IP System for Beef Production

1
IP System for Beef Production

• A first approach to cost estimation
• Ronald Volpi
• Rural Economy, University of Alberta

2
Agenda

• Objectives
• Background Information
• IP System Design
• Cost Estimation
• Conclusion

3
Objectives

• Assess the requirements and cost of running
  hormone-free beef production under an identity
  preservation system

4
Background Information

• List of hormones
• 17-ß oestradiol
• testosterone
• progesterone
• zeranol
• trenbolone acetate
• melengestrol acetate (MGA)

5
Background Information

• Beef is 45 of farm receipts in Alberta
• Alberta exports of carcasses and cuts, fresh and
  frozen in 2001 of 1,575 million
• US 80
• Mexico 13
• Japan 5.1
• South Korea 1.1
• Taiwan 0.8

6
Background Information

• Exports of beef to EU of 3 million (0.19) in
  2001
• 137 increase from 2000
• Basically not destined to human consumption
• US exports of beef to EU in 2001 of US12.4
  million (1,865 MT)

7
Background Information

• EU imports 400 to 450 thousand MT of beef per
  year
• Hilton quota high quality beef allocated to
  Argentina, Australia, Brazil, New Zealand,
  Uruguay, US/Canada

8
Background Information
Timeline on the hormone ban dispute
9
IP System Design

• Ensures traceability from box to cow
• Based on writen procedures
• Demands record keeping and lots of paperwork
• Audited (internal and external)

10
Cost Differential Estimation

• System Setup US2,500 or 4,000
• Calf producition of similar costs (if retained)
• Implanted Yearlings on pasture have a increase in
  gain weight of about 14
• Feedlot steers have a daily gain increase of 15
  to 22 with implants

11
Cost Differential Estimation
Source author calculations, based on Ag Ventures
(February 1998).
12
Cost Differential Estimation
Source author calculations, based on Gould
(2000).
13
Cost Differential Estimation
Source author calculations, based on Gould
(2000).
14
Cost Differential Estimation
Source author calculations.
15
Conclusions

• System seems viable but more research into the
  economics and the productivity is necessary
• Market for natural beef is definitely an
  alternative market
• EU will mantain its imports
• National identification programs are being
  lauched in many countries