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USDA Economists Say Freer Farm Trade Equals Pricier Chicken

April 5, 1990

WASHINGTON (AP) _ If negotiations to liberalize world agricultural trade are successful, look for fried chicken dinners to cost a bit more.

It wouldn’t be much of an increase, and it’s all pretty much of a guess, anyway, says the Agriculture Department. But when economists and computers get together, that’s the way it goes.

The department’s Economic Research Service assumed in its study that ″a hypothetical one-time 10 percent increase in corn prices″ would occur if ongoing talks under the General Agreement on Tariffs and Trade succeed in liberalizing trade.

Two computer models were set up to see what would happen to the broiler industries in the United States and Canada if producers had to pay more for corn used to feed their birds.

Prices would go up in both countries, at the producer level and at retail counters, the study concluded.

One of the report’s authors, economist Greg Gajewski, said Wednesday in a telephone interview that the study did not forecast that a GATT settlement would boost corn prices by 10 percent.

″It’s not based on past historical data,″ he said. ″And that’s because there’s never been such a movement to free trade.″

Gajewski said an earlier study last year showed that if the GATT talks resulted in liberalized trade, the U.S. market prices for corn - the prices that broiler producers would pay - could rise between 1 percent and 11 percent, a huge range of possibilities.

For purposes of the study, a 10 percent increase was used. Gajewski said the main point of the study is that U.S. broiler prices would be much more responsive than Canadian prices to an increase in corn costs.

In the United States -

Broiler prices at the producer level would start climbing immediately, with the monthly maximum increase of 3.9 percent occurring in the fifth month. However, prices would continue to rise at slower rates for an additional 27 months.

Over the entire period, each percentage point in corn prices would lift producer broiler prices by an average of nearly 0.4 percent.

At retail stores, broiler price increases would resemble those at the producer level, but the rise would be smaller. The peak monthly increase of 2.8 percent would occur in the fourth month. It would take an additional 26 months for the increases to end.

In Canada -

Broiler price increases at the farm would be delayed a month but would then rise and build strength through the 15th month with a peak rise of 4.3 percent. Farm broiler prices would continue up at lesser rates for another seven months.

On the retail level, Canadian broiler prices would begin increasing immediately, gaining strength through the 16th month, with a maximum monthly grain of 2.9 percent. The rise would continue more slowly for another six months.

The study, described in the April issue of Agricultural Outlook magazine, showed that the Canadian broiler price increases would taper off eight to 10 months sooner than in the United States, which would have more volatile month- to-month responses.

Some of the U.S.-Canada difference may be due to marketing structures, the report said. In Canada, provincial governments control broiler output through marketing quotas, and the federal government sets an import quota to help stabilize prices.

Broiler production in the United States is largely unregulated, and the top 20 firms account for about 80 percent of the total output.


WASHINGTON (AP) - Some Mexican cattle are getting fast-track clearance by the Agriculture Department to enter designated U.S. feedlots because drought- shriveled pastures have been reduced to starvation levels.

James W. Glosser, administrator of the department’s Animal and Plant Health Inspection Service, said Wednesday the agency’s usual import regulations have been temporarily set aside so the cattle can be brought in.

Normally, he said, imported animals and their herds of origin have to be tested and found free of cattle brucellosis and tuberculosis.

The usual requirement is that imported animals must come from herds that have been tested for the diseases no more than three months before the date of U.S. entry. With the special waiver, the Mexican cattle will be able to enter approximately three months sooner.

″The drought-stricken pasture lands in parts of Mexico cannot support the cattle,″ Glosser said. ″By bringing the animals temporarily to U.S. quarantined feedlots under strict movement restrictions, we can avert starvation of the animals and still protect the health of U.S. livestock.″

Glosser said the cattle will be taken directly to quarantined feedlots in USDA-sealed trucks or rail cars. They will not be sold to any U.S. buyer and will return directly to Mexico from the feedlots. The animals will be kept apart from U.S. cattle while in the feedlots, which are mostly in Texas.

There was no estimate of how many Mexican cattle may be imported under the special program, said agency spokeswoman Anita Brown.


WASHINGTON (AP) - The Corn Belt has been selected for a new Agriculture Department testing program designed to protect ground water from contamination by fertilizers and pesticides.

Agriculture Secretary Clayton Yeutter said Wednesday the research is scheduled to begin this summer. It will be undertaken on farmland overlying aquifers in nine states: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, Ohio and Wisconsin.

The research is part of a government-wide water quality initiative provided in the Bush administration’s budget requests, he said.

Spending for all of the Agriculture Department’s water quality activities this year is budgeted at $158 million, compared with $112.7 million last year, Yeutter said. The administration’s request for the fiscal 1991 year that will begin Oct. 1 is for $207 million.

Yeutter said about $3.7 million of this year’s funds has been targeted for the Corn Belt projects.

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