Abstracts Economics

Economic considerations for expanded feeding of livestock in the Pacific Northwest

by Paul R. Grimshaw

Several agricultural and related industry groups in the Pacific Coast states have expressed concern about the competitive position of these states in the production of feed grains and livestock products. This study was directed toward the investigation of these concerns. In order to permit the real world situation, with its accompanying multivariable reality, to be reduced to workable size, a linear programming model was designed. The 48 contiguous states were divided into five regions with smaller regions in the western United States to permit a more detailed analysis of the West. The quantities of feed grains produced in each state were determined and summed for the states in a region. The quantities of fed beef, pork, broilers, turkeys, eggs, and milk (the products of the major grain consuming classes of livestock) demanded in each state were computed. A matrix of transportation costs between regions was developed for feed grains and for the livestock products of the model. Regional weighted average prices received by farmers for each feed grain and for each livestock product were determined. The model was then utilized to indicate production of all the livestock products required for consumption by region at the least cost of producing the products. Optimal solutions were obtained using 1968 and 1969 relative prices and these solutions were analyzed. The analysis indicates that generally the states which are deficit in beef, pork, broiler, and egg production have a slight economic advantage in producing these products for local consumption until the locally produced feed supply is utilized. Each region in the model produced the milk consumed in that region. Region I (Oregon and Washington) has traditionally been self-sufficient in turkey production, and Region III (California) has been a turkey exporting state. According to the model, both of these regions should import the turkey consumed in the region to derive optimum economic benefits. These conclusions are based on the relative prices and transportation costs that existed in 1968 and 1969. After the solutions were obtained, the price of wheat in Region I was varied using a parametric procedure available with the linear programming package. Results of this analysis using 1968 and 1969 relative prices were described. The parametric analysis indicated that at the 1968 price of wheat in Region I more than twice the quantity of wheat allocated to livestock feeding in the basic model could have been economically utilized and would have reduced costs of producing the livestock products consumed in Region I. The 1969 wheat price in Region I was sufficiently low that the parametric analysis indicated an allocation of over four times the quantity used in the basic model for livestock feeding. The basic model utilized 1,043,000 tons of wheat for livestock feeding. It can be concluded from the analysis that Region I could have utilized much larger quantities of wheat for livestock feeding than was allocated for feeding in…