Abstract
This study proposes a comprehensive, consistent assessment of the potential impacts of freer U.S.-Mexico agricultural trade on the Mexican livestock, meat, and feedgrain industries. The basis for developing a theoretical model is set by analyzing the characteristics of the Mexican livestock, meat, and feedgrain industries. After presenting the underlying assumptions of the model, the Mexican livestock, meat, and feedgrain supply and demand relationships are discussed. Three demand model formulations (LA/AIDS, ROTTERDAM, and Single equation) are discussed for the Mexican meat sector. Gross complementarity among meats is found in the LA/AIDS and the ROTTERDAM and prevents the use of these demand specifications. The single equation meat demand formulation is integrated to the supply system and the parameters of the Mexican livestock, meat. and feedgrain model are estimated. The model is then validated through historical simulation and sensitivity analysis. Summary statistics show good performance and high stability of the estimated model. The fully integrated supply and demand model is used to simulate the effects of Mexico's trade liberalization on the Mexican livestock, meat, and feedgrain sectors under several scenarios. Liberalization of Mexican markets benefits both the livestock and feedgrain sectors in Mexico because the resulting increased demand for livestock generated an increase in demand for feed that more than offset the negative effects generated by increasing feed imports. The Mexican meat processing industry also benefits from Mexican market liberalization. Even though the simulation results indicate that after trade liberalization meat production is lower on average, total revenues actually increase because the inelastic nature of meat demand in Mexico results in a much larger percentage increase in retail prices of meat. Changes in real per capita income in Mexico are an important factor in determining the likely consequences of trade liberalization on Mexican meat imports. If real per capita income in Mexico had been only one standard deviation lower than was actually the case during the 1986 to 1991 period of unilateral liberalization, the model simulation results indicate that Mexican meat demand would have dropped enough to eliminate meat imports altogether, possibly even creating excess Mexican supplies of meat for export.
Garcia Vega, Jose de Jesus (1995). The Mexican livestock, meat, and feedgrain industries : a dynamic analysis of U.S.-Mexico economic integration. Texas A&M University. Texas A&M University. Libraries. Available electronically from
https : / /hdl .handle .net /1969 .1 /DISSERTATIONS -1574724.