Canada's Beef Cattle Industry: Exchange Rates, Price Pass-Through and Feedlot Profitability Under Different Production Systems

  • Author / Creator
    Fan, Jiaping
  • This thesis examines two issues from different perspectives of Canada’s beef cattle industry. The first study undertakes the analysis of the exogenous variable’s threshold effect on the domestic price pass-through across the different market levels. The study employs a 3-step analysis: first, a threshold test to detect threshold effect of variable, in this case, exchange rate, on domestic price transmission pattern; second, the threshold autoregression (TAR) model to find the threshold value; and third, the threshold ECM to estimate the short-run adjustments of the farm level price and the wholesale level price regarding to any deviation from the long-run relationship. The results suggest that the trade-oriented variable, exchange rate, exerts threshold effect inducing two regimes. Furthermore, in each regime, farm level producer and wholesale level producer coordinate with each other regarding prices in different patterns.
    The second study examines the impact of production systems on cattle carcass quality and determinants of cattle feeding profitability. It assigns a unit price to each cattle based on its carcass characteristics with the guidance of Canadian Beef Grading System and calculates profit with the grid-based price. The study applies a three-part analysis. First, ordered logit model is built to investigate the probability of cattle carcass falling into different grades. Second, ordinary least square (OLS) regression model is estimated to examine the effect of production variables on the cattle feeding profitability. Third, simulation methodology is applied to generate expected profit; then break-even analysis is conducted. This study also takes price risks into account by conducting the last two analyses in typical input and output price scenarios. The results indicate that cattle’s breed composition, hormone growth promotants, ractopamine treatment, and diet exert impacts on cattle carcass’ grade outcome and cattle feeding profitability in different price scenarios.

  • Subjects / Keywords
  • Graduation date
    Fall 2018
  • Type of Item
  • Degree
    Master of Science
  • DOI
  • License
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