
87 1,252.8 1,349.2 1,378.1 1,484.1 1,240.5
88 1,373.2 1,373.2 1,510.6 1,510.6 1,439.8
89 1,409.4 1,421.4 1,550.3 1,563.6 1,714.2
1990 1,529.8 1,457.6 1,682.8 1,603.3


aSource: [U.,S,-Cpngress, House of Representatives, 1979a].











1983 (1.33 billion pounds) and the high occurring in 1990 (1.68 billion
pounds). The trigger level under the slow growth in cattle inventory
assumption follows a similar pattern, with lows in the mid '80s, but
reaching a peak of only 1.60 billion pounds in 1990 (Figure 11). The
crucial point is that the so-called "countercyclical bill" is quite in-
sensitive to radical changes in assumptions about herd growth buildup
because of the rather long periods of weighted averages, three and ten
years in the case of domestic production, and five and two years in the
cow beef supply portion of the formula.
The countercyclical aspect of the bill will apparently function
quite well if inventory, and subsequent production, follow a pattern
similar to the previous cycle, but the countercyclical aspect would com-
pletely disintegrate if production were to continue to increase thrn
the 1980s, albeit at a slower rate than occurred in the previous cycle
(Figure 12). In the latter case the trigger level continues to increase
even though production increases. In effect, it acts in a fashion simi
to the 1964 bill. In this respect, the bill is not truly counterr:
in nature as it only operates that way under certain circumstances.
As a check against the results of the two scenarios, the projections
presented in the House of Representatives report (96-238) [U.S. Congress,
1979, p. 8-9] are also given. These projections follow a similar pattern
to those presented in this study, but tend to drop to a lower level
(1,240.5 million pounds in 1987) and peak out mugh higher (1,714.2 mi
pounds in 1989) (Table 12).

PROJECTIONS OF PER CAPITAL BEEF AND VEAL CONSUMPTION

The purpose of this section is estimating per capital consumption of
beef and veal from 1980-1990. To do this, commercial production of beef
and veal for 1954-1979 is summarized in Table 13, and graphically por-
trayed in Figure 13. In order to arrive at a projection of total c(
tion and from that, per capital consumption, the difference between pro-
duction and consumption must be estimated. This is more than just adding
imports, as inventory changes, exports and military use must be accounted
for.8 Furthermore, it must be recognized that actual or current per'

8See, for example, the table "Supply and distribution of commer ;i
produced meat, by months, carcass weight," given in each issue of Li!
and Meat Situation.














1,600
1,600 -


Trigger
level,
historical


Similar to
previ ous
cycle


S I I I I I I


i 4 1 1 j


1964 66 68 70 72 74 76 78 80 82 84 86 88 1990
Year

Figure ll.--Trigger level on United States meat imports, 1965-1980 with projections to 1990


Source: Tables 3 and 12.


g Slow growth in
I inventory
a


1,400 -





1,200





1,000 -


a--------- --- -g;-- ---- ------ ---










42












1.8 32


'1.7 30
s Production ,--

. 1.6 28 o


S1.5- \ 26

24 1
1.4- Trigger 24
, level
S1.3 / 22


1.2 20

0 Slow growth in inventory 0
00







1.8 32
Trigger
S1.7 level
30
c 1\ Production ./,--
1.6

1.5 -26


1.4 24

1.3 ,.
S/ 22

1.2 20
Inventory similar to previous cycle
0 _f 0
1980 1990
Figure 12.-Projections of United States beef and veal production compared
with meat import trigger level under two assumptions about
inventory growth, 1980-1990.















Table 13.--United States commercial production of beef and veal, total consumption
consumption, 1965-1979


and per capital


Commercial production Consumptionb Per capital consumption

Year Beef Veal Total Beef Veal Total Beef Veal Total


---------------------Million bs ---------------- -----------Lbs----------

1965 18,325 936 19,261 19,060 992 20,052 99.5 5.2 104.7
66 19,493 862 20,355 20,140 881 21,021 104.2 4.6 !08.8
67 19,991 747 20,740 20,793 749 21,542 106.5 3.8 110.3
68 20,662 696 21,358 21,627 707 22,334 109.7 3.6 113.3
69 20,960 640 21,600 22,065 654 22,719 110.3 3.3 114.1
70 21,472 558 22,030 22,926 581 23,507 113.7 2.9 116.6
71 21,697 516 22,213 23,084 545 23,629 113.0 2.7 115.7
72 22,218 429 22,647 23,962 465 24,427 116.1 2.2 118.3
73 21,088 429 21,413 22,812 376 23,188 109.6 1.8 111.4
74 22,844 325 23,286 24,489 493 24,982 116.8 2.3 119.1
75 23,673 442 24,500 25,398 876 26,274 120.1 4.2 124.3
76 25,667 827 26,480 27,549 854 28,403 129.3 4.0 133.3
77 24,986 813 25,780 27,038 836 27,874 125.9 3.9 129.8
78 24,010 794 24,610 25,999 646 26,645. 120.1 3.0 123.1
1979 21,141 600 21,553 24,000 107.6 2.0 109.6


aSource: Table 1. (Note: This data series excludes farm production. The data series shown as "production"
in Agricultural Statistics and Livestock and Meat Statistics includes farm production.)

bSource: [USDA, 1967] and [USDA, 1977].





















Similar to
last cycle


Consumption


Slow
growth


Production


Imports


- FTTTll~op-


1964 66 68 70 72 74 76 78 80


82 84 86 88 1990


Year


Figure 13.-.-United States beef and veal imports, production and
consumption, 1964-79 with projections to 1990


35 -


30 -



25 -



20


_____~__~~~









consumption of beef and veal is largely a function of production due to
the biological nature of cattle raising. In effect, only a minimal amount
of short-term adjustment can be made regardless of the intensity of demand.
The historical relationships have been calculated in Table 14 by
subtracting production from consumption. Then, that number has been
divided by the meat import trigger level to place the relationship on a
percentage basis. In most recent years (1972-1978), i.e., during the
years of inventory buildup and then into the reduction phase, the relation-
ship is quite consistent, at about 155 percent, with a range from 150 to
163. It is much higher in 1979 as that was a year of drastically reduced
domestic production. During the acceleration phase it increased steadily,
from 68 in 1966 to 155 in 1972. It declined to 150 in 1974. A moving
relationship should probably be calculated, but considering that any
error in the amount involved has a relatively small effect on per capital
consumption projections, a factor of 1.35 has simply been used to expand
the projected trigger level to the difference between total consumption
and production (Table 15).
Per capital consumption of beef and veal, under the assumption of
inventory projections similar to the last cycle, increases to 132.7 pounds
in 1986 and then drops, reaching 103.5 pounds in 1990 (Table 15). The
peaks and the lows are similar to those found in the last cycle. Under
the slow growth assumption, per capital consumption increases steadily
during the entire decade, reaching 123.4 pounds in 1985 and 132.1 pounds
in 1990.

DISCUSSION


In all likelihood, the actual trigger level will fall somewhere between
the two extremes presented in this paper. Given the relatively small dif-
ferences between the trigger levels in the two extremes, one where inventory
grows at a rate similar to the last cycle, and one where it grows more
slowly but consistently throughout the 80s, several conclusions and rami-
fications surface that should be useful for policymakers and cattlemen
in both the United States and the major beef exporting countries such as
Australia. The study shows, for example, that United States' imports,
as a percent of consumption, will hold in about the same range during the
1980s as in the 1970s,i.e.., about 5-6 percent depending on the;year




















Table 14.--Determination of total United States beef and veal consumption minus production as a
percent of meat import trigger level, and imports as a percent of consumption, 1965-1979




Total consumption
Total Meat minus total
Consumption import production as Imports as
minus triaer a percent of Total Actual a percent
Year production level trigger level conslmirtiona imports of consumption


--------Million lbs-------- Percent -------Million lbs-------- Percent

1965 791 934 85 2'],025 614 03
66 666 979 68 21,021 823 04
67 802 995 81 21,542 895 04
68 976 1,045 93 22,334 1,001 04
69 1,119 1,087 103 22,719 1,084 05
70 1,477 1,099 134 23,507 1,170 05
71 1,416 1,128 126 23,629 1,133 05
72 1,780 1,149 155 24,427 1,356 06
73 1,775 1,152 154 23,188 1,356 06
74 1,696 1,131 150 24,982 1,079 04
75 1,774 1,182 150 26,274 1,209 05
76 1,923 1,233 156 28,403 1,232 04
77 2,094 1,282 163 27,874 1,250 04
78 2,035 1,302 156 26,645 1,492 06
1979 2,447 1,245 197 24,000 1,554 06


aDerived from Table 13.

bFrom Table 3.
















Table 15.--Calculation of per capital consumption of beef and veal in the United States, 1980-1990


Inventory similar to last cycle Slow growth in inventory

Other Other
135 percent Total Per capital 135 percent Total Per capital
Year Productiona of trigger consumnsumptionsumptionc Productiona of trigger consumption consumption

--------------Million Ibs---------------- Lbs ------------Million Ibs----------------- Lbs


1980 21,245 2,252 23,497 105.8 21,245 2,252 23,497 105.8
81 22,400 1,932 24,332 108.5 22,960 2,183 25,143 112.1
82 23,690 2,003 25,693 113.5 24,168 1,878 26,046 115.0
83 24,957 1,806 26,763 117.1 25,056 1,914 26,970 118.0
84 26,291 1,878 28,169 122.0 25,960 1,843 27,803 120.5
85 28,032 1,949 29,981 128.7 26,880 1,878 28,758 123.4
86 29,304 1,897 31,201 132.7 27,694 1,932 29,626 126.0
87 28,672 1,860 30,532 128.0 28,520 2,003 30,523 128.8
88 27,798 2,040 29,838 124.5 29,232 2,040 31,272 130.5
89 24,244 2,093 26,337 108.9 29,718 2,111 31,829 131.6
1990 22,977 2,272 25,249 103.5 30,080 2,164 32,244 132.1



aSource: Table 7.

bThe trigger level has been about 135 percent of the difference between total production and total consumption since 1965 (Table 14).
Considering this, the coefficient of 135 percent of the trigger level is used to determine the difference between production and consump-
tion. See Table 12 for the trigger level.


Copulation projections given in Table 10.











(Tables 14 and 16). In 1980 these amounted to about 7.1 percent, while
in 1986 or 1987 they will drop below 5 percent, regardless of the assump-
tions used about inventory changes.
As a result of United States beef imports being such a small percent
of total beef consumption, it can be concluded that the new meat import
bill will have virtually no effect on mitigating the cattle cycle in the
United States or at the international level. As a consequence, it can
be confidently predicted that United States efforts to reduce fluctua-
tions in the cattle cycle will have to focus on policies other than
imports to "tame" the cattle cycle. In all likelihood, some form of herd
management is the only solution.
Because the United States figures importantly in setting prices at
the international level, it appears that countries such as Australia will
also be forced to some herd management scheme combined with some method
of insulating domestic prices from international fluctuations if they are
to successfully stabilize internal prices.
The GATT Secretariat could play a major role by developing a world
trade model which combines cattle inventory, production and consumption
in the beef trading countries. Such an effort could contain 10-year pro-
jections which are updated annually with the objective being provision
of an outlook on danger points developing in world supplies via appri
warning signals. This outlook could also contain suggestions about herd
management policies.
The major conclusion which can be drawn from this study is that the
so-called "countercyclical" meat import bill of the United States is only
countercyclical under certain circumstances, those in which domestic
cattle inventory and production follow a pattern similar to the last
If growth is slower but continuous after 1985, the bill operates in much
the same fashion as the 1964 bill, in which imports and production are
positively correlated.
Judgements are, of course, rather subjective and thus an assessment
of the 1979 bill and its impact depends largely on the viewpoint of the
affected parties. Regardless of individual biases, it is difficult to
argue that the bill will be particularly beneficial to either the United
States or exporting nations. Perhaps the major element is a psychol
one for United States' cattlemen as there is much less chance of pre
tial intervention under the new bill. Overall, the bill neither hinders








Table 16.--Projections of trigger level as a percent of total United States beef and veal
consumption, 1980-1990


Inventory similar to last cattle cycle Slow growth in cattle inventory

Total Total
Year consumption Trigger level consumption Tri-ger level

-------Million Ibs------ Percent -------Million lbs------ Percent

1980 23,497 1,668.0 7.1 23,497 1,668.0 7.1

81 24,332 1,431.1 5.9 25,143 1,616.6 6.4

82 25,693 1,484.1 5.8 26,046. 1,391.3 5.3

83 26,763 1,338.3 5.0 26,970 1,417.8 5.3

84 28,169 1,391.3 4.9 27,803 1,364.4 4.9

85 29,981 1,444.3 4.8 28,758 1,391.3 4.8

86 31,201 1,404.6 4.5 29,626 1,431.1 4.8

87 30,532 1,378.1 4.5 30,523 1,484.1 4.9

88 29,838 1,510.6 5.1 31,272 1,510.6 4.8

89 26,337 1,550.3 5.9 31,829 1,563.6 4.9

1990 35,249 1,682.8 6.7 32,244 1,603.3 5.0

aFrom Table 15.


bFrom Table 12.








50


the livestock and meat industry in either the United States or exporting
countries. Thus, the final assessment is that the bill probably is
neither "good" nor "bad;" at the same time it is neither "useful" nor
"harmful." Unfortunately, it still leaves wide open the question of the
most appropriate means of dealing with the cattle cycle.










REFERENCES


Adams, Mike. 1980. U.S. Agricultural Trade: An Australian Perspective
to 1985. Bureau of Agricultural Economics (Australia) Occasional
Paper No. 55.

BANAMEX (Banco Nacional de Mexico, S.A.). 1979. "Mercado de Ganado
Vacuno: Tienden a Decrecer las Disponibilidades," Examen de la
Situation Economica de Mexico 55:640: 154-160.

Conable, Daniel B. 1980. "Changes in U.S. Meat Import Law," Foreign
Agriculture Supplement (July).

Hinchy, Mike. 1978. "The Relationship Between Beef Prices in Export
Markets and Australian Saleyard Prices," Quarterly Review of Agri-
cultural Economics 31:2-3 (April/July), pp. 83-105.

Longmire, James. 1979. "The Cattle Cycle--Does It Exist?" Paper pre-
sented at a two day farmer short course conducted by Marcus Oldham,
Farm Management College, Geelong, Victoria (May).

Longmire, J.L., G.W. Main and R.G. Reynolds. 1980. "Market Implications
of Some Major Shocks to the Australian Beef Industry." Contributed
Paper, 24th Annual Conference, Australian Agricultural Economics
Society, Adelaide (February).

Longmire, J.L. and G.W. Main. 1980. "An Econometric Model of the
Australian Beef Industry." Contributed Paper, 24th Annual Conference,
Australian Agricultural Economics Society, Adelaid (February).

National Cattlemen's Association. 1980. Beef Business Bulletin (March 8).

Nelson, K.E., N.R. Martin, G.M. Sullivan and R.J. Crom. 1980. "Impact
of Meat Imports on Least Cost U.S. Beef Production." Selected paper
presented at the annual meeting of the American Agricultural Economics
Association, Urbana, Illinois (July 27-30).

Reeves, George. 1979. "Price Stabilization, Bilateral Trade and Institu-
tional Constraints: The Case of Beef in Australia and the United
States." Ph.D. dissertation, University of California, Davis.

__ 1980. "Some Implications of the United States Countercyclical
Beef Import Policy for the United States and Australia." Contributed
Paper, 24th Annual Conference, Australian Agricultural Economics
Society, Adelaide (February).

S1980. "A New Look at the Theory of the Cattle Cycle." Personal
communication and unpublished paper (June).

Simpson, James R. 1978. "Cattle Cycles: A Guide for Cattlemen." Food
and Resource Economics Department Staff Paper 100. Gainesville:
Univ. of Fla.










1979. "World Cattle Cycles and the Latin American Beef Industry,'
Proceedings, Thirteenth Annual Conference on Livestock and Poultry
in Latin America. Gainesville: Univ. of Fla. (May 7-11), pp. B48-58.

1980. Economic Considerations of United States Canned Beef
Imports. Food and Resource Economics Department. Econ. Info. Rpt.
Univ. of Fla.

Simpson, James R. and Donald E. Farris. 1982. The World's Beef Business.
Ames: Iowa State Univ. Press (forthcoming).

U.S. Congress, House of Representatives. 1979a. Meat Import Act'of 1979.
Report No. 96-238, 96th Congress, Ist Session (June 6).

U.S. Congress; 1979b. Agreements Reached in the Tokyo Round of the
Multilateral Trade Negotiations. House Document No. 96-153, Part I,
96th Congress, Ist Session (June 19), pp. 585-595.

1979c. Public Law 96-177. 96th Congress (December 31).

U.S. Department of Agriculture. 1980. Livestock and Meat Statistics.
Various issues.

1980. Working Data for Demand Analysis.

1968. Agricultural Statistics, 1967.

1978. Agricultural Statistics, 1977.
__ 1979 and 1980. Livestock and Meat. For. Agr. Cir. FLM-IT 7-79
and FLM-MT 3-80.

Weeks, Peter. 1979. "The Effect:of the Proposed U.S. ?'eat Import Law
on U.S. Imports of Meat," Quarterly Review of the Rural Economy 1:4;
(November), pp. 297-305.





















APPENDICES















APPENDIX I
PUBLIC i-.; ,:-.'. ,-.,-AUG. 22, 1964 [78 STAT.

Public Law 88-482
August 22, 1964 AN ACT
[H. R. 18391 To provide for the free importation of certain wild niimals, and to provide
for the imposition of quotas on certain meat and meat products.

Be it enacted by the Senate and House of Representatives of the
ild birds and United States of America in Congress .. .7. 'd,7, That (a) item 852.20
F""entry of title I of the T" i'v, T Act of 1930 (T, r;i Schedules of the v -t
77A Stat. 420. states; 28 F..., part II, August 17, 1963) is amended to road as
s1 Use 1202. follows:
S852.20 Wild animal (including bird and fish) iand ortid for
use, orforsuihfort. .
tioI lfor ethibitlonl '. ... ..I ...- J '
poses ................... ........................ J Free Free "
(b) Headnote 1 of part 4 of schedule 8 of such title I is amended
by striking out, "item : ...'...," and inserting in lieu thereof "items
850.50 and n85.20,".
(c) The amendments made by this section shall take .e''-'i. on the
tenth day after the date of the enactment of this Act.
Meat Imports, S:c. 2. (a) It is the policy of the Congress that the :2-r,'. .[-
liutatton' quantity of the articles specified in items 106.10 ('v.iid r i. .'r-:.,
chilled, or frozen cattle meat) and 106.20 relatingg to fresh, chilled, or
frozen meat of goats and sheep (except lambs)) of the Tariff Sohed-
A77 2s.' 2 rules of the United States which may be imported into the IUnited
S States in any calendar ,.' V L .-.: !I I,:: after December 31, 1964, should
not exceed T-.i,-;' pounds; except that this quantity shall be
increased or decreased for any calendar year by. the same percentage
that estimated average annual domestic comimercinit rmluction of
these articles in that calendar year and the two Ip: '';. '. calendar
years increases or :i:..'r,I-. in comparison with the average annual
domestic connmercial production of these articles during the years'
1959 through hi '..:i inclusive.
(b) The Secretary of Agriculture, for each calendar year after
1964, shall estima.to and publish-
(1) before the beginning of such calendar year, ,;.,: aggregate
Quantity prescribed for such calendar year by subsection (a), and
S(2) before the first day of each calendar quarter in such cal-
endar year, the r-Tr:';,i e i quantity of the articles described in
subsection (a) '1.-i '(,i. for this section) ..-:..;li be imported
in such calendar year.
In applying parraraph (2) for the second or any succeeding calendar
quarter in any calendar year, actual iia- -.,i c for the -,i .:" i, .. calen-
dar quarter or quarters in such calendar year shall be taken into
account. to the extent data is available.
iPr-stln(tlai (c) ) If the ,. .:-. quantity estimated before .-i.- calendar.
poc tton. quarter by the Secretary of Agriculture pursuant to subsection (b) (2)
equals or exceeds 110 percent of tlh aggregate quantity estimated by
him pursuant to subsection (b) (1), and if there is no I,;.:.-;"; in ef-
fect under this section with respect to such calendar year, the Presi-
dent shall by. proclamation limit the total quantity of the articles
described in lsubsection (a) which may bh entered, or withdrawn from
warehouse, for consumption, during such calendar year, to the qg)re-
gate .r,' estimated for such cendar yer sh len by the Secrc:.'I of
Agricult ure pIursuant to subsection (b) (1).
(2) If the .-':- -; Ant quantity estimated before any calendar quar-
ter by tile Secretary of Agriculture pursuant to subsection (b) (2)
does not equal or exceed 110 percent of the i;:,:I r.; .r, quantity esti-
mated by him pursuant to subsection (b) (1), nnd it a limitation is in
( : i under this section with respect to such calendar year, such limita-
tion shallt cease to apply as of the first day of such calendar quarter;










APPENDIX I-2
PUBLIC LAW f .; 1- 'iG. 22, :, 1.


except that any limitation which has been in effect for the third
calendar quarter of any calendar year shall continue in effect for the
fourth calendar quarter of such year unless the proclamation is sus-
pended or the total quantity is increased pursuant to subsection (d).
'(3) The Secretary of Agriculture shall allocate the total i;. .nl ity
proclaimed under paragraph (1), and any increase in such [ii.il iv
pursuant to subsection (d), among supplying countries on the basis
of the shares such countries supplied to the United States market dur-
ing a representative period of the articles described in subsection (a),
except that due account may be given to special factors which have
affected or may affect the' trade in such articles. The Secretary of
Agriculture siall certify such allocations to the Secretary of the
Treasury.
(d) 'The President may suspend any proclamation made under sub-
section (c), or increase the total quantity proclaimed under such sub-
section, if he determines and proclaims that-
(1) such action is required by overriding economic or national
security interests of the United States, giving special weight to
the importance to the nation of the economic :.il i.:-ir of the
domestic livestock industry;
(2) the supply of articles of the kind described in subsection
"(a) will be inadequate to meet domestic demand at reasonable
prices; or
(3) trade agreements entered into after the date of the enact-
ment of this Act ensure that the policy set forth in subsection (a)
will be carried out.
Any such suspension shall be for such period, and any such increase
shall be in such amount, as the President determines and proclaims
to be necessary to carry out the purposes of this subsection.
(e) The Secretary of Agriculture shall issue such regulations as he
determines to be necessary to prevent circumvention of the purposes of
this section.
(f) All determinations by the President and the Secretary of Agri-
culture under this section shall be final.


Approved August 22, 1964.


Public Law ,;-433


AN ACT


To declare that eighty acres of land acquired for the Flandreau Boarding School
is held by the United States in trust for the Flandreau Santee Sioux Tribe.

Be it enacted by the Senate and House of Rcpresentatives of the
United States of America in Congress assembled, That all of the
right, title, and interest of the United States in 80 acres of land
described as the east half northeast quarter section 16, township 107
north, range 48 west, fifth principal meridian, acquired by the United
States for the Flandrean lBh..,.-r School at Flandreau, South
Dakota, and no longer used for such purposes, together withi improve-
ments thereon, are hereby declared to be held by the United States in
trust for the Flandreau Santee Sioux Tribe, subject to all valid
existing rights-of-way.
SEC. 2. The Indian Claims Commission is directed to determine in
accordance with the provisions of section 2 of the Act of August 13,
.4. (60 Stat. 1050), the extent to which the value of the title con-
reyed by this Act should or should not be set off against any claim
against the United States determined by the Commission.
Approved August 22, 1964.


Proclanintion
suspension.






















Auaust 22, 1964
(I. R. 11052]


Indians.
Fandrerau Santee
Sioux Tribe.
Landd.







25 USC 70a.


78 STAT. ]













APPENDIX II

PUBLIC LAW 96-177-DEC. 31, 1979 93 STAT. 1291

Public Law 96-177
96th Congress
An Act
To modify the method of establishing quotas on the importation of certain meat, to Dec. 31. 1979
include within such quotas certain meat products, and for other purposes. [I.l. 27271

Be it enacted by the Senate and House of Representatives of the
United States ofAmerica in Congress assembled. That section 2 of the Meat imports.
Act of August 22, 1964, entitled "An Act to provide for the free quota
importation of certain wild animals, and to provide for the imposition modifications.
of quotas on certain meat and meat products" (19 U.S.C. 1202 note) is
amended to read as follows:
"SEC. 2. (a) This section may be cited as the 'Meat Import Act of Meat Import Act
1979'. of !979.
"(b) For purposes of this section- Definitions.
"(1) The term 'entered' means entered, or withdrawn from
warehouse, for consumption in the customs territory of the
United States.
"(2) The term 'meat articles' means the articles provided for in
the Tariff Schedules of the United States (19 U.S.C. 1202)
under-
"(A) item 106.10 (relating to fresh, chilled, or frozen cattle
meat);
"(B) items 106.22 and 106.25 (relating to fresh, chilled, or
frozen meat of goats and sheep (except lambs)); and
"(C) items -107.55 and 107.62 (relating to prepared and
preserved beef and veal (except sausage)), if the articles are
prepared, whether fresh, chilled, or frozen, but not otherwise
preserved.
"(3) The term 'Secretary' means the Secretary of Agriculture.
"(c) The aggregate quantity of meat articles which may be entered
in any calendar year after 1979 may not exceed 1,204,600,000 pounds;
except that thi. i, _'ri ;t,-. quantity hall be-
"(1) increased or decreased for any calendar year by the same
percentage that the estimated average annual domestic commer-
cial production of meat articles in that calendar year and the 2
preceding calendar years increases or decreases in comparison
with the average annual domestic commercial production of
meat articles during calendar years 1968 through 1977; and
"(2) adjusted further under subsection (d).
For purposes of paragraph (1), the estimated annual domestic com-
mercial production of meat articles for any calendar year does not
include the carcass weight of live cattle specified in items 100.40,
100.43, 100.45, 100.53, and 100.55 of such Schedules entered during
such year.
"(d) The aggregate quantity referred to in subsection (c), as
increased or decreased under paragraph (1) of such subsection, shall
be adjusted further for any calendar year after 1979 by multiplying
such quantity by a fraction-
"(1) the numerator of which is the average annual per capital
production of domestic cow beef during that calendar year (as

















93 STAT. 1292 PUBLIC LAW 96-177-DEC. 31, 1979

estimated) and the 4 calendar years preceding such calendar
year: and
"(2) the denominator of which is the average annual per capital
production of domestic cow beef in that calendar year (as
estimated) and the preceding calendar year.
"Domestic cow' For the purposes of this subsection, the phrase 'domestic cow beef'
beef.' means that portion of the total domestic cattle slaughter designated
by the Secretary as cow slaughter.
"(e) For each calendar year after 1979, the Secretary shall estimate
and publish-
"(1) before the first day of such calendar year, the aggregate
quantity :,r,--, i..:.1 for such calendar year under subsection (c)
as adjusted under subsection (d); and
"(2) before the first day of each calendar quarter in such
calendar year, the .* t. ::'d.* qu:,r i'tv of meat articles which (but
for this section) would be entered during such calendar year.
In applying paragraph (2) for the second or any succeeding calendar
quarter in any calendar year, actual entries for the preceding
calendar quarter or quarters in such calendar year shall be taken
into account to the extent data is a%.i a l t:-.
"(f)(1) If the aggregate quantity estimated before any calendar
quarter by the Secretary under subsection (e)(2) is 110 percent or
more of the .,:.;, *.-: :' quantity estimated by him under subsection
(e)(1), and if there is no limitation in effect under this section for such
calendar year with respect to meat articles, the President shall by
proclamation limit the total quantity of meat articles which may be
entered during such calendar year to the aggregate quantity
estimated for such calendar year by the Secretary under subsection
(e)(1); except that no limitation imposed under this paragraph for any
calendar year may be less than 1,250,000,000 pounds. The President
shall include in the articles subject to any limit proclaimed under this
paragraph any article of meat provided for in item 107.61 of the Tariff
19 USC 1202 Schedules of the United States (relating to high-quality beef specially
note, processed into fancy cuts).
"(2) If the aggregate quantity estimated before any calendar
quarter by the Secretary under subsection (eX2) is less than 110
percent of the aggregate quantity estimated by him under subsection
(e)(1), and if a limitation is in effect under this section for such
calendar year with respect to meat articles, such limitation shall
cease to apply as of the first day of such calendar quarter. If any such
limitation has been in effect for the third calendar quarter of any
calendar year. then it shall continue in effect for the fourth calendar
quarter of such year unless the proclamation is suspended or the total
q, i:, i'. I. i .increased pursuant to subsection (g).
Publication in "*i Ti..- President may, after providing opportunity for public
Federal comment by giving 30 days' notice by publication in the Federal
Register. Register of his intention to so act, suspend any proclamation made
under subsection (f), or increase the total quantity proclaimed under
such subsection, if he determines and proclaims that-
"(1) such action is required by overriding economic or national
security interests of the United States, giving special weight to
the importance to the Nation of the economic well-being of the
domestic cattle industry;
"(2) the supply of meat articles will be inadequate to meet
domestic demand at reasonable prices; or
"(3) trade agreements entered into after the date of enactment
of this Act insure that the policy set forth in subsections (c) and
(d) will be carried out.








59












PUBLIC LAW 96-177-DEC. 31, 1979 93 STAT. 1293

Any such suspension shall be for such periods, and any such increase
shall be in such amount, as the President determines and proclaims
to be necessary to carry out the purposes of this subsection.
"(h) Notwithstanding the previous subsections, the total quantity
of meat articles which may be entered during any calendar year may
not be increased by the President if the fraction described in subsec-
tion (d) for that calendar year yields a quotient of less than 1.0,
unless-
"(1) during a period of national emergency declared under
section 201 of the National Emergencies Act of 1976, he deter- so use i;21.
mines and proclaims that such action is required by overriding
national security interests of the United States;
"(2) he determines and proclaims that the supply of articles of
the kind to which the limitation would otherwise apply will be
inadequate, because of a natural disaster, disease, or major
national market disruption, to meet domestic demand at reason-
able prices; or
"(3) on the basis of actual data for the first two quarters of the
calendar year, a revised calculation of the fraction described in
subsection (d) for the calendar year yields a quotient of 1.0 or
more.
Any such suspension shall be for such period, and any such increase
hall be in such amount, as the President determines and proclaims
to be necessary to carry out the purposes of this subsection. The
effective period of any such suspension or increase made pursuant to
paragraph (1) may not extend beyond the termination, in accordance
with the provisions of section 202 of the National Emergencies Act of
1976, of such period of national emergency, notwithstanding the 5o Use 1622.
provisions of section 202(a) of that Act.
"(i) The Secretary shall allocate the total quantity proclaimed
under subsection (f(1) and any increase in such quantity provided for
under subsection (g) among supplying countries on the basis of the
shares of the United States market for meat articles such countries
supplied during a representative period. Notwithstanding the preced-
ing sentence, due account may be given to special factors which have
affected or may affect the trade in meat articles or cattle. The
Secretary shall certify such allocations to the Secretary of the
Treasury.
"(j) The Secretary shall issue such regulations as he determines to IRegiultions.
be necessary to prevent circumvention of the purposes of this section.
"(k) All determinations by the President and the Secretary under Determinations.
this section shall be final.

























93 STAT. 129

Study, report
and
recommendations
to congressional
committees.


Effective date.
19 USC 1202
note.


PUBLIC LAW 96-177-DEC. :1. 1979


"(1) The Secretary of Agriculture shall study the regional economic
impact of imports of meat articles and report the results of his study.
together with any recommendations (including recommendations for
legislation, if any) to the Committee on Ways and Means of the House
of Representatives and to the Committee on Finance of the Senate
not later than June 30, 1980.".
SEC. 2. This Act shall take effect January 1, 1980.

Approved December 31, 1979.























LEGISLATIVE HISTORY.
101SIE IREPORT No, !I;-2:18 I(Comrno. on Ways and Meanst.
SENATE REPORT No. 9!;-.15 Comm. on Fimincel
CONIRESSIONAI. RECORD, Vol. 125 1197!9!
Nov. 11. 14. considered and passed House.
Dec. 18, considered and passed Senate
WEEKLY COMPILATION OF PRESIDENTIAL DOCLUM.INTS. Vol 15. No 52.
Dec. 31. Presidential statement.


4







Appendix III.--Cattle inventory in 37 selected countries and total for the world, 1953-1980


Region & country


North America
Canada
Costa Rica
Dominican Rep.
El Salvador
Guatamala
Honduras
Mexico
Nicaragua
Panama
United States
South America
Argentina
Brazil
Chile
Colombia
Ecuador
Peru
Uruguay
Venezuela
Western Europe
EEC
Belgium/Lux.
Denmark
France
Germany, Fed. Rep. of
Ireland
Italy
Netherlands
United Kingdom
Western Europe, Other
Austria
Finland
Greece
Norway
Portugal
Spain
Sweden
Switzerland
Eastern Europe
Europe
Soviet Union
Oceania
Australia
New Zealand
World


1953 1954


129,300a 131,800a
8,906 9,371
696
860
615


1,175
15,000
1,250
568
94,241
138,300a
40,900
55,854
2,409
13,000
2,000
3,190
8,013
6,500
79,200 a
59,404
2,151
2,953
16,194
11,641
4,397
8,690
2,934
10,444

2,347
1,809
976
1,150

3,128
2,554
1,635


56,600
20,693
15,247
5,446
829,300


15,000
1,200
579
95,679
140,400a
42,000
57,626

13,650
1,216
3,189
7,819
6,000
81 ,000o
60,979
2,213
2,999
16,889
11,641
4,504
8,989
3,026
10,718

2,300
1,885
990
1,181
930
3,184
2,582
1,593

105,300a
63,000
-21,346
15,601
5,745
842,600


i955 15 I 1-57 I- 1 5 1- 5 -
----------... COO 1 iead .-----------------------------------.--


133,800a
9,473
804



15,000


96,592
145,700a
44,000
61,422



6,700
6,100
81,500a
61,478
2,379
3,089
17,322
11,521
4,483
9,033
2,983
10,668

2,304
1,902
1,010
1,171


2,575
1,583

105,900a
64,900
21,710
15,823
5,887
860,400


135,000a 137,900a
9,666 10,379
949
930
985


16 ,,, ',


97,465
148,300"
44,000
64,000






82,100a

2,250
3,082
17,560
11,552


10,-?!

2,346

1,025


18,700
1,328
622
94,502
151,470a
44,203
66,695
2,580
13,390
1,363
3,380
7,200
6,000

61,370
?,61
3,113
17,792
11,850
4,022
8,479
2,785.
10,711

2,325
1,845
1,057
1,060

2,736
2,426
1,613


106,7,?:'1- 105,130a
64,400
22,200 23,066
16,200 17,257
6,000 5,809
874,100 871,000


137,280a/
10,293
981


1,333

18,900

629
93,350
152,270a
41,100
69,548
2,590
14,490

3,332
7,430


61,737
2,413
3,151
17,928
11,953
3,970
8,630
2,873
10,819

2,297
1,936
1,086
1,068

2,734
2,543
1,664

105, '?,)
66,700
22,775
16,900
5,875
879,900


140,850
10,112
1,002

800
1,142

19,400
1,425
661
96,650
154,250
40,000
71,420
2,930
14 840

3,177
7,502


63,432
2,607
3,224
18,404
12,132
4,053
8,992
3,015
11,005

2,279
1,936
1,113
1,060

2,690
2,580
1,687

108,320a

22,200
16,279
5,921
899,700


Continued













Appendix III.--Cattle inventory in 37 selected countries and total for the world, 1953-1980--Continued

Region & country 1960 1961 1962 1963 1964 1965 1966
---------------------------------- 1,000 head-----------------------------------

North America 131,606 133,880 137,709 143,230 148,201 151,001 151,790
Canada 10,387 10,696 10,933 11,223 11,678 12,128 11,902
Costa Rica 901 951 1,006 1,068 1,135 1,211 1,294
Dominican Rep. 1,132 1,125 1,121 1,115 1,109 1,104 1,099
El Salvador 1,110 1,141 1,163 1,194 1,225 1,271 1,322
Guatamala 1,062 1,134 1,122 1,263 1,324 1,384 1,328
Honduras 1,394 1,411 1,429 1,447 1,465 1,483 1,502
Mexico 17,413 17,668 18,453 19,325 20,219 21,078 21,975
Nicaragua 1,305 1,291 1,278 1,265 1,252 1,373 1,495
Panama 666 763 835 842 891 969 1,011
United States 96,236 97,700 100,369 104,488 107,903 109,000 108,862
South America 138,686 144,087 148,153 150,621 152,203 156,167 161,697
Argentina 45,484 47,494 48,657 48,520 47,213 49,173 51,792
Brazil 55,700 57,900 59,800 61,800 63,900 66,100 68,300
Chile 2,913 2,990 3,046 3,017 3,062 2,870 2,869
Colombia 15,000 15,500 16,000 16,400 16,700 17,000 17,300
Ecuador 1,600 1,650 1,700 1,800 1,850 1,900 1,950
Peru 3,132 3,242 3,326 3,466 3,625 3,644 3,686
Uruguay 8,532 8,792 8,900 8,682 8,698 8,100 8,188
Venezuela 6,325 6,519 6,724 6,936 7,155 7,380 7,612
Western Europe 80,822 83,014 84,796 84,222 82,058 83,330 85,514
EEC 65,586 67,557 68,967 68,533 66,635 68,036 70,295
Belgium/.Lux. 2,688 2,684 2,798 2,847 2,641 2,686 2.,790
Denmark 3,313 3,359 3,461 3,393 3,197 3,183 3,266
France 18,735 19,502 20,583 20, '6 20,041 20,244 20,640
Germany, Fed. Rep. of 12,485 12,872 13,281 13,355 13,014 13,053 13,680
Ireland 4,273 4,291 4,179 4,301 4,369 4,524 4,946
Italy 9,417 9,845 9,551 9,189 8,649 9,226 9,429
Netherlands 3,196 3,303 3,496 3,558 3,286 3,434 3,549
United Kingdom 11,479 11,702 11,618 llf. 11,438 11,686 11,995
Western Europe, Other
Austria 2,308 2,387 2,457 2,437 2,311 2,350 2,441
Finland 1,888 1,855 1,975 2,023 2,012 1,938 1,855
Greece 1,119 1,145 1,176 1,197 1,156 1,128 1,131
Norway 1,076 1,114 1,138 1,096 1,071 1,050 1,011
Portugal 1,100 1,108 1,114 1,127 1,141 1,108 1,080
Spain 3,640 3,662 3,683 3,671 3,723 3,697 3,694
Sweden 2,359 2,425 2,504 .2,422 2,311 2,250 2,211
Switzerland 1,746 1,761 1,782 1,716 1,698 1,773 1,796
Eastern Europe 29,952 31,218 32,158 32,033 31,640 31,998 32,646
Europe 110,774 114,232 116,954 116,255 113,698 115,328 118,160
Soviet Union 74,155 75,780 82,077 86,988 85,448 87,171 93,436
Oceania 22,495 23,778 24,631 25,240 25,751 25,617 25,154
Australia 16,503 17,332 18,033 18,549 19,055 18,816 17,936
New Zealand 5,992 6,446 6,598 6,691 6,696 6,801 7,218
0_ 920.300 932,300 950,000 1,01T,904 1,020,200 1,041,756 1,062,609








Appendix III.--Cattle inventory in 37 selected countries and total for the world, 1953-1920--Continued

region & country 1967 1968 1969 1970 1971 1972 1973
-----------------------------------1,000 head---------------------------------
North America 152,556 153,828 154,917 159,096 163,154 167,576 172,353
Canada 11,723 11,677 11,,)1 11,626 11,985 12,267 12,726
Costa Rica 1,387 1,355 1,423 1,496 1,574 1,655 1,694
Dominican Rep. 1,093 1,082 1,090 1,100 1,339 1,423 1,500
El Salvador 1,330 1,371 1,410 1,440 1,100 1,150 1,008
Guatamala 1,242 1,371 1,376 1,443 1,585 1,740 1,808
Honduras 1,380 1,450 1,559 1,578 1,598 1,618 1,641
Mexico 22,965 23,294 23,627 24,876 26,053 26,371 26,830
Nicaragua 1,616 1,738 1,859 1,980 2,102 2,200 2,295
Panama 1,037 1,119 1,157 1,188 1,240 1,290 1,312
United States 108,783 109,371 110,015 112,369 114,578 117,862 121,539
South America 166,526 170,537 174,107 177,229 180,243 186,809 191,140
Argentina 53,120 53,392 53,291 52,260 51,877 53,667 54,837
SBrazil 70,500 72,900 75,300 78,448 81,131 85,134 86,135
Chile 2,884 2,911 2,916 2,931 2,891 2,961 3,165
Colombia 17,900 18,700 19,500 20,200 20,508 20,960 22,100
Ecuador 2,000 2,100 2,150 2,200 2,250 2,300 2,400
Peru 3,700 3,810 4,060 4,127 4,310 3,784 3,800
Uruguay 8,570 8,622 8,601 8,564 8,727 9,273 9,860
Venezuela 7,852 8,102 8,289 8,499 8,549 8,730 8,843
Western Europe 86,999 87,305 88,154 88,458 86,987 87,1-:5 90,755
EEC 71,667 71,853 72,514 72,898 71,902 71,734 74,841
Belgium/Lux. 2,780 2,798 2,865 2,906 2,907 2,835 2,954
Denmark 3,231 3,142 3,004 2,897 2,766 2,678 2,810
France 21,184 21,680 21,566 21,719 21,737 21,698 22,557
Germany, Fed. Rep. of 13,973 13,981 14,061 14,286 14,026 13,638 13,892
Ireland 5,149 5,009 5,086 5,229 5,405 5,516 5,946
Italy 9,546 9,583 10,070 9,612 8,776 8,669 8,805
Netherlands 3,633 3,663 3,768 3,953 3,?5) 3,783 4,117
United Kingdom 12,171 11,997 12,094 12,296 12,435 12,917 13,760
Western Europe, Other
Austria 2,497 2,480 2,433 2,418 2,468 2,499 2,514
Finland 1,895 1,854 1,953 1,981 1,754 1,736 1,712
Greece 1,132 1,132 1,108 1,028 979 992 1,065
Norway 996 969 999 987 933 926 947
Fcrtuj3 1,050 1,100 1,050 1,020 1,060 1,339 1,400
Spain 3,844 4,000 4,185 4,293 4,235 4,249 4,475
Sweden 2,083 2,062 2,043 1,926 1,833 1,829 1,890
S,.it zer Irn 1,835 1,855 1,869 1,907 1,823 1,841 1,911
Eastern Europe 33,750 34,114 33,688 33,022 33,316 34,215 35,648
Europe 120,749 121,419 121,842 121,460 120,303 121,360 126,403
Soviet Union 97,111 97,167 95,735 95,162 99,225 102,434 104,006
Oceania 26,017 27,465 29,216 30,939 33,192 36,147 38,189
Australia 18,270 19,218 20,611 22,162 24,373 27,373 29,101
New Zealand 7,747 8,247 8,605 8,777 8,819 8,774 9,088
World 1,092,653 1,105,361 1,112,991 1,125,384 1,111,126 1,128,850 1,150,512











64












Appendix III.--Cattle inventory in 37 selected countries and total for the world, 1953-1978

Region & Country 1974 1975 1976 1977 1978 1979


1980


----------------------------------1.000 head-----------------------------
North America 180,437 186,794 183,653 181,002 172,657 167,130 168,140
Canada 13,210 14,008 14,018 15,710 12,870 12,328 12,400
Costa Rica 1,742 1,816 1,841 1,920 2,002 2,069 2,165
Dominican Rep. 1,837 1,900 1,950 2,000 ,, 2,150 2,153
El Salvador 1,038 1,074 1,110 1,162 1,236 1,294 1,354
Guatamala 1,916 2,031 2,148 2,270 2,417 2,580 2,700
Honduras 1,661 1,689 1,715 1,770 1.r?? 2,245 2,245
Mexico 27,512 28,400 2.,l 29,300 :-,' J 29,300 30,100
c-, 2,400 2,500 ,-.' 2,686 2,774 2,846 2,525
Panama 1,333 1,348 1,361 1,374 1,395 1,454 1,537
United States 127,788 132,028 127,980 122,810 116,375 110,864 110,961
South America 202,061 204,015 207,680 207,584 206,027 206,266 210,370
Argentina 56,800 58,700 61,469 61,891 61,825 60,174 59,545
Brazil 92,000 91,000 92,000 91,000 89,000 90,000 93,000
Chile 3,356 3,606 3,389 3,407. 3,492 3,550 3,600
Colombia 23,032 23,222 23,825 24,335 25,218 26,137 27,151
Ecuador 2 680 2,711 2,793 2,875 2,767 2,532 2,231
Peru 4,144 4,200 4,260 4,300 4,350 4,100 4,000
Uruguay 10,961 11,536 10,398 9,843 9,424 9,613 10,480
Venezuela 9,088 9,040 9,546 9,933 9,951 10,160 10,363
Western Europe 94,934 95,143 93,102 92,879 93,053 93,656 93,754
EEC 78,973 79,307 77,464 77,134 77,218 77,811 77,882
Belgium/Lux. 3,104 3,103 3,011 3,022 3,030 3,085 3,050
Denmark 3,100 3,145 3,055 3,064 3,055 3,052 3,030
France 23,949 24,327 23,641 23,334 23,360 23,507 2' ,'
Germany, Fed. Rep. of 14,364 14,430 14,493 14,496 14,763 15,007 14,900
Ireland 6,408 6,500 6,214 6,210 6,246 6,132 6,218
Italy 8,487 8,243 8,529 8,813 8,568 8,724 8,850
Netherlands 4,722 4,719 4,606 4,528 4,673 4,797 4,700
United .in:r 14,839 14,840 13,915 13,667 13,523 13,507 13,509
Western Europe, Other
Austria 2,624 2,581 2,500 2,502 2,547 2,594 2,580
Finland 1,780 1,704 1,702 1,661 1.657 1,644 1,644
Greece 1,226 1,244 1,179 1,116 1,035 973 950
Norway 953 943 901 1 944 964 985 1,002
Portugal 1,072 1,100 1,080 1,100 1,115 1,050 1,110
Spain 4,413 4,417 4,408 4,538 4,601 4,650 4,625
Sweden 1,910 1,879 1,863 1,879 1,892 1,911 1,923
Switzerland 1,973 1,964 2,005 2,005 ?,;?. 2,038 n...
Eastern Europe 37,377 38,461 38,359 37,794 ." 38,598 ,
Europe 132,311 133,604 131,461 130,673 131,251 132,254 132,319
Soviet Union 106,266 109,122 111,034 110,346 112,690 114,086 115,000
Oceania 40,254 42,446 43,211 41,005 38,508 35,507 34,464
Australia 3:. 1 32,793 33,434 31,533 29,379. 27,107 26,164
New Zealand 9,*. 9,653 9,777 9,472 9,129 8,400 8,300
World 1,180,941 1,202,469 1,208,832 1,210,602 1,213,165 1,212,017

aEstimated in Agricultural Statistics.

bThe statistics for the selected countries include buffalos of which there are virtually none in these countries,
World totals are for cattle only.
Source: 1953-59 r .,i r '"I ,rit'_ :. iirDI. urjous issues.
1960-75 -.- i'' I': e, rl t FLM 10-78.
1 9 7 6 8 0 -Ti' ,r ,T. 'o 1' -'-; it F i 2 8 0 .
World rAu rp .t ; o.r, n ro.rc. ,r0 i c.--s ui'. -. l-e: Not all the countries are represented in the
table.












Appendix IV.--Calculation of annual quota, 1981-1990, under assumption
that cattle inventory is the same as in the previous cycle


21,733 160
AQ81 = 1,204.6 x
23,184 220


17.2
x -
15.5


21,573 17.2
= 1,204.6 x x-
22,964 15.0


= 1,204.6 x 0.94 x 1.15


= 1,300.9 and 1,431.1 trigger


AQ82 =


22,445 160
1,204.6 x
22,964


17.2
x --
15.0


= 1,204.6 x 0.97 x 1.15

= 1,349.2 and 1,484.1 trigger


AQ83 =


23,682 160
1,204.6 x
22,964


15.2
x
15.3


= 1,204.6 x 1.02 x 0.99


= 1,216.7 and 1,338.3 trigger



24,979 160 15.3
AQ84 = 1,204.6 x x -
22,964 15.7

= 1,204.6 x 1.08 x 0.97

= 1,264.8 and 1,391.3 trigger


(65)







(68)


Appendix IV.--Calculation of annual quota,
that cattle inventory is the
--Continued


1981-1990, under assumption
same as in the previous cycle


= 1,204.6


26,427 160
x
22,964


15.6
16.3
16.3


= 1,204.6 x 1.14 x .96

= 1,313.0 and 1,444.3 trigger


S1,204.6 x 27,876 160 x17.1
22,964 19.5

= 1,204.6 x 1.21 x 0.88

= 1,276.9 and 1,404.6 trigger


,204.6 28,669 160
1,2042,96 x
22,964


18.4
22.1
22.1


= 1,204.6 x 1.25 x 0.83

= 1,252.8 and 1,378.1 trigger


204.6 28,591 160
22,,204. x64
22,964


19.4
21.1


= 1,204.6 x 1.24 x 0.92

= 1,373.2 and 1,510.6 trigger


26,905 160
1,204.6 x 26,905 16
22,964


20.1
19.9


= 1,204.6 x 1.16 x 1.01

= 1,409.4 and 1,550.3 trigger


AQ85


AQ86


AQ 87


AQ88


AQ89 =


____
I L __~~__









(67)


Appendix IV.--Calculation of annual
that cattle inventory
--Continued


quota, 1981-1990, under assumption -
is the same as in the previous cycle


25,006 160
= 1,204.6 x 2 160
22,964

= 1,204.6 x 1.08 x 1.18


= 1,529.8 and 1,682.8 trigger


AQ90


19.5
16.5
16.5


I I











Appendix V.--Calculation of annual qqpta, 1981-1990, under assumption
of slow growth in cattle inventory


AQ81


(68)


= 1,204.6 22,919 160 x 18.6
= 1,204.6 x x
22,964 15.1

= 1,204.6 x 0.99 x 1.23

= 1,469.6 and 1,616.6 trigger


S1,204.6 22,791 160 16.4
= 1,204.6 x x
22,964 15.4

= 1,204.6 x 0.99 x 1.06

= 1,264.8 and 1,391.3 trigger



= 1,204.6 x 24,061 160 x 15.9
22,964 15.4

= 1,204.6 x 1.04 x 1.03

= 1,288.9 and 1,417.8 trigger


= 1,204.6 25,061 160 15.8
= 1,204.6 x x ---
22,964 16.6

= 1,204.6 x 1.08 x 0.95

= 1,240.7 and 1,364.8 trigger


= 1,204.6 25,965 160 16.3
= 1,204.6 x x --
22,964 17.4

= 1,204.6 x 1.12 x 0.94

= 1,264.8 and 1,391.3 trigger


AQ82


AQ83


AQ84


AQ85








(69)




Appendix V.--Calculation of annual quota, 1981-1990, under assumption
of slow growth in cattle inventory--Continued


26,845 160
= 1,204.6 x 26845 -
22,964


= 1,204.6


17.0
18.3
18.3


x 1.16 x 0.93


= 1,301.0 and 1,431.1


= 1,204.6 x 27,698 160
22,964


trigger


17.8
19.2


= 1,204.6 x 1.20 x 0.93

= 1,349.2 and 1,484.1 trigger


1,2046 28,482 160 18.7
22,964,204.6 x x20.2
22,964 20.2


= 1,204.6 x 1.23 x 0.93


= 1,373.2 and 1,510.6


1,204.6 29,319 160
22,9641,204.6
22,964


trigger


19.6
21.0
21.0


= 1,204.6 x 1.27 x 0.93

= 1,421.4 and 1,563.6 trigger


1,204.6 29,677 160 20.5
1,204.6 x x
22,964 21.9

= 1,204.6 x 1.29 x 0.94

= 1,457.6 and 1,603.3 trigger


AQ86


AQ87


AQ88


AQ89


AQ90




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