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Impacts of trade, environmental and agricultural policies in the North American hog/pork industry on… Savard, Marielle 1997

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IMPACTS OF TRADE, ENVIRONMENTAL AND AGRICULTURAL P O L I C I E S IN THE NORTH AMERICAN HOG/PORK INDUSTRY ON WATER QUALITY, TRADE PATTERNS AND WELFARE  by MARIELLE B.Sc, M.Sc,  SAVARD  McGill, McGill,  1982 1989  A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in THE  FACULTY OF GRADUATE STUDIES  R e s o u r c e Management and E n v i r o n m e n t a l S t u d i e s We a c c e p t t h i s t h e s i s  THE  as conforming t o t h e r e q u i r e d  UNIVERSITY OF BRITISH COLUMBIA September 1997  © Marielle  Savard,  1997  standard  In  presenting this  degree at the  thesis  in  University of  partial  fulfilment  of  of  department  requirements  British Columbia, I agree that the  freely available for reference and study. I further copying  the  by  his  or  her  representatives.  an advanced  Library shall make it  agree that permission for extensive  this thesis for scholarly purposes may be granted or  for  It  is  by the  understood  that  head of copying  my or  publication of this thesis for financial gain shall not be allowed without my written permission.  Department of The University of British Columbia Vancouver, Canada  DE-6 (2/88)  11  ABSTRACT  The  objectives  framework  of  t o measure  this  study  t h e impact  were:  (1)  of trade,  to  design  agricultural  e n v i r o n m e n t a l p o l i c i e s o n w a t e r q u a l i t y a n d (2) t o a s s e s s patterns and  and market  welfare  consumer s u r p l u s e s  plus  (Marshallian  reach  linked  those  e n v i r o n m e n t a l and t r a d e  an e n v i r o n m e n t a l  model,  t o a model o f t h e N o r t h A m e r i c a n h o g / p o r k  Results to  objectives,  water  show t h a t t r a d e  o r Pont-Rouge  trade  various  policies. EPIC,  was  sector.  l i b e r a l i z a t i o n does n o t c o n t r i b u t e  p o l l u t i o n i n t h e two c a s e s  Carolina  and  o f producer  g o v e r n m e n t payments) u n d e r  combinations o f a g r i c u l t u r a l , To  measures  a  Quebec.  studies':  In fact,  Raleigh,  North  leaching, of nitrates  d e c r e a s e s i n Quebec f o l l o w i n g t h e e l i m i n a t i o n o f c o u n t e r v a i l i n g duties, exports  stabilization  and t h e ban  surface  nutrient and  policies,  management  groundwater  plans  quality  including nutrient plans,  patterns.  The r e d u c t i o n  o f US p o r k e x p o r t s Trade  and  are  live  hog  both  Environmental  a l s o have a c l e a r impact on  i n Quebec i n v e n t o r i e s t r i g g e r s a t o t h e US a n d a n i n c r e a s e  t o Canada.  agricultural  policy  scenarios  impact on t r a d e p a t t e r n s t h a n on w e l f a r e b a n o n US l i v e h o g e x p o r t s  exports  US  implemented,  increase.  decrease o f Canadian l i v e hog exports  the  on  t o Canada.  When  trade  payments  have  a  larger  a n d w a t e r q u a l i t y . When  t o Canada i s l i f t e d ,  US l i v e h o g  t o Canada i n c r e a s e a t t h e e x p e n s e o f US p o r k e x p o r t s a n d  I l l  Canadian  live  Market from  impacts  scenarios while  hog  exports to the  welfare  impacts  induced  trigger  by  trade p o l i c i e s  environmental  increases  environmental  from  US.  i n North  policies  are  are  policies. American  responsible  different  Trade  market  welfare, the welfare decrease  somewhat a t t e n u a t e d u n d e r  free  from  welfare  f o r decreases  market w e l f a r e . S i n c e t r a d e l i b e r a l i z a t i o n has a p o s i t i v e on  policy  environmental  trade conditions.  in  impact  policy  is  iv TABLE OF  CONTENTS  ABSTRACT  i i  L I S T OF TABLES  v i  L I S T OF FIGURES  v i i  ACKNOWLEDGEMENTS  viii  CHAPTER 1 - INTRODUCTION  1  Problem Statement . . . . Objectives Organization of the Thesis  1 6 6  CHAPTER I I - LITERATURE REVIEW . . . . Trade Studies with Environmental V a r i a b l e s Hog/Pork S t u d i e s w i t h T r a d e V a r i a b l e s Environmental Studies  8 9 12 14  CHAPTER I I I - THE CONCEPTUAL MODEL . D e s c r i p t i o n o f t h e C o n c e p t u a l Model I m p a c t s o f T r a d e and A g r i c u l t u r a l P o l i c i e s on W a t e r Q u a l i t y , W e l f a r e , and Trade Impacts of Nutrient Management Plans on Water Quality Impact o f N u t r i e n t Management P l a n s on W e l f a r e a n d Trade S c a l e s o f t h e E n v i r o n m e n t a l and Economic Models . . Trade and E n v i r o n m e n t a l S c e n a r i o s Design of Scenarios 4 t o 7  18 18  CHAPTER I V - THE ECONOMIC MODEL The O b j e c t i v e F u n c t i o n F e e d C o s t s and P o r k Demand a s D r i v i n g F o r c e s o f Model Output V a r i a b l e s Important F e a t u r e s o f t h e Model Dynamics Regionality Incorporation of Risk D a t a V a l u e s and S o u r c e s E x p e c t e d R i s k a n d S t a b i l i z a t i o n Payments . R e f i n e m e n t o f C a n a d i a n and US T r a d e D a t a . R e f i n e m e n t o f C a n a d i a n a n d US C o s t D a t a . . R e f i n e m e n t o f C a n a d i a n a n d US C o e f f i c i e n t s E m p i r i c a l T o o l s Used f o r E v a l u a t i o n Comparison o f S i m u l a t e d and A c t u a l Data . . Sensitivity Analysis Dynamic R e s p o n s e o f t h e M o d e l Possible Modifications  21 23 23 24 26 30 36 36  the  . . . .  . . . .  . .  37 38 39 39 40 42 44 44 46 47 48 52 55 62 65 66  V  CHAPTER V - THE ENVIRONMENTAL MODEL D e s c r i p t i o n of Chemical T r a n s p o r t Models The E r o s i o n P r o d u c t i v i t y Impact C a l c u l a t o r (EPIC) . Environmental I n d i c a t o r s Data Inputs Management I n f o r m a t i o n f o r N o r t h C a r o l i n a . . . Management I n f o r m a t i o n f o r Quebec Output V a r i a b l e s Validation Results V a l i d a t i o n Results f o r North C a r o l i n a V a l i d a t i o n R e s u l t s f o r Quebec Sensitivity Analysis Possible Modifications  68 68 72 74 75 79 81 82 84 85 86 90 91  CHAPTER V I - ANALYSIS AND EMPIRICAL RESULTS Manure N i t r o g e n I n s e r t e d i n t o E P I C u n d e r Two Trade Policies Manure N i t r o g e n I n s e r t e d i n t o E P I C u n d e r Two N u t r i e n t Management P l a n s E f f e c t o f Two T r a d e S c e n a r i o s and two Environmental S c e n a r i o s on Hog Management E f f e c t o f Two T r a d e S c e n a r i o s and Two Environmental S c e n a r i o s on W a t e r Q u a l i t y E f f e c t o f N i n e T r a d e and E n v i r o n m e n t a l S c e n a r i o s on Welfare, Trade, Hog I n v e n t o r i e s and Slaughter Amounts S c e n a r i o s 1 and 2 Scenario 3 S c e n a r i o s 4 and 6 S c e n a r i o s 5 and 7 C o m p a r i s o n s Between S c e n a r i o s 4 and 5, and 6 and 7 S c e n a r i o s 8 and 9 Trade Patterns Across Scenarios N o r t h A m e r i c a n W e l f a r e Changes A c r o s s S c e n a r i o s . . R e g i o n a l Market W e l f a r e Versus E n v i r o n m e n t a l Impacts  93  CHAPTER V I I - CONCLUSIONS AND Conclusions Policy implications BIBLIOGRAPHY APPENDIX - THE  POLICY IMPLICATIONS  . . . .  93 96 101 103 114 124 125 126 126 127 127 128 132 134 137 137 139 144  ECONOMIC MODEL  151  vi L I S T OF  TABLES  Table  1 C h a r a c t e r i s t i c s of the Baseline and N i n e S c e n a r i o s T a b l e 2 K i l o g r a m s o f N i t r o g e n and P h o s p h o r u s P e r m i s s i b l e u n d e r Two N u t r i e n t Management P l a n s i n t h e S o u t h e a s t and i n Quebec U s i n g E P I C C r o p A b s o r p t i o n R a t e s . . . T a b l e 3 Hog I n v e n t o r y P e r m i s s i b l e u n d e r Two N u t r i e n t Management P l a n s i n t h e S o u t h e a s t and i n Quebec . . T a b l e 4 P r o d u c t i o n , S l a u g h t e r , Demand R e g i o n s and t h e i r Centers T a b l e 5 S t a n d a r d D e v i a t i o n s 1981-1986 Used i n t h e S i m u l a t i o n P e r i o d as a Proxy f o r R i s k . T a b l e 6 Q u a r t e r l y D e a t h R a t e s o f P i g l e t s by R e g i o n . . . T a b l e 7 Sources o f Data f o r t h e Economic Model T a b l e 8 Hog I n v e n t o r y and S l a u g h t e r V a l i d a t i o n S t a t i s t i c s f o r t h e 1981-1986 P e r i o d T a b l e 9 Hog I n v e n t o r y and s l a u g h t e r V a l i d a t i o n S t a t i s t i c s f o r t h e 1987-1992 P e r i o d T a b l e 10 S e n s i t i v i t y A n a l y s i s f o r t h e 1987-92 P e r i o d . . T a b l e 11 Components o f t h e E P I C M o d e l T a b l e 12 S e l e c t e d E P I C I n p u t s S p e c i f i e d by t h e U s e r . . . T a b l e 13 F r e q u e n c y o f E f f l u e n t I r r i g a t i o n s on t h e E x p e r i m e n t a l S i t e T a b l e 14 H a r v e s t D a t e s f o r t h e E x p e r i m e n t a l P e r i o d . . . T a b l e 15 C o m p a r i s o n b e t w e e n S i m u l a t e d and E x p e r i m e n t a l North C a r o l i n a Data T a b l e 16 C o m p a r i s o n between S i m u l a t e d and E x p e r i m e n t a l Quebec D a t a T a b l e 17 Impact o f T r a d e S c e n a r i o s on Hog I n v e n t o r y P e r c e n t a g e Changes Compared t o t h e B a s e l i n e . . . . T a b l e 18 Impact o f T r a d e and E n v i r o n m e n t a l S c e n a r i o s on K i l o g r a m s o f N i t r o g e n (N) and P h o s p h o r u s (P) A p p l i e d p e r H e c t a r e i n N o r t h C a r o l i n a and Quebec . . T a b l e 19 Impact o f T r a d e and E n v i r o n m e n t a l S c e n a r i o s on M a r k e t Hogs Numbers p e r H e c t a r e i n N o r t h C a r o l i n a and Quebec T a b l e 20 Impact o f T r a d e and E n v i r o n m e n t a l S c e n a r i o s on W a t e r Q u a l i t y i n N o r t h C a r o l i n a T a b l e 21 Impact o f T r a d e and E n v i r o n m e n t a l S c e n a r i o s on W a t e r Q u a l i t y i n Quebec T a b l e 22 M a r k e t W e l f a r e , Hog I n v e n t o r i e s , S l a u g h t e r Amounts, L i v e Hog and P o r k E x p o r t s and Percentage D i f f e r e n c e from t h e B a s e l i n e f o r Three Trade S c e n a r i o s T a b l e 2 3 M a r k e t W e l f a r e , Hog I n v e n t o r i e s , S l a u g h t e r Amounts, L i v e Hog and P o r k E x p o r t s and Percentage D i f f e r e n c e from t h e B a s e l i n e f o r S i x Environmental Scenarios T a b l e 24 W a t e r Q u a l i t y and M a r k e t W e l f a r e Changes i n N o r t h C a r o l i n a and Quebec  27 31 33 41 45 49 50 57 59 64 73 77 80 81 85 88 94  95 102 110 113  115  118 134  vii L I S T OF  FIGURES  F i g u r e 1 C o n c e p t u a l Model F i g u r e 2 I n p u t and A b s o r p t i o n o f N i t r o g e n by F o r a g e i n N o r t h C a r o l i n a and Quebec F i g u r e 3 I n p u t and A b s o r p t i o n o f P h o s p h o r u s b y F o r a g e i n N o r t h C a r o l i n a and Quebec F i g u r e 4 I n p u t and A b s o r p t i o n o f N i t r o g e n and P h o s p h o r u s b y C o r n i n Quebec F i g u r e 5 Impact o f L a n d A p p l i c a t i o n o f Swine L a g o o n E f f l u e n t on Mass T r a n s p o r t o f P h o s p h a t e s i n R u n o f f i n N o r t h C a r o l i n a and Quebec F i g u r e 6 Impact o f L a n d A p p l i c a t i o n o f Swine L a g o o n E f f l u e n t on F o r a g e on Mass T r a n s p o r t o f N i t r a t e s i n N o r t h C a r o l i n a and Quebec F i g u r e 7 Impact o f L a n d A p p l i c a t i o n o f Swine L a g o o n E f f l u e n t on C o r n on Mass T r a n s p o r t o f N i t r a t e s i n R u n o f f and i n L e a c h i n g i n Quebec F i g u r e 8 Sum o f L i v e Hog E x p o r t s f r o m 1987 t o 1992 u n d e r t h e B a s e l i n e and A l t e r n a t i v e S c e n a r i o s . . . . F i g u r e 9 Sum o f P o r k E x p o r t s f r o m 1987 t o 1992 u n d e r t h e B a s e l i n e and A l t e r n a t i v e S c e n a r i o s . . . . F i g u r e 10 N o r t h A m e r i c a n W e l f a r e f r o m 1987 t o 1992 u n d e r t h e B a s e l i n e and A l t e r n a t i v e S c e n a r i o s . . . .  20 98 99 100 106 107 109 130 131 133  viii ACKNOWLEDGEMENTS I h a v e h a d a l o t o f s u p p o r t i n t h e c o u r s e o f my g r a d u a t e s t u d i e s f r o m e x t r e m e l y d e d i c a t e d p r o f e s s i o n a l s who c a n e s t a b l i s h r e l a t i o n s h i p s o f m u t u a l r e s p e c t w i t h o t h e r s . My o n l y d e s i r e i s t o g i v e b a c k a t l e a s t a s much a s I h a v e r e c e i v e d . First, I w o u l d l i k e t o t h a n k G a r t h C o f f i n , my M a s t e r s T h e s i s S u p e r v i s o r whom I c o n s i d e r a s my f i r s t m e n t o r . G a r t h i n t r o d u c e d me t o R o b e r t Romain, w i t h whom I w o r k e d f o r two y e a r s as a R e s e a r c h A s s o c i a t e a t L a v a l U n i v e r s i t y . R e s e a r c h e r s o f t h e G r o u p e de R e c h e r c h e A g r o - A l i m e n t a i r e (GRAAL) i n c l u d i n g R o b e r t , have an excitement f o r r e s e a r c h which i s c o n t a g i o u s and which c o n t r i b u t e d t o my d e c i s i o n t o p u r s u e my s t u d i e s . I n t i m e s o f d o u b t d u r i n g my Ph.D., R o b e r t i s t h e one who t o l d me I c o u l d do i t . L a v a l U n i v e r s i t y a l s o f i n a n c e d my s t u d i e s d u r i n g f i v e y e a r s w h i c h made t h i s p r o j e c t p o s s i b l e . A t UBC, I w o u l d l i k e t o t h a n k my s u p e r v i s o r M a r y Bohman who p r o v i d e d an i n c r e d i b l e support, academic, moral and l o g i s t i c i n c l u d i n g r i d e s home a f t e r work a n d l a s t m i n u t e p h o t o c o p y i n g . To complement h e r academic skills, Mary i s a good editor, communicator and s t r a t e g i s t t o deal with administrative procedures. I would a l s o l i k e t o thank L e s L a v k u l i c h , D i r e c t o r o f R e s o u r c e Management a n d E n v i r o n m e n t a l S t u d i e s . He was a n d will r e m a i n I hope a n i n v a l u a b l e a d v i s o r d u e t o a g r e a t combination o f l i s t e n i n g s k i l l s , i n t e l l i g e n c e and experience. F u r t h e r m o r e , c o n v e r s a t i o n s w i t h h i m a n d Hans S c h r e i e r , o n e o f my committee members, a m p l i f i e d my passion f o r ecology and r e s e a r c h . P i e r r e - P h i l i p p e Claude, a c o n s u l t a n t i n s o i l s c i e n c e , p l a y e d a c r u c i a l r o l e due t o h i s k n o w l e d g e o f t h e e n v i r o n m e n t a l model, EPIC. F o r t h r e e y e a r s , I had an o f f i c e i n t h e Department o f A g r i c u l t u r a l Economics and I w i s h t o acknowledge Kathy Shynkaryk and R e t h a G e r s t m a r f o r c r e a t i n g a f a m i l y a t m o s p h e r e s o i m p o r t a n t when one w o r k s l o n g h o u r s . I would a l s o l i k e t o mention t h e c o n t r i b u t i o n o f E s t e l l e B r o o k e , my t e a c h e r o f t r a n s c e n d e n t a l m e d i t a t i o n . N o t o n l y d i d t h i s technique h e l p me c o p e w i t h t h e s t r e s s e s o f g r a d u a t e s t u d i e s b u t i t b r o u g h t a l o t o f g r o w t h a n d h a p p i n e s s i n t o my life. F i n a l l y a word f o r my p a r e n t s , e s p e c i a l l y my m o t h e r , who's r e v e r e n c e had a s t r o n g i n f l u e n c e o n me.  Paul and G i l Savard and f o r h i g h e r education has  1 CHAPTER 1 - INTRODUCTION  Problem  Statement  The has  interaction  become a h o t  between  issue  the North American  and  environmental  in international  policy  Agreement on E n v i r o n m e n t a l  t h e Committee on T r a d e Organization  trade  and E n v i r o n m e n t  (WTO). The  topics raised  (CTE)  policies  forums  such  Co-operation  of the World  include:  as and  Trade  1) t h e i m p a c t  of  e n v i r o n m e n t a l p o l i c i e s on t r a d e p a t t e r n s and c o m p e t i t i v e n e s s , 2) the  contribution  of  international  trade  to  environmental  d e g r a d a t i o n , 3) t h e i n t e r n a t i o n a l h a r m o n i z a t i o n o f e n v i r o n m e n t a l policies,  and  level  environmental  of  4)  the  important questions.  use  of  t r a d e measures  quality.  First,  will  Dean  to  (1992)  the removal  ensure  a  given  identifies  of trade  two  barriers  d e c r e a s e n a t u r a l c a p i t a l and  l e a d t o u n s u s t a i n a b l e development,  annihilating  trade?  the  gains  from  Second,  i f we  assume  that  e n v i r o n m e n t a l p o l i c y can compensate f o r t h e p o t e n t i a l l y n e g a t i v e environmental combination  of  effects  of  t r a d e and  trade  environmental  highest welfare? This thesis with  an  empirical  liberalization,  analysis  addresses of  the  policies t h e s e two  North  what  is  the  providing  the  key  questions  American  hog/pork  industry. While  the  environmental theoretically necessary  first-best policy (e.g.  and  second-best  combinations Krutilla,  1991),  s i n c e many o f t h e t h e o r e t i c a l  have  optimal been  trade  and  identified  empirical  studies  are  findings  d e p e n d on  the  2 magnitude  of  damage) and  environmental  on s u p p l y  The  hog  and  cost  in  industry  general,  are  is  a  good  The  hog  source  sector  pollution  important  attributed  to  Agriculture  (USDA) c i t e d  Potential industry  rivers  livestock  and  waste  of  f o r 64%  and  and  of  (United  from  the to  57%  livestock pollution,  of  which  States  an  the  nonpoint  2 0%  may  Department  be of  i n Bouzaher e t a l . , 1993b).  environmental  pollution  physical  i t i s estimated that  lakes,  problems  include: eutrophication  emissions,  of  study  contributors  i s responsible  of  case  industry,  e s p e c i a l l y w a t e r p o l l u t i o n . I n t h e US, agricultural  value  demand e l a s t i c i t i e s o f g o o d s p r o d u c e d .  environmental perspective. sector  ( i . e . the  from  the  livestock  o f s u r f a c e w a t e r s by  groundwater  by  nitrate  phosphate emissions,  c o n t a m i n a t i o n by h e a v y m e t a l s , s u c h as cadmium, c o p p e r , m e r c u r y , lead  and  zinc  originating  from  concentrated  c o n t a m i n a t i o n by p a t h o g e n i c m i c r o - o r g a n i s m s , and N i t r a t e s and the  literature.  months o f disorder, nitrates levels  and  age  susceptible  to  methaemoglobinaemia, in  odor nuisance.  p h o s p h a t e s h a v e r e c e i v e d t h e most a t t e n t i o n i n  N i t r a t e s a f f e c t human h e a l t h : are  feedstuffs,  drinking  water.  A  the  potentially lethal  caused link  i n f a n t s under s i x  by  between  large  amounts  excessive  s t o m a c h c a n c e r i s a more c o n t r o v e r s i a l  blood of  nitrate  issue.  C o n t a m i n a t i o n by p h o s p h a t e s c a u s e s e u t r o p h i c a t i o n o f i n l a n d waters plant  which  is  associated  with  growth, oxygen d e p l e t i o n ,  p l a n t s p e c i e s q u a l i t y and  increased  pH  food-chain  algae  variability,  and  and  aquatic  changes  in  e f f e c t s . Certain blue-green  3 algae odor  i n eutrophied problems,  Growth  of  waters  and  larger  form p o t e n t  i n t e r f e r e with  plant  forms  toxins,  drinking  limit  the  cause t a s t e  water  treatment.  usefulness  of  w a t e r s f o r r e c r e a t i o n a l and n a v i g a t i o n a l p u r p o s e s , and t h e p o t e n t i a l f o r c o m m e r c i a l and  sport fishing  and  inland  decreases  (Sharpley  et  al.,  1994) . Unfortunately, environmental nature  of  the  damages  the  economic  have  problem  not  costs  been  requires  associated  assessed.  with  The  information  these  widespread  regarding  all  c a t e g o r i e s o f damages ( h e a l t h r i s k s , r e d u c t i o n o f c o m m e r c i a l recreational regions.  fishing,  Hence,  decisions  of  these  nitrate be  and  costs  livestock  (market p r i c e s d i f f e r environmental  etc.)  and are  their not  producers,  incorporated  creating  costs).  Since  the  total  into  market  supply failure  private  associated  and with to  t h i s t h e s i s measures  Market w e l f a r e  i s defined  consumer s u r p l u s e s  as  plus  payments. correct  environmental  the  costs,  control"  approaches  on  use),  input  different  phosphate p o l l u t i o n i n N o r t h America would have  t h e M a r s h a l l i a n m e a s u r e s o f p r o d u c e r and  To  a  costs  i n c l u d e d i n a measure o f s o c i a l w e l f a r e ,  government  for  from s o c i a l c o s t s which e q u a l  market r a t h e r than s o c i a l w e l f a r e .  subsidies, are  costs  and  chiefly  and  and  market's  policies (such  as  and  failure regulations  standards,  incentive-based  i n the  bans,  mechanisms  marketable permits) are  used  to or and  "command  and  restrictions  (such  implemented.  livestock sector to  incorporate  as  taxes,  Regulations  restrict pollution  4 b e c a u s e many e n v i r o n m e n t a l p r o b l e m s a s s o c i a t e d production are an  nonpoint source p o l l u t i o n problems; to  incentive-based  first  with a g r i c u l t u r a l  mechanism  i d e n t i f y the  like  polluter  and  taxation, determine  policymakers the  extent  p o l l u t e r ' s r e s p o n s i b i l i t y . Examples o f e n v i r o n m e n t a l in  food  and  agriculture  include:  implement  restrictions  must  of  the  regulations  on  land  use,  q u o t a s on t h e p r o d u c t i o n and  a p p l i c a t i o n o f manure, r e s t r i c t i o n s  on  per  the  number  operations,  of  and  animals  identified  t i l l a g e and  sector  and  as  Best  w a t e r and  used  from  instruments.  price  policies  policies and  variations support  raise  countervailing  and  the  C a n a d i a n hog  case  surface of  specifies  output  duties  brought  prices  to  used  effects  to  the  livestock  instruments,  designed have  environmental  attenuate  subsidies  are can  above  Canadian  not be  as  levied  by  policy  necessarily  amplified  the  market  p r o v i n c i a l programs are  are  risks  the  when level.  targeted  United  States  e x p o r t s . Numerous g o v e r n m e n t p r o g r a m s were  judged c o u n t e r v a i l a b l e in  into  Practices,  targeted  programs  F u r t h e r m o r e , t h e s e f e d e r a l and  against  livestock  applications.  control"  policies  These  resource-neutral:  when  of  1996). A n o t h e r t y p e  Management  pesticide  "command  stabilization  incurred  public  ( K r i s s o f f e t al.,  environmental  have  income  size  c r o p r o t a t i o n p r a c t i c e s , t e r r a c e , g r a s s e d waterways,  fertilizer, While  or  r e s t r i c t i o n s on dumping p o l l u t a n t s  or groundwater s u p p l i e s policy,  hectare  on t h e b a s i s o f t h e US  by  p o r k e x p o r t s i n 1984  the and  United against  States  "specificity  against  test"  Canadian  Canadian exports of  hog  fresh,  5 chilled,  and  frozen pork  i n 1989.  However, payments u n d e r  federal Agricultural S t a b i l i z a t i o n Act Income 80%  Stabilization  of the t o t a l  Further, (NTS)  Insurance  calculated  payments  from  program, which  accounted 1989  investigation  Program  and t h e Quebec Farm  (QFISIP)  accounted  s u b s i d y i n t h e 1984  the  National  r e p l a c e d ASA  f o r n e a r l y 90%  (ASA)  of the t o t a l  (Moschini  and  and  Stabilization from t h e QFISIP  calculated  Meilke,  for  investigation.  Tripartite  f o r hogs,  the  subsidy i n the  1993).  This  thesis  s t u d i e s t h e e c o n o m i c and e n v i r o n m e n t a l i m p a c t s o f t h e r e m o v a l  of  these  of  programs  and  consequently  countervailing  duties  e x p o r t s by t h e  US.  levied  of  against  the  elimination  Canadian  hog  and  O n l y one t r a d e b a r r i e r r e m a i n s : a n o n t a r i f f b a r r i e r live  US  hog  imports  pseudorabies.  Pseudorabies  warm-blooded vaccine has  mammals  occurred  occured  to  is a  viral  except  i n t h e US  in  people,  introduced  into  that  infected  prevent  1931.  problems  though These in  no  signs  susceptible  of  for  which  spread  there  h o s t s . The  sporadic  by  illness,  is  no  disease  piglets  Pseudorabies  of most  outbreaks  outbreaks k i l l  sows.  pigs,  the  banning  disease affecting  a h e a l t h y h e r d o f swine  shows  and  Canada,  since  reproductive  animal  Canada  o r t r e a t m e n t . Swine a r e i t s n a t u r a l  not  cause  in  pork  can  have and be  an  infected  carrier  by  contact  between  contaminated  clothing,  or  commonly by meat p r o d u c t s ( A g r i c u l t u r e Canada, 1 9 8 8 ) . Removal o f t h e ban the  on  US  potential  imports  of l i v e  trade  related  hogs  i n Canada  externalities  i s simulated but associated  with  6 pseudorabies  are not analyzed i n t h i s  thesis.  To summarize, t h e h o g / p o r k s e c t o r i s an e x p a n d i n g in  an  open  international  environmental concerns  market.  Its  e s t i m a t i n g e c o n o m i c and e n v i r o n m e n t a l regulations  is a  growth  triggers  f r o m l o c a l c o m m u n i t i e s w i t h "command  c o n t r o l " r e g u l a t i o n s as a consequence;  new  rapid  industry  and  an i n c r e a s i n g demand f o r impacts  and t r a d e - o f f s  of  result.  Objectives The  first  framework  to  objective  measure  environmental  the  policies  of  this  impact  on  study  of  water  is  trade,  quality.  to  develop  agricultural Water  and  is  nitrates  phosphates. The  impacts and  and  quality  m e a s u r e d by t h e l e v e l s o f two e n v i r o n m e n t a l i n d i c a t o r s ,  a  second  o b j e c t i v e i s t o a s s e s s t r a d e and m a r k e t w e l f a r e  of v a r i o u s combinations  trade  of a g r i c u l t u r a l ,  environmental  policies.  Organization of the Thesis Chapter  II reviews  the  literature  on  trade,  environmental  and h o g / p o r k m o d e l s . C h a p t e r  I I I d e s c r i b e s t h e c o n c e p t u a l model  used  linking  in  this  thesis  for  trade  and  environmental  v a r i a b l e s . C h a p t e r s IV and V p r e s e n t a l l a s p e c t s o f t h e e c o n o m i c and  environmental  sources, Chapter  validation VI  analyzes  models, results the  including and  impacts  data  transformations,  possible modelling extensions. of  policy  s c e n a r i o s on  water  7 quality,  welfare,  inventories  trade  (i.e.  hog  patterns, numbers).  slaughter Chapter  amounts VII  and  hog  discusses  c o n c l u s i o n s and t h e i r p o l i c y i m p l i c a t i o n s . The e c o n o m i c m o d e l i s presented  i n Appendix.  8 CHAPTER I I - LITERATURE REVIEW  A s u r v e y o f l i t e r a t u r e on t r a d e and t h e e n v i r o n m e n t  by Dean  (1992) p r e s e n t s an o v e r v i e w o f t h e m a i n p o i n t s o f d e b a t e . 2 0 y e a r s ago,  several  studies  environmental  policies  relocation  production.  of  international (like  of  and  pros  and  countervailing  1992,  the  impact  advantages  cons  of  duties)  harmonized policies  capable  were  of and  of  scrutinized.  extended t o i n c l u d e transboundary p o l l u t i o n  the t r a d e of hazardous In  The  comparative  changes i n comparative advantages  The a n a l y s i s was to  the  on  s t a n d a r d s were d i s c u s s e d and a l t e r n a t i v e  subsidies  alleviating  on  were c o n d u c t e d  Almost  and  substances.  v i r t u a l l y no a n a l y t i c a l work e x i s t e d on t h e  impact  r e m o v a l o f t r a d e b a r r i e r s on e n v i r o n m e n t a l d e g r a d a t i o n  (Dean,  1992) . To d a t e , s t u d i e s a c c o u n t i n g f o r c h a n g e s i n s o i l quality  due  coverage  to  because  policy the  reform  often  environmental  lack  and  and  multiple-country  economic  effects  p o l i c y r e f o r m a r e r e g i o n - s p e c i f i c and d e p e n d c r i t i c a l l y specific (Krissoff  land,  climate, al.,  et  and  farm  1996).  structure  Linkages  water  on  of  site-  characteristics  between  trade  and  e n v i r o n m e n t a l components h a v e n o t y e t b e e n made f o r t h e h o g / p o r k i n d u s t r y . The  f i v e most e s s e n t i a l e l e m e n t s  i n t h i s study: trade,  m u l t i - s t a g e m o d e l l i n g o f p o r k p r o d u c t i o n ( f r o m t h e sow pork  production),  Subsequently, (1995) .  the  government  literature  was  stabilization  reviewed  by  herd  to  programs,  Jaffe  et  al.  9 e n v i r o n m e n t a l p o l i c y and t h e r e s u l t i n g e n v i r o n m e n t a l d e g r a d a t i o n have  not  reviewed the  been  adequately  f o r e a c h component  agricultural  and m o d e l s  discussed  i n the next  environmental equilibrium different Espinosa  General  quality  has  Equilibrium  latter  and  valuation  of been  Copeland models  (1995),  trade  Trade  models  (CGE)  and  Beghin,  f u n c t i o n s where i s assumed  within  Taylor  involving  models  liberalization  assessed  a  (1995)  North-South  Roland-Hoist  are  developed trade,  and  (1994) u s e d  the  model  van  of  and der  Computable results.  including  elasticity  on  general  to obtain empirical  a u t h o r s u s e an e n v i r o n m e n t a l  to emissions  environmental  Variables  (1995) and P e r r o n i and W i g l e  The  respect  impact  theoretical  Mensbrugghe  is  section.  the  Smith  literature  the  o f the hog/pork s e c t o r .  framework.  and  the  incorporating  Studies with Environmental Recently,  Hence,  s e p a r a t e l y : t r a d e models, models o f  sector  dimension  Trade  linked.  damage  damage  with  t o be g r e a t e r t h a n u n i t y .  They  r e c o g n i z e t h a t t h e s e e l a s t i c i t i e s a r e l i k e l y t o be d i f f e r e n t f o r s p e c i f i c t y p e s o f e m i s s i o n s and v a r y a c r o s s r e g i o n s , t o r e f l e c t differences  i n assimilative  These d i f f e r e n c e s equilibrium relevant  framework.  capacity.  are best accounted Partial  f o r policymakers  for within  equilibrium  involved  i n waste  results  a  partial  are  management  more since  e n v i r o n m e n t a l p o l i c i e s a r e s p e c i f i c t o t h e l i v e s t o c k s e c t o r and trade p o l i c i e s ,  such as t a r i f f s ,  a r e s e t commodity b y  commodity.  10 Many  studies  use  partial  equilibrium  a g r i c u l t u r a l s e c t o r to assess the production, and  market  policies  welfare  consequences  following  either static commodities, Hester  trade  and et  sector  agricultural al.  (1993)  (among  contribution of  i s the  agricultural  compare  the  consumption,  eliminating  liberalization.  of  and  the  Studies,  only  sectors).  Their  of the  which  are  regions,  trade  trade  most  policies.  liberalization  study  related to  e f f e c t s of  environmental  e f f e c t s of  empirical  environmental p o l i c i e s  comparison  with  trade  policies.  is  other  the  agricultural  o r d y n a m i c , i n c l u d e d i f f e r e n t numbers o f  containing both trade pork  of  models  the  interesting modifications  These  for  authors  agricultural  p o l i c i e s w i t h t h e e f f e c t o f e n v i r o n m e n t a l p o l i c y on w o r l d p r i c e s and  trade  volumes  environmental livestock European  of  policy  density  various modelled  for  Community  commodities  specific  where  of  intensive  environmental  recent  Common A g r i c u l t u r a l P o l i c y r e f o r m s , densities.  A  1%  1%  reduction  an  estimated increase Model as  estimated decrease  of  0.4%  decrease of  8.9%  in  i n p r i c e . The  of  net  production  has  As  part  the  limits  were  in  pork  obtained  from  the  i n pork  exports  Static  (SWOPSIM), a s y n t h e t i c model  elasticities  0.4%  in the  B e l g i u m / L u x e m b o u r g , Denmark, F r a n c e , Germany and t h e induced  The  of  effects.  reduction  pork.  industries  livestock  serious  stocking  a  livestock  caused  on  adverse  consists  including  World  of  imposed  density  Netherlands  production,  and  in  an  an  estimated  Policy  Simulation  i n t e g r a t i n g parameters  such  literature,  This  was  used.  11 model  incorporates  data  from  many  countries  and  many  commodities. SWOPSIM elimination pork  includes  sector,  an  asset,  o f i t s p o l i c i e s might have a g r e a t e r  sector,  policies  the grain  than  the elimination  of  direct  since the  effect  to the  income  support  (Shagam, 1 9 9 0 ) . I n t h e m o d e l , t h e f e e d s e c t o r i s l i n k e d  t o t h e p o r k s e c t o r by i n c o r p o r a t i n g a d e r i v e d demand f o r f e e d b y the is  l i v e s t o c k s e c t o r i n t h e demand f o r f e e d . a l s o an i m p o r t a n t SWOPSIM  v a r i a b l e i n the supply  incorporates  policies  even  The p r i c e o f f e e d of livestock.  though  i t i s not a  p o l i c y s p e c i f i c model where, f o r example, a l l f o r m u l a s f o r p r i c e stabilization fixed  are endogenized.  difference  incentive price. the  Economic  between  consumer s u b s i d y Hartman  policy  the traded  The p o l i c y  Research  A  price  p r i c e wedge d a t a  Service s  the  a  domestic  are obtained  from and  equivalents.  (1993) u s e s an a d a p t a t i o n o f SWOPSIM, t h e T r a d e a n d  and w e l f a r e  Community.  Her  pork)  input  and  and  as  c a l c u l a t i o n s of producer  1  E n v i r o n m e n t a l P o l i c y S i m u l a t i o n model trade  i s represented  effects  study  of nitrogen  includes  markets.  (TEPSIM), t o e s t i m a t e t h e  The  both  taxes  i n t h e European  agricultural  results  show  that  output a  (e.g.  level  of  t a x a t i o n o f 25%, 50%, 100% and 200% w o u l d i n c r e a s e t h e E u r o p e a n Community's  net  exports  of  pork  by  1%,  2.6%,  4.4%  and  7%  respectively. Bohman and  lamb  and L i n d s e y markets  to  (1997) model explore  the  t h e North American market  and  non  sheep market  12 consequences  of  liberalization.  environmental  They  conclude  r e g u l a t i o n e n f o r c e m e n t by cost  of  regulation  unlikely  to  to reverse the  level  do of  drawback  not  attempt  reduction of  a l l  Consequently, been f u l l y  that  consumers  and  assess  livestock  agricultural  the  effects  evaluated  nonmarket  do  not  consider  of  the  effects  are  the  optimal  environmentally  density,  reforms  which  is  the  liberalization on  welfare  major  studies.  have  not  yet  1991).  components a r e  environmental  v a r i a b l e s c o u l d be  from  Lindsey  trade  (Anderson,  incorporating trade  gain  (1993) and Bohman and  T h r e e o t h e r s t u d i e s f o c u s i n g on t h e hog and  can  trade  s i g n o f market g a i n s o r l o s s e s .  to  in  producers  and  s h i f t i n g a s i g n i f i c a n t p o r t i o n of  H e s t e r e t al.  Hartman ( 1 9 9 3 ) , (1997)  regulations  and/or pork s e c t o r  reviewed.  policies  and  Although  degradation,  they these  added.  Hog/Pork S t u d i e s w i t h T r a d e V a r i a b l e s Wahl  liberalization annual model  al.  (1992)  in  Japanese  et  multimarket contains  that  poultry,  three  econometric model  to  fish  blocks  pork,  impose  import  effects policies  corresponding l i n k e d by  Wagyu  expenditures.  model w h i c h  the  livestock  blocks are  includes  and  pork  econometric  p o u l t r y m a r k e t s . The system  measured  i s not  as  c o n s t r a i n t s and  using  pork,  et  al.  various  a  and  meat demand  (1992) as  an  This  beef,  import-quality  convenient offer  gradual  model.  a retail  beef, Wahl  by  sector to  of  beef,  use  an  programming  technological  13 choices.  In  fact,  controlling (Hanley,  nitrate  studies  pollution  incorporating  use  linear  the  costs  programming  example,  programming can  Hahn  model  be  (1993)  built  f o r North American  linked  to  a  grain  a  static  is  whereas fact  models  trade  model  of  mathematical  animal  preferable  a  static  that  because  model  tariffs  and  only  it  shows  the  predicts  subsidies  are  products  i f necessary.  Hogs  p o r k , among o t h e r l i v e s t o c k c o m m o d i t i e s , a r e i n c l u d e d . model  of  1990).  For  which  most  not  A dynamic  adjustment  market  and  pattern  equilibrium.  The  n e c e s s a r i l y phased  out  i n equal instalments,  and  d i f f e r e n t e l i m i n a t i o n schedules induce  different  be  incorporated  static  costs  models,  unchanged. T h i s policy hog  can  stocks  not  modelled  first  a f f e c t breeding  m a r k e t i n g s n i n e t o t e n months  sector  with  model.  He  exports  (1991) a  the  US,  price  expectations  model  has  included  modelled  multi-stage  modelled  to  suffered  but  reallocation  and  duties include  risk,  and  the  not  this.  regions,  production  to  In be  production,  which  imposed  which  US  determine  hog/pork  programming on  government  These  Spinelli  i n Canada  and  forecasting  necessarily  impacts.  assumed  mathematical  not  of  model.  i n hog  Canadian  dynamic  because  Eastern of  and  stocks  did  because they are  and  dynamic  later.  the  countervailing  change e n v i r o n m e n t a l  Western  a  i s a s e r i o u s weakness, s i n c e ,  variables  Spinelli  can  are  in  Canadian programs,  power o f  programs  his  must  be  resource neutral divided would  following  Canada  and into  capture modification  the of  14 the  Western G r a i n  reflect  the  provincial  Stabilization  effects  of  provincial  environmental  Economic  studies  incorporating  Act.  I t would  not,  stabilization  however,  programs  or  legislations. modelling  the  livestock  sector  environmental v a r i a b l e s are reviewed  and  i n the next  section.  Environmental Heady the  US  Studies  and V o c k e  t o analyze  (1992) u s e a l i n e a r  a set of p o l i c i e s  programming  designed  model  to alter  of  current  a g r i c u l t u r a l p r a c t i c e s t o r e d u c e US a g r i c u l t u r e ' s i m p a c t on t h e environment. alternative  The  endogenous  production  crop  production  sector  includes  activities  for grain  sorghum,  sorghum  s i l a g e , b a r l e y , c o r n , c o r n s i l a g e , c o t t o n , legume a n d non-legume hay,  oats,  livestock hogs,  production  beef  linear  sugar  beets,  activities  beef  that  produced  wheat.  i n t h e model  feeding,  is  and  and  i t  dairy.  can  The a u t h o r s u s e a n i t r o g e n  nitrogen  first per  cows,  programming  constraints. all  soybeans,  i n wastes  Endogenous  are defined The  include  advantage  on  of  environmental  balance equation  i s applied  for  the  where  land.  The  scenario  r e s t r a i n s n i t r o g e n u s e t o a maximum o f 50 p o u n d s  acre while  t h e second s c e n a r i o r e q u i r e s t h e c o n s t r u c t i o n o f  runoff  control f a c i l i t i e s  Saygideger studied producing  and  trade-offs  at additional costs.  Heady between  (cited soil  i n Heady erosion  and  control  Vocke, and  output. Their o b j e c t i v e function minimizes  1992)  costs  of  production  15 and  transportation costs  associated levels  with  below  researcher  a  their  rather  an  impact  organic  environmental  model.  of  organic  limiting  followed  environmental programming should soil  be  addition  constraints  model.  slope  application,  as  of  of  an  to define  cost  sources.  on  of  the  to  the  of  the acre  land  fields.  crop  study  A  information  this  crop,  the  added  using in  the  f o r the  Fraser  to  rainfall, timing  watershed,  manure  nitrogen  to  inorganic  of and  used.  support  animal  V a l l e y . Their primary  p r o b a b l e magnitude of  the  procedure  s u c h as  drainage,  the  fertilizer  production  c r o p p e d were n o t  system  a  multiple  the  waste goal  livestock contribution  t o groundwater n i t r o g e n . They p a r t i t i o n e d e x i s t i n g s o i l and  used  fertilizer  authors,  within  sources  They  however,  Variables  c u l t i v a t e d land,  of  c a t t l e - f e e d complex  ideal  regional  each  way  inorganic  not,  wastes  to  the  solution.  least  from  did  second,  weights the  are  pollution  (1994) c o n d u c t e d a p i l o t s t u d y t o d e t e r m i n e  management d e c i s i o n s was  the  inorganic  They  and  relative  i m p a c t on  exploratory.  location  Moon e t al.  on  According  of a p p l i c a t i o n per  utility  overkill  studied  problems  used t o r e l a t e n i t r a t e l e v e l s t o  by  regarded  type,  level  an  Two  minimizing  l i n e a r programming model o f t h e US  r e g r e s s i o n model was usage,  be  emissions and  loss.  First,  assign  (1974)  nitrogen  from  soil  a significant  Barr  target  spatial, and  and  than  might  arbitrarily  o b j e c t i v e , w h i c h has  achieving  total  approach.  threshold  must  Abrams  and  additions,  nitrogen  mineralized  n i t r o g e n , v o l a t i l i z a t i o n , d e n i t r i f i c a t i o n , c r o p u p t a k e , and  deep  16 losses, in  c h o o s i n g t o impose a maximum c o n c e n t r a t i o n  leachate  was  reaching  conducted  and  manure  enterprise  transport  processing, simulated  groundwater. A l t h o u g h economic  t o determine  budget, and  of  t h e impact  trade  the  i t was  demand  activities.  assessment  of a l t e r n a t i v e land  restrictions,  ignoring  limited  side,  These  i t  environmental environmental  variables  is  models  necessary to  to  fully  components. T h i s  link  integrate  integrated  1 9 9 3 a ) . The t h r e e most r e l e v a n t  variants.  be  economic  and  economic  and  studies  Lakshminarayah  e t al.  (1996)  reductions  emphasizing  Canada.  determine  The  objective  technologies,  institutional  land  settings  a  management reducing  second methods,  the negative  thesis  (EPIC) o r one o f  evaluated  u s e and s o i l of  (Bouzaher  forthis  n e u t r a l i t i e s o f two s t a b i l i z a t i o n p r o g r a m s a n d t h e i r  Western  can  systems approach has  u s e d t h e E r o s i o n P r o d u c t i v i t y Impact C a l c u l a t o r  risk  an  slaughtering,  been a p p l i e d a t t h e farm, w a t e r s h e d and r e g i o n a l l e v e l  its  to  use  w i t h an e c o n o m i c m o d e l .  Therefore,  e t al.,  nitrogen  resource associated  degradation i n project  was  policies, impacts  to and  of the  d a i r y i n d u s t r y on t h e e n v i r o n m e n t a n d a t t h e same t i m e r e s u l t i n g i n a competitive pollution The  industry  i n Erath  ( O s e i e t al.,  1 9 9 5 ) . R e s e a r c h on d a i r y  County, Texas, s e r v e d  as t h e b a s e l i n e  study.  e c o n o m i c model d i s t i n g u i s h e s b e t w e e n s m a l l , medium a n d l a r g e  herd  s i z e s because o f t h e economies o f s i z e and s c a l e  production model  and  i s used  waste  handling  t o capture  systems.  t h e complex  A  linear  i n milk  programming  i n t e r r e l a t i o n s h i p s among  17 policy, level.  economic, The model  nutrient  and  odor  parameters  i d e n t i f i e s both farm-level  at  the  farm  economic impacts o f  a l t e r n a t i v e p o l i c i e s and f a r m l e v e l n u t r i e n t a n d o d o r e m i s s i o n s . Mapp e t al. of  (1994) compared  n i t r a t e s and  different policies  pesticides  regions such  restrictions.  as They  and  lost  soils  per-acre  the quantitative d i s t r i b u t i o n s i n runoff  under  and  percolation for  alternative  restrictions  and  water total  l i n k e d an e c o n o m i c m a t h e m a t i c a l  MODFLOW  (an a q u i f e r  model  which  nitrogen  programming  m o d e l t o a v a r i a n t o f EPIC, i n c o r p o r a t i n g a p e s t i c i d e and  quality  subroutine  determines the  amount  of  drawdown and w a t e r l e v e l s i n t h e a q u i f e r ) . The framework comparable explained  to  the  of the three studies approach  i n the conceptual  chosen framework  described  in this  previously i s  thesis,  i n chapter I I I .  which  is  18 CHAPTER I I I - THE  To  assess  agricultural market  hog/pork  agricultural  to  between  production  country.  In  on  in  quality, links  liberalization  environmental framework policy  this  next  the  an  policies  shows  from  poses  prices  and  i n more  impacts  of  how  a has  than  changes  in  conceptual  these  scale  thesis.  are  achieved  e c o n o m i c model  1). Outputs  North  impacts  consumption  section,  and  Model  study  model w i t h  (Figure  of  e n v i r o n m e n t a l c o n d i t i o n s . The  the  and  model. M o d e l l i n g  affects  environmental  D e s c r i p t i o n of the Conceptual of  model  international  trade patterns  environmental  d i f f e r e n c e s are dealt with i n t h i s  Objectives  a  trade  environmental  local  and  contrast,  presented  an  environmental,  p r o d u c t i o n and  o u t p u t d e p e n d on l o c a l model,  water  sector  effects  of  research  c h a l l e n g e . Trade  widespread one  on  this  relationships  severe  impacts  policies  welfare,  American the  the  CONCEPTUAL MODEL  by  integrating  using a  an  conceptual  o f the models a r e c i r c l e d ,  while  s c e n a r i o s , w h i c h a r e compared t o a b a s e s c e n a r i o , a r e i n  rectangles. objectives The  Output  variables  most  interest  to  reach  the  of t h i s t h e s i s are i n bold type.  economic  model  model o f US  and  equilibrium  quantities  Important  of  Canadian  is a  spatial  mathematical  s w i n e i n d u s t r i e s . The such  that  markets  o u t p u t v a r i a b l e s a r e l i v e hog  programming  model s o l v e s f o r  clear  at a l l levels.  inventories,  quantities  19 marketed and t r a d e d , Canada.  a n d p r i c e s o f h o g s a n d p o r k i n t h e US a n d  These v a r i a b l e s  welfare.  Recall  Marshallian government The  that  measures  a r e used market  to calculate regional welfare  of producer  Erosion  P r o d u c t i v i t y Impact  158  field-scale focuses  model  simulating  on l e a c h i n g  and r u n o f f  p h o s p h a t e s and n u t r i e n t a b s o r p t i o n Procedures  from  t o measure  l a t o l c and t h e impacts  application  1987  manure  on w e l f a r e  plus  inventory  level  following  sections,  each  of nitrates,  impacts,  runoff  and  assess  exceed  the  i s shown  c a n be  crop  impact  followed  these  i s discussed  plans  four  i n more  4a  to  plans,  nutrient  f r o m 3a t o above t h e  4c.  procedures detail.  on  agronomic  of  c a n be t r a c e d  from  of  agricultural  2a t o 2 c . U n d e r t h e s e not  This  and phosphorus.  and t r a d e ,  and t r a d e  of  i s the  variables.  o f a moratorium p r o h i b i t i n g i n c r e a s e s  hog  different  must  to  (EPIC)  o f n u t r i e n t management  i n steps  Procedures  management p l a n s The impact  of  output  of trade  on w a t e r q u a l i t y , w e l f a r e ,  requirements.  3c.  the  t h e economic model. I t  of nitrogen  impacts  water q u a l i t y a r e depicted land  surpluses  Calculator  is  policies  as  payments.  with  thesis  defined  and consumer  e n v i r o n m e n t a l model u s e d i n c o n c e r t a  is  market  In the  measuring  20  Figure 1. Conceptual Model  Trade & Agricultural Policy Scenarios (1 to 3)**  REGIONAL ECONOMIC MODEL OF HOG/PORK INDUSTRY Live Hog Inventories  Environmental Policy Scenarios (Moratoriums) (8 and 9)**  • •  Demand Welfare  Supply  •  Trade •  T  r  Field Application of Manure/Hectare under Trade and Agricultural Policies 1b  .  Manure Production  I 4b  3c Nutrient Plan (Quantity of Nutrient/Hectare of Arable Land) T  i Environmental Policy Scenarios (Nutrient Plans) (4 to 7)*  Regional Hog _ Numbers 3b <•  Nutrient per Region  * N u m b e r s ( e . g . 1 a ) refer t o t h e t y p e o f p o l i c y a n a l y z e d . T h e l i n k s b e t w e e n m o d e l s a n d  3a  other  calculations are s h o w n by the arrows. 1 a , 1b a n d 1 c : I m p a c t of t r a d e a n d a g r i c u l t u r a l p o l i c i e s o n w a t e r q u a l i t y , w e l f a r e a n d t r a d e 2 a , 2 b a n d 2 c : I m p a c t of nutrient m a n a g e m e n t p l a n s o n w a t e r q u a l i t y  ^  3 a , 3 b a n d 3 c : I m p a c t of nutrient m a n a g e m e n t p l a n s o n w e l f a r e a n d t r a d e  — . — - — •  4 a , 4 b a n d 4 c : I m p a c t of m o r a t o r i u m s o n w a t e r q u a l i t y , w e l f a r e a n d t r a d e  —  ** S e e T a b l e 1  -  -  -  ^  21 Impacts  o f Trade  Welfare,  and A g r i c u l t u r a l  Policies  on Water Q u a l i t y ,  and Trade  Trade  and  incorporated  agricultural  within  policies  t h e economic  ( l a i n Figure  model  which  1) a r e  predicts the  r e g i o n a l h o g i n v e n t o r y f r o m w h i c h t h e r e g i o n a l amount o f manure p r o d u c e d c a n be c a l c u l a t e d . I n o r d e r t o u s e t h e s e r e s u l t s i n t h e environmental hectare  values,  significant option  m o d e l , r e g i o n a l r e s u l t s must b e t r a n s l a t e d t o p e r the  scale  of  area o f farmland  owned o r r e n t e d b y p o r k p r o d u c e r s  o f manure  i s used  animal  model.  A  amount o f manure p r o d u c e d b y t h e  applied  per hectare.  chosen s i n c e i t i s n o t r e a l i s t i c base  environmental  a s s u m p t i o n must b e made t o l i n k t h e two m o d e l s . One  i s t o divide the total  quantity  the  as p o i n t e d  manure  This  to  option  i s not  t o assume t h a t t h e w h o l e  o u t by A b d a l l a  i s costly  t o obtain the  transport  e t a l . : "Since and  e c o n o m i c v a l u e , i t o f t e n i s s p r e a d on o r n e a r  usually  land most  h a s low  ( s i c ) farm  fields"  ( A b d a l l a e t al., 1 9 9 5 ) . An  alternative  method  i s s e l e c t e d . I n t h e base  t h e n i t r o g e n f r o m manure a n d m i n e r a l f e r t i l i z e r , times  t h e recommended  rate of mineral  A c c o r d i n g t o Ganbazo (1995),  continued  equalling three  fertilizer,  i s applied.  t h e common p r a c t i c e i s t o a p p l y t h e  recommended amount o f f e r t i l i z e r "Producers  scenario,  t o apply  and add t w i c e  fertilizer  a s much manure.  because  they  h a d no  c o n f i d e n c e i n t h e n u t r i e n t v a l u e o f manure. Manure was s p r e a d on t h e l a n d a t h i g h r a t e s s i m p l y t o g e t r i d o f i t " (Ganbazo, 1995) . Hog  manure  having  a  lower  dry  matter  content  and  lower  22 fertilizing  value  than beef  costs per kilogram are  higher In  according  costs  the  amount  t o c h a n g e s i n l i v e hog is directly  increase  by  1%.  This  transportation  manure o f f t h e  p o u l t r y or beef of  nitrogen  is  proportional 1%,  method  to  these  assumes  that  farmers  of  The  quantity  o f manure n u t r i e n t s a p p l i e d t o one  soil  and  plant  performed  on  use  a  land.  into  data  small  adjusted  the kilograms of n u t r i e n t  quantity  incorporated  manure.  inventories.  constant  then  farm  i n v e n t o r i e s s i n c e t h e amount o f  Hence, i f i n v e n t o r i e s i n c r e a s e by also  hog  to transport  scenarios,  manure p r o d u c e d  p o u l t r y manure,  of n i t r o g e n to spread  than the  trade  and  the  environmental  (lb i n Figure  plots,  model  1) . L i k e  model s i m u l a t i o n s  with  field on  hectare  is  weather,  experiments  small  areas  are  i n d i c e s of natural processes  occurring at a larger scale leading  to  of  the  leaching  and  runoff  changes i n p r o d u c t i o n are  inputs  different quality  i n the trade  sites  chosen  and  agricultural  North to  l e v e l s , simulated  North  following  Carolina, spillovers  the  compare t h e  policy  and  scenarios  Pont-Rouge,  environmental  emergency 2  Thus,  impact on  of  water  1). Carolina  run  phosphates.  w i t h t h e economic model,  model.  f a c i n g e n v i r o n m e n t a l t h r e a t s f r o m t h e hog in  and  e n v i r o n m e n t a l model t o  ( l c i n Figure  Raleigh,  nitrates  f o u n d 124  inspections  Quebec Both  are  the  regions  are  i n d u s t r y . For by  lagoons f i l l e d  2  state  t o the  example, agencies brink  and  A f t e r heavy r a i n s l a s t s p r i n g , the e a r t h w a l l o f a lagoon b u r s t on J u n e 21, 1995 and s e n t 22 m i l l i o n g a l l o n s o f w a t e r and p i g w a s t e i n t o t h e new r i v e r a b o v e J a c k s o n v i l l e , k i l l i n g 4,000 f i s h , 2 | l  23 526  dangerously overloaded  In  Quebec,  a  registered Commission in April to  a  group  (The Economist,  of  complaint  18  with  non-governmental  to  environmental  The  optimal  agronomic  related  quantity  requirements  of  1) . The o p t i m a l  quantity  of nitrogen  problem  since  quality the only  Hence t h e a s s e s s m e n t  agricultural  manure  needed with  to  the  are designed  meet  crop  environmental ( 2 a a n d 2b i n  o f manure a p p l i e d  i s b a s e d on  and phosphorus a b s o r b e d b y c r o p s  b a s i s . When s t u d y i n g  on w a t e r  neglected  on Water Q u a l i t y  i s determined  quantity  to  (NAFTA),  e s p e c i a l l y hog, p r o d u c t i o n .  model a n d n u t r i e n t management p l a n s  plans  T r a d e Agreement  norms  I m p a c t s o f N u t r i e n t Management P l a n s  hectare  Co-operation  1997, a l l e g i n g t h a t t h e Government o f Quebec  p o l l u t i o n o r i g i n a t i n g from animal,  the  organizations  the Environmental  o f t h e North American Free  adhere  Figure  S e p t e m b e r 2-8, 1 9 9 5 ) .  t h e impact  (2c i n F i g u r e model u s e d  o f n u t r i e n t management  1) , t h e r e  i s no  scaling  i s the environmental  i s on a p e r h e c t a r e  Impact o f N u t r i e n t Management P l a n s  on a  model.  basis.  on W e l f a r e and T r a d e  To o b t a i n t h e maximum r e g i o n a l l e v e l o f n u t r i e n t s r e q u i r e d for  a  nutrient  requirements multiplied  management  (3a i n F i g u r e  b y t h e number  plan,  based  on  1), the absorption o f hectares  owned  crop  agronomic  of nutrients i s  o r rented  by hog  c l o s i n g a n e a r b y r i v e r t o swimmers a n d b o a t e r s , a n d t h r e a t e n i n g s h e l l f i s h b e d s 15 m i l e s downstream. F i v e o t h e r s p i l l s f o l l o w e d . " (The Economist, S e p t e m b e r 2-8, 1995 p.24)  24 producers.  The  regional  quantities  of  nutrients  can  be  t r a n s l a t e d i n t o a maximum h o g i n v e n t o r y i . e . a maximum number o f hogs  per region  (3b i n F i g u r e  1)  by  assuming  that  manure  c o n t a i n s a f i x e d amount o f n u t r i e n t s e v e r y y e a r a c r o s s r e g i o n s . When  this  sustainable  inventories, level,  into  o f manure  loop  economic  links  level  which  i s lower  fixes  t h e economic  i s translated  are incorporated into  calculate their a  constraint,  i s inserted  quantity which  a  inventory  a  maximum  model.  into  than  inventory  Hence t h e o p t i m a l  environmental  t h e economic  actual  model  policies  and used  to  i m p a c t on m a r k e t w e l f a r e ( 3 c i n F i g u r e 1 ) . T h u s ,  t h e economic  t o environmental  and back  to the  model.  Scales o f the Environmental  and Economic  Models  An i n t e r e s t i n d r a f t i n g a m e t h o d o l o g y t o l i n k a l a r g e - s c a l e economic  model  comprising  trade  with  an  environmental  model  m o t i v a t e d t h e a d o p t i o n o f t h e p r o c e d u r e s d e s c r i b e d above. I f t h e e n v i r o n m e n t a l model were l i m i t e d t o s t u d y t h e i m p a c t o f n u t r i e n t management  plans  on w a t e r  quality  (2c i n F i g u r e  1) ,  scaling  p r o b l e m s w o u l d b e e l i m i n a t e d . The o b j e c t i v e w o u l d b e r e a c h e d b y u s i n g t h e e n v i r o n m e n t a l model w i t h o u t t h e e c o n o m i c component on a per hectare basis. of  international  strong,  I n c o r p o r a t i n g t h e assessment o f t h e impact  trade policy  but necessary,  Furthermore,  on w a t e r q u a l i t y  requires  making  assumptions.  the linkage  from  the environmental  e c o n o m i c model c o u l d be a v o i d e d . E n v i r o n m e n t a l p o l i c i e s  t o the inserted  25 into  the  economic  model  could  be  designed  without  e n v i r o n m e n t a l model, t h u s e l u d i n g s c a l i n g problems. the  moratorium  scenarios  environmental  endowments.  a b o v e t h e 1987  hog  the simulation  (4a The  i n Figure  moratoriums  inventory level,  period.  The  1)  1987  are  using  the  F o r example,  not  founded  prohibit  on  increases  being the f i r s t year of  maximum l e v e l  does not t a k e  account  o f s i m u l a t i o n r e s u l t s on t h e l a n d a s s i m i l a t i v e c a p a c i t y p r o v i d e d by  the  policy  environmental  m o d e l . Hence t h e box  s c e n a r i o s i s not  integrated  in  including  the  arrow  these  two  linking  the  environmental  t o t h e e c o n o m i c model  the procedure  i s seen as e x p l o r a t o r y , t h e use o f EPIC t o d e s i g n  nutrient described  plans i n the  for  four  next  area of e c o l o g i c a l  of  section  the  (4a i n F i g u r e 1 ) .  six  i s seen  economics needing  environmental as  Although  scenarios  a contribution  further research.  to  an  26 Trade  and The  Environmental four  incorporate  nine  s c e n a r i o s and and  4  types  Scenarios of  policy  nutrient  scenarios  address account  trade p o l i c i e s practice  trade  Liberalization  in  Figure  1  liberalization  endeavors  different  while  levels  current policies.  of The  scenarios  waste  management.  encompass  environmental policy  and  depicts the  Characteristics  the n i n e s c e n a r i o s are found  policy  harmonization  baseline  i n force during the study p e r i o d  regarding  b a s e l i n e and  identified  scenarios: three  plans).  liberalization  into  1  s i x e n v i r o n m e n t a l p o l i c y s c e n a r i o s (2 m o r a t o r i u m s  important  taking  linkages  i n Table  l.  the  common of  the  3  D e t a i l e d r e s u l t s f r o m an a d d i t i o n a l s c e n a r i o w i t h a c o n s t a n t exchange r a t e e q u a l t o 1 a r e not r e p o r t e d s i n c e t h i s s i t u a t i o n i s not expected t o o c c u r i n the near f u t u r e . I t would induce d e c r e a s e s i n C a n a d i a n l i v e hog and p o r k e x p o r t s t o t h e U.S. o f 16% and 22% r e s p e c t i v e l y . T h e s e c h a n g e s a r e i n a c c o r d a n c e w i t h t h e 20% i n c r e a s e i n v a l u e of the Canadian d o l l a r .  27 Table  1 C h a r a c t e r i s t i c s o f t h e B a s e l i n e and N i n e  Scenarios  Scenarios  %  % of 1987 inventory level all regions  Any level  No  Any level  Hog  Any level  No  Any level  No  No  Any level  No  Any level  No  No  No  Any level  No  Any level  4  Yes  Yes  Pork & Hog  96.5  50  Any level  5  Yes  Yes  Yes  96.5  No  Any level  6  Yes  Yes  Pork & Hog  35  50  Any level  7  Yes  Yes  Yes  35  No  Any level  8  Yes  Yes  Pork & Hog  100  No  100  No  No  100  No  100  Nontariff barrier  Stabilization payment  Countervail  % of 1987 Quebec inventory level  B  Yes  Yes  Pork & Hog  1  Yes  Yes  2  Yes  3  9 No B:Baseline  Increase i n non feed costs i n 5 regions (other than Quebec)  28 In the increased  first  by  category  steps  countervailing  ( l a i n Figure 1), l i b e r a l i z a t i o n  from  duty  scenario  is  1  removed,  to  3.  First,  followed  by  the  pork  the  hog  c o u n t e r v a i l i n g d u t y and s t a b i l i z a t i o n p r o g r a m s . F i n a l l y , t h e on US  live  hog  imports  i n Canada i m p o s e d b e c a u s e o f t h e  of the spread of pseudorabies Scenarios  4  to  9  are  is  ban  threat  i s eliminated.  environmental  s c e n a r i o s chosen  to  cover d i f f e r e n t p o l i c y harmonizations. Harmonization of p o l i c i e s is  an  important  environmental  policies  Environmental variations quality and  issue  policies  in  to within  vary  and  assimilative  supply of environmental  an  across  preferences  (through  consider  when  international regions  mainly  endowments  capacity).  quality  implementing  of  Thus,  suggests  context. because  of  environmental v a r y i n g demand  different  optimal  l e v e l s o f environmental p r o t e c t i o n . There i s a p e r c e i v e d danger that  differences  implementation,  in  the  stringency of  however,  pollution-intensive  may  create  policies  pollution  or  in  havens  their where  f i r m s c a n r e l o c a t e . T h i s i s an a r g u m e n t f o r  p o l i c y h a r m o n i z a t i o n , where t h e d i s t i n c t i o n must be made b e t w e e n the  harmonization  of  objectives  r e a c h t h o s e o b j e c t i v e s . Two e.g.  limit  different region plans  the  while  hectare.  instruments  require the  the  other  the  instruments  used  to  r e g i o n s c a n h a v e t h e same o b j e c t i v e  amount o f n i t r a t e s  policy  can  and  to  i n runoff to  6 mg/L  attain  objective.  certification region  can  of  limit  this  nutrient the  hog  and  use One  management numbers  per  29 S c e n a r i o s 4 and nutrient  6 simulate m u l t i l a t e r a l  management  plans  using  policy  implementations  instruments  s p e c i f i c t o r e g i o n a l n e e d s , w h i l e s c e n a r i o s 5 and unilateral Figure  implementation  1 ) . The  design  of  nutrient plans  of  which  are  7 simulate  the  i n Quebec  (3c  in  o f s c e n a r i o s 4 t o 7 r e q u i r e d a number  of  c a l c u l a t i o n s which are exposed i n next s e c t i o n . Scenarios  8  and  9  harmonize  m u l t i l a t e r a l l y by s i m u l a t i n g t h e under  actual  and  respectively). simulated years  A  Carolina.  Quebec  8.  and  implementation  conditions on  the  were  (scenarios  1987  Moratoriums  and  they  do  are  not  not  allow  been  to  according  c a p a c i t y but they are e a s i e r t o monitor  and  9,  levels  is  used  implemented  supply  designed  8  inventory  have  recently  instruments  of a moratorium  M o r a t o r i u m s a r e n o t e c o n o m i c a l l y and  because they  prices  trade  moratorium  i n scenario  in  optimal  free  policy  f o r many in  North  environmentally  respond to  to  market  assimilative  t h a n n u t r i e n t management  p l a n s . I t i s almost  impossible f o r inspectors to v e r i f y that a l l  land  respect  necessary  applications. marketing  are  interested context,  On  published to  in  the  on  plans  Canada  assess  m o r a t o r i u m s c a n be  moratorium  the  is  utilized  t h e o t h e r hand, r e g i o n a l d a t a on  parties  Scenario  See  to  this  the  policy's  practical  9 c o m b i n e s t r a d e and 1987  and  environmental  manure  inventory  and  allowing a l l  success.  though not  inventories i s simulated  s e c t i o n on p o l i c y  US  for  In  this  optimal. policies.  under  i m p l i c a t i o n s f o r more  free  The  trade  details.  30 conditions  t o take  into  t r a d e and e n v i r o n m e n t a l  Design  account policy  potential  opposing  effects of  on i n v e n t o r y c h a n g e s .  of Scenarios 4 t o 7  Scenarios  4 a n d 6, w h i c h  are identified  i n Figure  1 as  n u t r i e n t p l a n s , u s e E P I C s i m u l a t i o n r e s u l t s on t h e a b s o r p t i o n o f n u t r i e n t s . The o b j e c t i v e s o f t h e n u t r i e n t p l a n s a r e h a r m o n i z e d , but  different  whether  farmers  applications. applied:  policy  Two  expand  types  of  assessed  the  land  environmental  base  depending for  on  manure  instruments  are  on i n v e n t o r i e s when t h e l a n d b a s e i s  determine  areas. which  policy  r e g i o n , t h e ecosystem  maximum  a r e implemented  a n d 2) i n c r e a s e s i n t r a n s p o r t a t i o n c o s t s t o s p r e a d  manure on l a r g e r  each  can  1) r e s t r i c t i o n s  insufficient,  To  instruments  instrument  support  c a p a c i t y f o r hogs  i n v e n t o r i e s must b e e s t i m a t e d . by c a l c u l a t i n g  i s appropriate f o r  The s u p p o r t  i . e . the  capacity i s  t h e maximum amounts o f n u t r i e n t s w h i c h  c a n be a p p l i e d on l a n d a n d i t s c o r r e s p o n d i n g h o g i n v e n t o r y . First,  t h e maximum  amounts  of nutrients are obtained  by  m u l t i p l y i n g t h e consumption o f n u t r i e n t p e r c r o p p e r h e c t a r e , by the 2) •  number o f h e c t a r e s owned o r r e n t e d b y h o g p r o d u c e r s  (Table  31 T a b l e 2 K i l o g r a m s o f N i t r o g e n and P h o s p h o r u s P e r m i s s i b l e u n d e r Two N u t r i e n t Management P l a n s i n t h e S o u t h e a s t and i n Quebec U s i n g EPIC Crop A b s o r p t i o n Rates Region Crop  Kilograms of Nitrogen under the N i t r o g e n P l a n  and  Per  Per  Hectare  Kilograms o f Phosphorus under the Phosphorus Plan  Region  Kg  Million  Southeast (Forage)  73  Quebec (Corn)  106  Per  Kg  Hectare  Per  Region  Kg  Million  207.45  20  56.84  15  22  3.11  Kg  Quebec 84 11.89 30 4.25 (Forage) [1] S p e c i e s w h i c h compose f o r a g e i n N o r t h C a r o l i n a a r e d i f f e r e n t f r o m t h o s e t h a t compose f o r a g e i n Quebec.  To hog  translate  numbers  must  be  (3b  r e g i o n a l amounts  of  nutrients into  regional  quantity of a  nutrient  i n Figure 1), the t o t a l  divided  by  the  quantity of  n u t r i e n t s produced  a n i m a l . C h o i c e s f o r t h e c o n c e n t r a t i o n o f n i t r o g e n and in  manure  is  of  primary  importance.  One  fertilizing  value  o f manure a t d i f f e r e n t  treatment,  which  can  storage,  but  before  be  land  measured  a v a i l a b l e to crops, a f t e r s o i l be t a k e n North  i n t o account.  Carolina,  70%  The  phosphorus  consider of  storage value  one  the  the  manure  or  after  of nutrients  incorporation losses, should  also  T h i s c a n be a s i g n i f i c a n t v a l u e s i n c e ,  and  anaerobic  lagoon  (personal  communication  Extension  Specialist,  North  stages  before  application.  can  by  20%  treatment with  of  the  and  manure  James  Biological  Carolina State University).  nitrogen i s lost  and  C.  storage Barker,  Agricultural  in  following  respectively Professor  and  Engineering,  I n Quebec, t h e l o s s  i s around  32 40%  (Gouvernement du Losses  to  Quebec,  the  ammonium e m i s s i o n s  1995).  atmosphere are  should  converted  not  be  ignored  into nitrates  contributing to  a c i d r a i n w h i c h r e t u r n s n i t r o g e n t o t h e l a n d . One for  a i r and  manure  water  before  in  losses.  scenarios  Figure  t h a n on  1)  nutrient  content  atmosphere  assessment  of  and  soil  environmental  welfare  (3a t o  (2b  on  on  and  land,  the  total  nitrogen  2c  in  the  Figure  same a s  1)  the  the one  ratio  used t o  of  water  nitrogen  find  former r a t i o i s found a f t e r  impacts a i r and  volatilized  and  3c  rather  the  of  land  water which  l o c a t i o n at  a p p l i c a t i o n s on  q u a l i t y . Since returns  which  from  the  nitrogen  the  to  sustainable  volatilization  t r e a t m e n t , f o l l o w i n g s t o r a g e o f manure, s i n c e t h e f o c u s only  in  and  t h e i m p a c t o f n u t r i e n t management p l a n s on  i n v e n t o r y l e v e l s . The  not  impact  the  4 t o 7 on t r a d e p a t t e r n s  phosphorus i s not  is  to  to account  assimilative capacity.  To a n a l y z e  and  The  measure  way  i s b a s e d on e c o s y s t e m a s s i m i l a t i v e c a p a c i t y  soil  quality  i s to  volatilization  incorporation policy  quality  since  here  water q u a l i t y ; proportion  atmosphere t o  returns  after  of the  being  c a r r i e d by a i r c u r r e n t s a r e unknown, t h a t p o r t i o n o f n i t r o g e n i s ignored  when e x a m i n i n g  i m p a c t s o f n u t r i e n t management p l a n s  on  water q u a l i t y . Since North  nutrient levels  America,  a  hog  at  i n manure a r e the  p r o d u c e 10.44  k g o f n i t r o g e n and  which  nutrient  i s the  content  finishing 5.22  fairly stage  comparable is  assumed  kg o f p h o s p h o r u s  before  losses  in to  annually,  (Gouvernement  du  33 Quebec,  1995).  5  Maximum  nitrogen  and  phosphorus  levels  are  d i v i d e d b y 10.44 a n d 5.22 r e s p e c t i v e l y t o o b t a i n t h e maximum h o g inventory  levels.  Maximum  p e r c e n t a g e s o f 1987 l e v e l s ;  inventories  Table Plans  converted  i n Table  i n Quebec a n d i n t h e  3.  3 Hog I n v e n t o r y P e r m i s s i b l e u n d e r Two N u t r i e n t i n t h e S o u t h e a s t and i n Quebec Nitrogen  Region and C r o p  to  t h e y e a r 1987 i s c h o s e n s i n c e i t i s  the s t a r t o f the simulation period. Results S o u t h e a s t a r e shown  are  Phosphorus  Plan  Management _^  Plan  Maximum Hog Numbers [1]  % 1987 Hog  Maximum Hogs Numbers [1]  % 1987 Hog Numbers[2]  Million Head  %  Million Head  %  Southeast (Forage)  11.16  295  5.23  138  Quebec (Corn)  0.8  96.5  0.29  35  Quebec (Forage)  0.64  77.2  0.39  47  Numbers [2]  [1] Hogs a t t h e f i n i s h i n g s t a g e [2] 1987 s i m u l a t e d levels  Since  Quebec i n v e n t o r i e s a l r e a d y  restrictions According  on  inventories  to results  are  shown i n T a b l e  exceed t h e l a n d  imposed  i n that  capacity, province.  3, p r o d u c e r s must r e d u c e h o g  A b o a r a n d sow, w i t h p i g l e t s , p r o d u c e 22.1 k g o f n i t r o g e n a n d 15.14 k g o f p h o s p h o r u s a n d t h e h e r d i s assumed t o b e composed o f 48% p i g l e t s , 38% h o g s a t t h e f i n i s h i n g s t a g e a n d 14% sows a n d boars.  34 marketings  to  0.8  respectively) 96.5%  and  forage,  respect  of the  and  35%  o f 1987  inventory  restrictive Conclusions  1987  4  on  and  to  443,24 0 w i t h o u t  a  to  6  levels  35%  and  47%  are  the  least  constrain  to  to  fall  i s more  (corn  77.2%  and  inventories  i n Table and  3).  and  the to  Results  47%  i n between t h e  inventory  of  1987  most  and  levels  depend  i s a d d e d t o l a n d owned o r r e n t e d  to  restrict  on  available for  i f l a n d on w h i c h wheat  t h e number o f h e c t a r e s need  to  restrictions.  l a n d a p p l i c a t i o n s o f manure. I n f a c t ,  producers,  forage,  corresponding  t h e number o f h e c t a r e s  small grains are c u l t i v a t e d  and  phosphorus p l a n  chosen,  s u s t a i n a b l e hog  a s s u m p t i o n s made c o n c e r n i n g  Quebec hog  plan,  ( i n bold type  expected  inventory  (for corn  levels.  scenarios  levels  are  nitrogen  reductions  inventory  levels  head  l e v e l s . The  Scenarios  restricting  least  the  1987  environmental  and  from  million  requires  restrictive.  96.5%  0.64  r e s p e c t i v e l y ) of the  The most  to  77.2%  constraining  and  and by  jumps f r o m 141,520  inventory.  These  areas,  however, h a v e t o be s h a r e d w i t h o t h e r l i v e s t o c k p r o d u c e r s and i t i s beyond the from o t h e r  s c o p e o f t h i s t h e s i s t o i n c l u d e manure  species.  Nevertheless, that the  the  million  produced.  cubic  meters  close to production the  information  from  different  l a n d b a s e i n Quebec i s i n s u f f i c i e n t  manure  production  Each of  units  year,  manure  there  is  f o r which  sources  confirm  to dispose  of a l l  an  land  excess is  of  3.6  unavailable  (Gouvernement du Quebec, 1 9 9 6 ) . A l s o ,  1995-1996 r e p o r t f r o m t h e A u d i t o r G e n e r a l  states that  there  35 is  a  surplus  of  7  million  cubic  meters  of  manure  applied  on  land . 6  In the Southeast, increases  in  simulated. Midwest,  costs  to  Increases in  however, l a n d c a p a c i t y i s s u f f i c i e n t  in  Western  spread costs  Canada,  p r o v i n c e s . On a v e r a g e ,  1,684  produced p e r head p e r y e a r . slurry  up  to  manure are  in  on  also  Ontario  larger  areas  incorporated and  in  the  7  In Indiana,  three-quarters of  thousand  acres  a g a l l o n , the annual  in  a mile  (1,130 a c ) . "  Atlantic  for a price i s spread  of  (Roka,  one  cent  represents  1993). A t  i n s c e n a r i o s 4 and  t h e economic model, which i s p r e s e n t e d  be  i n a concentric  one  c o s t i s US$16.84 o r US$4.21 p e r q u a r t e r  head. T h i s c o s t i s e n t e r e d  the  "a c u s t o m s e r v i c e h a u l s  c i r c l e a r o u n d t h e hog h o u s e , t h r e e - q u a r t e r s o f a m i l e one  are  g a l l o n s o f s l u r r y a r e assumed t o  per g a l l o n (Jones; F o s t e r ) . I f s l u r r y  over  and  6 simulated  i n chapter  cent per with  IV.  R a p p o r t du V e r i f i c a t e u r g e n e r a l a l ' A s s e m b l e e n a t i o n a l e p o u r l ' a n n e e 1995-1996. Tome I , C h a p i t r e 2, A i d e f i n a n c i e r e o f f e r t e aux producteurs agricoles. Etude c o n d u i t e a u p r e s du ministere de 1 ' A g r i c u l t u r e , d e s P e c h e r i e s e t de 1 ' A l i m e n t a t i o n , de l a R e g i e d e s a s s u r a n c e s a g r i c o l e s du Quebec e t de l a S o c i e t e de financement agricole. A m a r k e t hog and sow w i t h p i g l e t s p r o d u c e r e s p e c t i v e l y 2.9 and 8.5 m per year of s l u r r y (Gouvernement du Quebec, 1 9 9 5 ) . Spinelli (1991), s t a t e s t h a t t h e i n v e n t o r y i s composed o f 38% m a r k e t h o g s and 62% sows and p i g l e t s . The w e i g h t e d a v e r a g e o f s l u r r y p e r h e a d c o n v e r t e d i n t o g a l l o n s p e r y e a r e q u a l s 1683.96. 7  36 CHAPTER I V - THE ECONOMIC MODEL  The  economic  mathematical industries  model  is  programming (Spinelli,  an  model  1991) .  adaptation of  It  US  is  and  a  of  a  spatial  Canadian  multi-stage  swine partial  e q u i l i b r i u m model w h i c h i s d y n a m i c , r e g i o n a l a n d i n c o r p o r a t e s risk variable;  features described  the  function,  objective  variables.  Data  thereafter. function,  The m o d e l ,  i s described  The O b j e c t i v e The defined  values  feed  following the presentation of  costs,  pork  and v a l i d a t i o n including  demand  of results  equations  maximizes  as t h e M a r s h a l l i a n  measures  of producer  plus  government  since  payments.  pork i s a small  e x p e n d i t u r e s and major s h i f t s  The  The  phosphate  market  demand  portion  and  welfare consumer  function  of total  is  consumer  i n p o r k p r i c e s have s m a l l  effects  of living.  objective  function  does  n o t maximize  which i n c l u d e s t h e economic b e n e f i t s d e r i v e d quality,  objective  i n a p p e n d i x A.  function  on t h e c o s t  output  a r e shown  and t h e  objective  uncompensated  and  Function  model's  surpluses  a  because  economic  values  social  welfare  from e n v i r o n m e n t a l  f o r decreased  nitrate  l e v e l s i n N o r t h A m e r i c a do n o t e x i s t . H a n l e y  and  (1990)  explains:  " . . . e c o n o m i s t s seem t o h a v e n e g l e c t e d b e n e f i t estimation f o r n i t r a t e p o l l u t i o n c o n t r o l : much more work i s n e e d e d i n t h i s a r e a . A l t e r n a t i v e l y , we m i g h t j u d g e b e n e f i t e s t i m a t i o n  37 t o be t o o d i f f i c u l t , a n d s e e k e f f i c i e n t ways o f a c h i e v i n g p o l i t i c a l l y - d e t e r m i n e d target n i t r a t e l e v e l s a t the lowest p o s s i b l e r e s o u r c e c o s t . " (Hanley, 1990). Hence,  t h e approach  chosen  i n this thesis  market, r a t h e r than s o c i a l w e l f a r e . the  area  under  government fixed age  each  payments  or variable cohort  region's and  costs  and  The o b j e c t i v e i s t o maximize  pork  subtracting  production  between  production  storage,  and t r a n s p o r t a t i o n slaughtered  wholesale-retail which  are  into  products  c)  pigs  incurred  margin,  a r e : a)  and hogs,  f o r each  (including  actual  e)  carcasses,  countervailing cost  and f ) r i s k  pigs  processing,  while preparing  pork  equivalent  f r o m Canada,  adding  c o s t s f o r moving f e e d e r  processed  an  which  a l l slaughter,  costs  and  marketing  translated  transporting price  regions,  function,  a l lcosts  region  a b a t e m e n t c o s t s ) , b) t r a n s p o r t a t i o n  distributing  demand  f o r producing  each  i s t o maximize  and d)  a  duties  increase  for  associated  with  variability.  F e e d C o s t s a n d P o r k Demand a s D r i v i n g F o r c e s o f t h e M o d e l Feed c o s t s of  t h e model.  a n d t h e demand f o r p o r k a r e t h e d r i v i n g Feed  herds  whose  herd.  Feed p r i c e s  in  dynamics  retail  f o r pork  demand  influence  are driven  by  the size  of regional  the size  of the breeding  a r e e x o g e n o u s and h e n c e do n o t a l l o w  animal production Demand  costs  forces hog  changes  t o a f f e c t g r a i n demand o r p r i c e s . i s represented  function  f o r composite  by an a g g r e g a t e pork  products  quarterly comprising  d i f f e r e n t c u t s o f p o r k . F o r example, t h e US s e a s o n a l r e t a i l  pork  38 demand  equation  quarter,  from  obtained  a linear  by  Spinelli  regression  (1991),  f o r the  with ordinary  least  first  squares  (OLS) i s : PCPC PINC  =  t  15.421 -  0.058  RPP  t  +  0.022  BRP  +  t  = = = = = =  +  t  0.077  p e r c a p i t a pork consumption pork r e t a i l p r i c e beef r e t a i l p r i c e chicken r e t a i l price p e r s o n a l p e r c a p i t a income quarter t  R e g r e s s i o n p a r a m e t e r s u s e d by S p i n e l l i updated  data  f o r independent v a r i a b l e s .  seasonal r e t a i l regions.  A  assumption regions  multiplied  price  regional  The US data  Parameters  average  definitions Canada  retail on  and p r i c e  average  Hence,  f o r t h e US  since  As a p o i n t  retail  t h e US  weight  makes  a r e used per  this  for  capita  a l l  income  each r e g i o n has i t s the slope  endogenous  o b t a i n e d by S p i n e l l i  p r i c e and q u a n t i t y  of  prices  elasticity  quantities.  and  personal  functions.  by r e g i o n a l  elasticity  Output  between  t h e demand  function  regional  consistent  necessary.  differentiate demand  of  f o r pork  and  (1991) a r e u s e d w i t h  p o r k demand e q u a t i o n a r e assumed t o a p p l y t o a l l  lack  equivalents  parameter  hog p r i c e s  of reference, (1991) u s i n g  over  the pork  average  US  i s -0.768.  Variables  The g  CRP  t  PCPC RPP BRP CRP PINC t  is  0.049  output  variables  s o l v e d by t h e model  a r e : t h e number  of animals  i n the  39 herd,  the actual capital  t h e f a r m a n d SPS l e v e l s , of  live  animals  produced number  and i n c r e m e n t a l  i n farm  breeding  r e g i o n t o another, regions are also  i n capital at  t h e number o f h o g s m a r k e t e d , t h e w e i g h t a n d SPS  and i n s t o r a g e ,  of  changes  regions,  a n d t h e demand  animals  t h e amount  for retail  transferred  from  one  a n d t h e amount o f meat s h i p p e d  o f meat  pork.  The  production  f r o m t h e SPS  simulated.  Important Features  o f t h e Model  Dynamics Dynamics The  number  are important  of piglets  aspects  o f t h e model's  equations.  i s a function of the breeding  t h e p r e v i o u s p e r i o d , m u l t i p l i e d by t h e b i r t h r a t e ,  herd  from  added t o t h e  n e t t r a n s f e r o f p i g l e t s a c r o s s r e g i o n s . The number o f f i n i s h e r s d e p e n d s on t h e p r e v i o u s p e r i o d , a n d i s a f u n c t i o n o f t h e number o f p i g l e t s t h a t s u r v i v e t h e weaning s t a g e combined w i t h t h e n e t t r a n s f e r o f p i g l e t s f r o m o t h e r r e g i o n s . The number o f a n i m a l s i n the breeding a  function  finishers,  stock of  a l s o d e p e n d s on t h e p r e v i o u s p e r i o d , a n d i s  breeding  minus  the  inventory  number  of  and  number  marketed  animals The  stock  is a  fixed  entering the stock model  proportion  i s constrained  such  that  plus  culled  of the total  i n the previous  surviving  animals,  t r a n s f e r s a c r o s s r e g i o n s . The number o f a n i m a l s breeding  of  net  from t h e  number  of  quarter. the quantity  o f pork  p r o d u c e d i n a SPS r e g i o n , p l u s i m p o r t s , m i n u s q u a n t i t i e s s h i p p e d t o c o n s u m p t i v e r e g i o n s , t h e m i l i t a r y s e c t o r , US t e r r i t o r i e s , a n d  40 export  markets,  storage  must  from the  Dynamics assets  be  last  also  The  play  a  role  of  at  quantity  to the  replacement  the  farm  capital,  p o r t i o n of c a p i t a l  g r e a t e r or equal  the  i n the  equipment)  replacement  undepreciated  than  added  to  quarter.  ( b u i l d i n g s and  levels.  larger  capital  and  of  slaughtering  combined  from t h e  last  available for  durable  with  the  q u a r t e r must  be  production.  Reqionality Regional.ity regions  are  is  a  main  delineated  feature  of  according  the  to  model.  Production  prevailing  cultural  p r a c t i c e s i n r a i s i n g h o g s and by t h e amount o f f e e d s p r o d u c e d i n e a c h r e g i o n . Two and  the  producing  Southeast  regions:  East,  regions  are  production, Ontario, A  (comprising  South,  the  and  Quebec, and  North  Midwest  same  SPS  central  regions exist  as  demand  is  Western  SPS  chosen  exist:  the  and  US.  regions.  regions  the A t l a n t i c  city  Carolina)  and  the  i n t h e US:  f o u r US  The  In  corresponding  consistent  with  Extension  Service  Canadian  regional  regional  experts.  costs).  information of  Iowa  Western  breakdown  The  each  US  provided  is  SPS  demand four  Canada,  provinces. for  State  US  Canada,  region  (Table  c a l c u l a t e the d i s t a n c e s over which t r a d e d goods a r e (with  Midwest  regional by  University based  on  4)  transported  breakdown  the (1992)  to  is  Cooperative while  discussions  the with  Table their  4 Production, Centers  Regions  Slaughter,  Central  Demand R e g i o n s a n d  City  Hog P r o d u c t i o n  Province  or State  Level  Southeast  Charlotte  North C a r o l i n a  Midwest  Dubuque  Iowa  Atlantic  Edmunston  New-Brunswick  Quebec  St-Hyacinthe  Quebec  Ontario  Stratford  Ontario  Western Canada  Edmonton  Alberta  Slaucj h t e r ,  P r o c e s s i n g , S1:orage L e v e l  East  Philadelphia  Pensylvannia  South  Raleigh  North C a r o l i n a  Midwest  Des M o i n e s  Iowa  West  Los  California  Atlantic  Moncton  New  Quebec  Montreal  Quebec  Ontario  Burlington  Ontario  Western Canada  Edmonton  Alberta  Angeles  Brunswick  Demand L e v e l East  New Y o r k  City  South  Atlanta  Georgia  Midwest  Chicago  Illinois  West  Sacramento  California  Atlantic  Halifax  Nova S c o t i a  Quebec  Montreal  Quebec  Ontario  Toronto  Ontario  Western Canada  Edmonton  Alberta  New  York  42 The t h r e e t y p e s o f e c o n o m i c a g e n t s , retailers, Live  hogs  local  from  each p r o d u c t i o n  processing  hogs,  baseline The  p r o c e s s o r s and  a c t i n two v e r t i c a l l y r e l a t e d s e c t o r s : h o g s a n d p o r k .  sector  p r o c e s s i n g , and s t o r a g e live  farmers,  however,  because  r e g i o n c a n be d e l i v e r e d t o t h e  or  exported  to  other  (SPS) r e g i o n s d o m e s t i c a l l y o r a b r o a d . US  cannot  be  exported  t o Canada  o f the t h r e a t o f the spread  SPS s e c t o r b u y s l i v e h o g s f r o m t h e p r i m a r y  pork t o r e t a i l e r s  slaughter,  of  under t h e  pseudorabies.  s e c t o r and s e l l s  a t home o r a b r o a d .  Incorporation of Risk Risk  i s a significant  assumed  that  prices.  After  adaptive  producers  addition to Spinelli*s  have  a  perfect  considering previous  expectations  model  foresight  supply  response  framework i s c h o s e n ,  which  of  which market  s t u d i e s , an i s seen as a  9  first  attempt  economic  t o model  agents  base  expectations.  their  Within  expectations  this  framework,  on p r e v a i l i n g  prices  when t h e y make t h e i r d e c i s i o n s . F a r m e r s make d e c i s i o n s a b o u t h o g b r e e d i n g t h r e e q u a r t e r s b e f o r e t h e hogs a r e ready since  the gestation period  process  takes  processing, same q u a r t e r  five  storage  i s four  t o s i x months. and r e t a i l e r  M a r t i n and Goddard expectation process.  (1987)  months  and t h e  Agents  at the slaughter,  levels,  i n which t h e a c t i v i t y  for slaughter,  takes  discuss  finishing  make d e c i s i o n s i n t h e place.  specifications  of the  43 In averse,  this  thesis,  hog producers  b a s e d on f i n d i n g s o f L e g a u l t  a r e assumed  t o be  risk  ( 1 9 9 5 ) , who showed t h a t 81%  o f Quebec h o g p r o d u c e r s a r e r i s k a v e r s e ,  8% r i s k n e u t r a l a n d 11%  r i s k l o v i n g , a t a n i n v e s t m e n t l e v e l o f CDN$150,000. F u r t h e r m o r e , W i l s o n a n d Eidman swine p r o d u c e r s are  risk  (cited  are risk  i n Legault, averse,  preferring. Also,  1995) f o u n d t h a t  34% a r e r i s k  t h e assumption  44% o f US  neutral  a n d 22%  i s made t h a t .  risk  has  a  Incorporating to al.  risk  a research  area  impact  on  investment  n e e d s t o be e x p a n d e d  10  decisions.  i n t o d y n a m i c programming m o d e l s , that  .  contributes  (Krautkraemer e t  1992) : "Most previous stochastic dynamic programming (DP) a p p l i c a t i o n s h a v e assumed t h a t d e c i s i o n m a k e r s a r e r i s k n e u t r a l ; however, r i s k p e r m e a t e s b o t h i n t r a - y e a r a n d i n t e r y e a r r e l a t i o n s h i p s i n most DP p r o b l e m s . . . More r e s e a r c h on r i s k a v e r s e DP f o r m u l a t i o n s i s needed" (Krautkraemer e t al., 1992). In  yield of  negative  market  the literature,  variability  variation).  risk  (variance,  In t h i s  i s measured by revenue, standard  study,  deviation  t h e proxy  or  coefficient  f o r risk,  associated  w i t h p r i c e v a r i a b i l i t y o f hogs, i s t h e s t a n d a r d  deviation of the  e n d o g e n o u s q u a r t e r l y m a r k e t p r i c e s f o r t h e 1981-1986 First,  t h e model  i s applied  price, or  t o t h e 1976-1980  period. period  to  I t i s common t o assume t h a t p r i c e u n c e r t a i n t y i n d u c e s a d e c r e a s e i n investment and output, a l t h o u g h Robinson argues t h a t i t t r i g g e r s an i n c r e a s e ( c i t e d i n S p r i g g s and v a n Kooten, 1988): "a s u b s t a n t i a l p a r t o f i n v e s t m e n t i n a g r i c u l t u r e o c c u r s i n y e a r s of h i g h p r i c e s s i n c e such y e a r s p r o v i d e both t h e c a p a c i t y t o i n v e s t and t h e i n c e n t i v e , p a r t l y because farmers a r e n o t o r i o u s t a x a v o i d e r s . " ( R o b i n s o n c i t e d i n S p r i g g s a n d v a n K o o t e n , 1988)  44 e s t i m a t e t h e s t a n d a r d d e v i a t i o n o f market p r i c e s , the expected r i s k is  then  the  validated  expected  i n the f o l l o w i n g p e r i o d : with  risk.  the  The  risk  response  coefficient  over  1981-1986 p e r i o d .  the  1981-1986  to  stabilization Finally,  1981-1986. The  quarterly  aversion  the proxy f o r  data  including  coefficient  payments  are  scenarios are  model  and  the  estimated  compared  to  t h e b a s e l i n e o v e r t h e s i m u l a t i o n p e r i o d : 1987-1992; t h i s h o r i z o n is  chosen  to include a f u l l  The  introduction  stabilization  production cycle.  of  risk  and  Canadian data  are  t h e m a i n m o d i f i c a t i o n s u s e d on t h e o r i g i n a l d a t a t o i m p r o v e  the  performance  payments and  expected  11  the refinement of Canadian  o f t h e model f o r Canada. A d e t a i l e d  description  of  12  d a t a and  procedures  D a t a V a l u e s and Expected The replaced  pricing an  incorporation  in Spinelli  (1991).  Sources  R i s k and  by  i s available  Stabilization rule,  based  Payments on  perfect  foresight,  a d a p t i v e e x p e c t a t i o n s framework of  a  proxy  for  risk.  The  proxy  and  has allows  for  the  been the risk  The hog p r o d u c t i o n c y c l e d e s c r i b e s t h e r e g u l a r f l u c t u a t i o n i n hog numbers due t o c h a n g e s i n hog p r i c e s . A p e r i o d o f d e c l i n i n g m a r k e t p r i c e i s g e n e r a l l y f o l l o w e d by a r e d u c t i o n i n h e r d s and b r e e d i n g c a p a c i t y . R e d u c e d numbers r e s u l t i n p r i c e i n c r e a s e s a y e a r t o e i g h t e e n months l a t e r e n c o u r a g i n g f a r m e r s t o i n c r e a s e h e r d s f o l l o w i n g t h i s p r i c e s t r e n g t h e n i n g . These f l u c t u a t i o n s c r e a t e a r e g u l a r c y c l e o f t h r e e t o f o u r y e a r s (Churches, 1988). 12  .  Data  c a n be  o b t a i n e d from t h e  author.  45 associated deviation  with of  price  the  variability  endogenous  variable  does  market not  of  hogs  prices  cause  much  is for  the the  standard 1981-1986  period.  This  variation  regions  ( T a b l e 5 ) . P r i c e s i n Quebec, O n t a r i o and W e s t e r n Canada  v a r y s l i g h t l y l e s s than p r i c e s i n the Midwest but t h e is  l e s s than To  find  or equal to the  risk  across  difference  2%.  aversion  coefficient,  the  model  is  w i t h d i f f e r e n t c o e f f i c i e n t s . The r i s k a v e r s i o n c o e f f i c i e n t , is  the  parameter  a c t u a l d a t a . The widely  from  0.08  creating  the  best  f i t between  range o f e s t i m a t e s used to  7  depending  on  simulated  run 0.3, and  i n other studies varies methodology  and  sample  (Bouzaher e t a l . , 1995).  Table 5 Standard Deviations P e r i o d as a Proxy f o r R i s k  1981-1986 u s e d  Region  Simulation period 1987-1992  Southeast  12 . 67  Midwest  12.73  Atlantic  Canada  12.64  Ontario  12.56 Canada  12.47  Income s t a b i l i z a t i o n impact  Simulation  12.77  Quebec  Western  i n the  schemes, i m p l e m e n t e d t o a t t e n u a t e  the  o f p r i c e v a r i a t i o n s , have been added t o S p i n e l l i ' s model.  Q u a r t e r l y d a t a f o r f e d e r a l s t a b i l i z a t i o n payments a r e  available  46  f r o m A g r i c u l t u r e Canada, b u t q u a r t e r l y d a t a Income  Stabilization  Insurance  f o r t h e Quebec Farm  Program  (QFISIP)  are not  a v a i l a b l e s i n c e i t i s an a n n u a l p r o g r a m . I t i s assumed h e r e t h a t c a s h a d v a n c e s , w h i c h were p r o v i d e d t h r e e t o e i g h t t i m e s from  1987  t o 1992, p l a y  Therefore,  cash  i.e.  quarters  three  expected  a  advances  made  before  subsidies.  role  Like  when p r o d u c e r s  marketings, the risk  r e s p o n s e c o e f f i c i e n t t o payments provides  the best  though  low,  f i t between  is  i n producers'  consistent  l i t e r a t u r e . Most e c o n o m e t r i c  aversion  simulated  expectations.  make d e c i s i o n s ,  a r e used  (0.12),  annually  as p r o x i e s f o r  coefficient,  the  i s t h e parameter which and a c t u a l  with  estimates  estimates  suggest  data  found  and  i n the  t h a t Canadian hog  p r o d u c t i o n s u b s i d i e s d i d n o t t r i g g e r an i n c r e a s e i n Canadian hog production (Savard  and e x p o r t s ,  o r i f they  a n d Romain, u n p u b l i s h e d  to  be w i t h  Eastern  ignored.  In t h i s  Ontario,  Quebec  Canada  thesis,  four  Eastern  Trade  data  from  demand  individual  small  Data  and t r a d e  and t h e A t l a n t i c  Canadian  was  a l l t r a d e w i t h t h e US i s assumed with  Canada  regions, Canadian  Western  Canada i s  i s disaggregated  provinces.  have been r e f i n e d t o r e c o r d imports the  t h e impact  manuscript).  R e f i n e m e n t o f C a n a d i a n a n d US T r a d e I n S p i n e l l i ' s 1991 t h e s i s ,  did,  Furthermore,  and e x p o r t s  data  i n t o and o u t o f  i n c l u d i n g Western regions  into  into  Canada.  o r o u t o f US  r e g i o n s a r e n o t c u r r e n t l y a v a i l a b l e b e c a u s e t r a d e w i t h t h e US i s r e p o r t e d by p o r t n o t r e g i o n o f o r i g i n , o r d e s t i n a t i o n . I t i s n o t  47 possible, to  f o r example,  the Southeast  Trade and  i s thus  t o d i s t i n g u i s h between C a n a d i a n  or the East  reported  from  i f they  a t t h e same  each o f t h e Canadian  port.  regions  into  o u t o f t h e US a s a w h o l e .  R e f i n e m e n t o f C a n a d i a n and US C o s t Capital  costs  are not  have  calculated  Ontario, are  amortizement  1.5  and  conservative  value  the  cost  capital  quarter)  o f 1.3  Costs marketing  and  i n Quebec, O n t a r i o  and A l b e r t a  times  interest  (1995)  higher  i s chosen  than  in  Iowa.  The  a n d m u l t i p l i e d b y US$737,  production  o f 780  pigs  per  c o s t s o f US$960 i n  Iowa.  are obtained  by  hogs and p o r k .  from p r o v i n c i a l  estimated  are replaced  pork  actual  C a n a d i a n hog  Marketing  wholesale-retail  data  from  Boards.  marketing  t h e USDA  and a l l  a r e assumed t o h a v e t h e same m a r g i n s .  The  same a s s u m p t i o n i s made f o r s l a u g h t e r i n g a n d p r o c e s s i n g  costs.  Considering  plants,  standardization across  (1995) p r o v i d e which  across  i n Quebec,  a r e i n c u r r e d t o market  (1991)  identical  costs  per p i g (for a  except  costs  Spinelli*s  regions  be  t o o b t a i n one-time, p e r p i g c a p i t a l  regions  margins  1.54  to  (1991). F o r t i n and S a l a u n  A l b e r t a a n d Iowa. C o s t s  1.33,  Data  assumed  r e g i o n s as they a r e i n S p i n e l l i  all  cross  exports  is  the  lack  of  information  regions  for  individual  i s chosen. K l e i n e t a l .  slaughtering capacities at the provincial  insufficently  disaggregated.  Information  on  level, plant  c a p a c i t y , on t h e age o f t h e e q u i p m e n t , l a b o r c o n t r a c t s i n f o r c e ,  48 and t h e p o t e n t i a l number o f l a b o r s h i f t s a r e n e c e s s a r y t o a s s e s s cost differences Spinelli's  ( B r e s s l e r and K i n g ,  1970).  s l a u g h t e r i n g and p r o c e s s i n g c o s t s  o f US$22.88  p e r head f o r a l l r e g i o n s a r e kept s i n c e t h i s v a l u e i s r e a s o n a b l e based  on  Ward  and  Faminow's  (1992)  estimates.  Those  authors  s u r v e y e d US meat p a c k e r s and a s k e d e x e c u t i v e s a b o u t t h e p e r h e a d cost  of  slaughtering-processing f o r three  Respondents  estimated  average  sizes  of  plants.  c o s t s o f US$18.67, US$21.42 a n d  US$23.5 p e r h e a d f o r p l a n t s w i t h a n n u a l v o l u m e s o f 3.8, 2.7 a n d 1.6 m i l l i o n h e a d , r e s p e c t i v e l y . A c c o r d i n g t o t h e a u t h o r s , costs  are  "informed  estimates"  since  the  sample  these  is  not  s t a t i s t i c a l l y representative.  Refinement  o f Canadian  The p e r c e n t a g e found  i n Table  Salaun kept  6.  and US  o f p i g l e t s l o s t d u r i n g t h e weaning p e r i o d i s Data  (1995) w h i l e d a t a  identical  Coefficients  f o r Canada  are taken  f o r t h e Midwest  as i n S p i n e l l i  (1991).  from  Fortin  and  and t h e S o u t h e a s t a r e  49 T a b l e 6 Q u a r t e r l y Death Rates o f P i g l e t s by Region Region  Death Rate  Southeast  0.2  Midwest  0.2  Atlantic  0.15  Canada  Quebec  0.135  Ontario  0.138  Western  Canada  Dressing set  a t 71%  leaner. USDA  percentage  identifies  from  and  information  (1976-1995)  Products  0.131  i n t h e US  This  (%)  and  from  a t 68%  on  issues  Canada  a l l sources of data.  to carcass  weight  is  i n Canada, C a n a d i a n p o r k b e i n g  i s based  various  Statistics  liveweight  as  electronic of  data  Livestock  shown  in  from  and  Table  7,  the  Animal which  50 T a b l e 7 Sources o f Data f o r t h e Economic Model Data  Source Initial  Herd  Population  US  USDA, NASS, Hogs and P i g s ,  Canada  CANSIM  database, Matrix Feed  US  corn  various  issues  9500-9510  Prices  USDA, NASS, A n n u a l P r i c e Summary, received  prices  US Soy Bean Meal(44% protein)  USDA, NASS, A n n u a l P r i c e Summary, p r i c e s  Canada Wheat, C o r n and B a r l e y  A g r i c u l t u r e and A g r i - f o o d Canada, P o l i c y B r a n c h , E c o n o m i c and P o l i c y A n a l y s i s Directorate  Supplements  Feedstuffs,  May  22,  1989  Non-feed V a r i a b l e US and Canada  Costs  USDA, ERS, E c o n o m i c I n d i c a t o r s Sector, various issues Marketing  o f t h e Farm  Costs  US  USDA, ERS, E c o n o m i c I n d i c a t o r s Sector, various issues  Canada  Various  o f t h e Farm  P r o v i n c i a l Hog M a r k e t i n g B o a r d s  Consumer P r i c e I n d i c e s , US and Canada  paid  Exchange R a t e s  A g r i c u l t u r e and A g r i - f o o d Canada, P o l i c y B r a n c h , E c o n o m i c and P o l i c y A n a l y s i s Directorate R e g i o n a l N o m i n a l Income  US  US D e p a r t m e n t o f Commerce, B u r e a u o f E c o n o m i c A n a l y s i s , Local Area Personal Income, M i c r o f i c h e 2708-49, v a r i o u s i s s u e s  Canada  A g r i c u l t u r e and A g r i - f o o d  Pork Trade, M i l i t a r y US  Canada  S h i p m e n t s and S h i p m e n t s t o T e r r i t o r i e s  USDA, ERS,  Livestock  and Meat  Statistics  51 Table 7 , continued. Data  Source  Canadian pork imports and e x p o r t s  A g r i c u l t u r e and A g r i - f o o d  Canada  R e g i o n a l Human P o p u l a t i o n US  US D e p a r t m e n t o f Commerce, C e n s u s B u r e a u , C u r r e n t P o p u l a t i o n R e p o r t , P u b l i c a t i o n 2542-1, various issues  Canada  A g r i c u l t u r e and A g r i - f o o d Retail  C h i c k e n and Beef  Prices  A g r i c u l t u r e and A g r i - f o o d  US  Canada  Canada  Countervailing Duties US countervail  Canadian  Pork  Council  Stabilization  Payments  Canadian (federal)  A g r i c u l t u r e and A g r i - f o o d  Quebec  R e g i e d e s A s s u r a n c e s A g r i c o l e s d u Quebec Frozen Storage  Canada  Quantities  US  USDA, ERS, L i v e s t o c k a n d Meat  Statistics  Canada  S t a t i s t i c s Canada, L i v e s t o c k a n d A n i m a l P r o d u c t s , C a t a l o g u e 23-203  D i s t a n c e s b e t w e e n P r o d u c t i o n , SPS a n d Demand C e n t e r s US a n d Canada  Rand M c N a l l y , US/Canada A r e a Owned o r R e n t e d  Atlas  b y Hog P r o d u c e r s  US  U n p u b l i s h e d Farm C o s t s a n d R e t u r n s 1994  Survey  data,  Canada  S t a t i s t i c s Canada, A g r i c u l t u r a l C e n s u s , Agricultural Division, Agricultural Profile of Canada, T a b l e 25  52 Table  7,  continued  Data  Source Validation Herd  Data  Inventory  US  USDA, NASS, Hogs a n d P i g s , v a r i o u s  issues  Canada  S t a t i s t i c s Canada, L i v e s t o c k a n d A n i m a l P r o d u c t s , C a t a l o g u e 23-203 Slaughter  US  USDA, NASS, L i v e s t o c k S l a u g h t e r , d a t a 1976-1995  Electronic  Canada  S t a t i s t i c s Canada, L i v e s t o c k a n d A n i m a l P r o d u c t s , C a t a l o g u e 23-203 Prices  US  USDA, NASS, A g r i c u l t u r a l  Canada  A g r i c u l t u r e and A g r i - f o o d  Prices Canada  Farm L e v e l T e c h n i c a l C o e f f i c i e n t s , I n i t i a l a n d r e c u r r i n g f i x e d c o s t s a t t h e p r o d u c t i o n a n d SPS l e v e l s , t r a n s f o r m a t i o n a n d t r a n s p o r t a t i o n c o s t s and s l a u g h t e r house c o s t s a r e g i v e n i n S p i n e l l i (1991)  V a l i d a t i o n Tools The  next  validate  and R e s u l t s  section  outlines  t h e e c o n o m i c model  the empirical  and p r e s e n t s  tools  the results  used  to  i n Tables  8 a n d 9.  Empirical  T o o l s Used f o r E v a l u a t i o n  C o m p a r i s o n s between made  using  (%RMSE)  root  mean  and T h e i l ' s  sensitivity  simulated  square  error  inequality  t o discount  rates  results  and a c t u a l data a r e  (RMSE),  coefficients  and t h e dynamic  percentage  RMSE  (U., a n d U ) . T h e 2  response  ofthe  53 model  are  performance The  additionnal  measurements  error  from  becomes  t h e a c t u a l time evaluated  of the variable,  (Pindyck  the basis  s i n c e i t measures  c a n be b e s t  size  chosen  to  evaluate  the  o f t h e model.  RMSE  variable  criteria  and R u b i n f e l d ,  f o r many  "goodness  of  f i t "  the deviation o f the simulated path.  Because  by comparing  t h e percentage  t h e magnitude  i t with  RMSE  of  t h e average  i s also  presented  1991).  Formula  1. RMSE  Formula  2 . P e r c e n t a g e RMSE  where Y a n d Y a r e t h e s i m u l a t e d a n d a c t u a l v a l u e s f o r t h e v a r i a b l e s i n p e r i o d t a n d n i s t h e number o f p e r i o d s . t  t  The two T h e i l ' s i n e q u a l i t y c o e f f i c i e n t s , and  U  2  statistics  statistic  c o n t a i n t h e RMSE i n t h e i r  commonly  called  numerators.  i s m i s l e a d i n g , however, s i n c e i t s d e n o m i n a t o r  on t h e a b s o l u t e v a l u e s o f p a s t p r e d i c t i o n s . T h e l e v e l s o f  The U  1  depends were  shown t o b e l o w e r e d b y a d d i t i v e t r a n s f o r m a t i o n s o f p r e d i c t e d a n d  54 actual  values  Nevertheless,  of  variables  being  the widespread  m i g h t be e x p l a i n e d by t h e i r  tested  acceptance  (Leuthold,  of  these  statistics  ease o f i n t e r p r e t a t i o n  b o u n d e d b y 0 a n d 1. When U^O,  the s t a t i s t i c s  used  1975).  as they a r e i n t h e model  p r e d i c t s v a l u e s w h i c h a c c u r a t e l y f i t t h e d a t a . I f U ^ l , however, the  predictive  When 1^=1, are  simulated  non-zero,  actual  values  positive  p e r f o r m a n c e o f t h e model  and  values  a r e always  non-zero  are zero.  (or negative)  i s less 0, t h o u g h  p r e d i c t i o n s have  Furthermore, when  actual  than  values  actual  been  simulated  adequate. values  made  values  when  may  are negative  positive)  (Pindyck and R u b i n f e l d ,  statistic  i s t o compare a l t e r n a t i v e v a r i a b l e s a n d r e g i o n s .  F o r m u l a 3. T h e i l ' s U,  Statistic  The  t  U  different  2  statistic  h a s t h e same  denominator.  The v a l u e  z e r o when s i m u l a t i o n s e q u a l has  no  equals  f o rthe  a  t  upper  (or  1 9 9 1 ) . T h e b e s t u s e o f t h e U,  where Y and Y a r e t h e s i m u l a t e d and a c t u a l v a l u e s v a r i a b l e s i n p e r i o d t a n d n i s t h e number o f p e r i o d s . s  be  boundary.  numerator  of the U  2  the a c t u a l data,  It' s  value  is 1  as t h e U  1  but a  statistic  is still  but this  statistic  when  the simulation  t h e n a i v e p r e d i c t i o n and has v a l u e s g r e a t e r t h a n  1, when  55 predictions  F o r m u l a 4.  are  less  Theil's U  accurate.  Statistic  2  where Y and Y are the v a r i a b l e s i n p e r i o d t and s  s i m u l a t e d and a c t u a l v a l u e s n i s t h e number o f p e r i o d s .  a  t  t  E v e n i f a model h a s to stimuli  a s m a l l RMSE,  important  evaluation  or  sensitivity minor  for  to the  changes  large  accurate  criterion. c r i t e r i o n o f model p e r f o r m a n c e i s  starting  i n model  mathematical estimates  is  and  dynamic response o f t h e model i s thus  I n a d d i t i o n , an i m p o r t a n t its  the  i t must r e s p o n d  2  i n ways w h i c h a r e c o n s i s t e n t w i t h e c o n o m i c t h e o r y  e m p i r i c a l o b s e r v a t i o n . The an  and U ,  for  date  of the  parameters. programming  more  discount rates i s analyzed  This  simulation period, i s especially  models  difficult.  where  The  true  obtaining  sensitivity  a f t e r c o m p a r i n g a c t u a l and  to  simulated  data.  Comparison o f Simulated  and  Simulated  and  1987-1992  periods  parameters  of  and  Actual  a c t u a l data  the  (Tables original  Data  a r e compared o v e r 8  and  model  9  the  1981-1986,  respectively).  were  estimated  Since using  56 econometric period and  was  includes  1986.  data:  regressions  The  1987-1992. S i n c e  used  for  chosen  to  Slaughter and  SPS  the  data of  from  1976-1983,  out-of-sample  includes  data:  s i x years of  1987-1992 p e r i o d  the  first  1984,  1985  out-of-sample  i s more r e c e n t ,  i t  simulations. slaughter  v a l i d a t e the  output of the impact  years  second p e r i o d  Inventory,  the  three  with  of  and  model.  live  Inventory  e c o n o m i c model s i n c e changes  in  the  i s validated  to  assess  sectors. Finally,  q u a n t i t i e s are  the  hog  hog  prices i s the  are  variables  most  important  i t i s the v a r i a b l e measuring industry linkages  on  water  between t h e  quality. primary  p r i c e s are v a l i d a t e d s i n c e p r i c e s  m a i n components o f  welfare.  and  57 T a b l e 8 Hog I n v e n t o r y t h e 1981-1986 P e r i o d  and S l a u g h t e r V a l i d a t i o n  R o o t Mean Square Errors Predicted Variable  RMSE  T h e i l ' s UStatistic  u  %  2  RMSE  Hog Inventory  Mean  Statistics for  Values  Simulated Value  Actual Value  Differenc e [1]  Million  Head  %  North America  10.73  0.17  0.08  0.77  71.55  63.21  11  United States  10. 44  0.2  0. 09  0.87  62.06  53.14  14.8  Southeast  2.2  0.28  0.13  1.15  7.62  8.36  -10.2  Midwest  10.28  0.23  0.1  1.01  54.45  44.79  19.4  Canada  1.98  0.2  0.1  0.97  9.09  10. 06  -9.5  Atlantic  0.11  0.29  0.16  1.52  0.3  0.39  -23  Quebec  0.77  0.25  0.12  1.09  2.8  3.13  -12  Ontario  0. 69  0.21  0.11  1. 05  2.75  3.28  -16.2  Western Canada  0.77  0.24  0.12  1.27  3.25  3.26  1.3  Real  US$/Cwt  Hog Prices  %  Midwest  38.99  0.49  0.3  2.25  48.37  76.91  -37.1  Atlantic  24.99  0.39  0.22  1.66  48.95  58.1  -15.74  Quebec  24.62  0.4  0.21  1.68  49.63  58.61  -15.32  Ontario  26.07  0.42  0.23  1.83  49.44  58.18  -15.02  Western Canada  24.42  0.41  0.22  1.8  48.75  55.95  -12.86  58 Table  8,  Predicted Variable  continued RMSE  % RMSE  Ui  u  2  Simulated  Actual Value  Difference  Value Slaughter  M i l l i o n Cwt  %  North America  13 .1  0. 38  0.16  1.2  47.43  41.76  12.79  United States  7.24  0.2  0.09  0.81  41.67  36.26  13.9  Northeast  0.8  0. 27  0.14  1.02  2.94  2.82  2.87  South  0.68  0.1  0. 05  0.42  6.2  6.19  -2.4  Midwest  6.77  0.27  0.12  1.07  31.64  26.16  19.62  West  0. 28  0.24  0.14  0.98  0.88  1. 09  -21.21  Canada  2.01  0.35  0.17  1.73  5.77  5.49  4.26  Atlantic  0. 05  0.21  0.12  1.15  0.19  .24  -17.8  Quebec  0.48  0.25  0.14  1.15  1. 55  1.91  -18.95  Ontario  0.71  0.42  0.24  1.93  1.16  1.73  -32.49  Western 1.9 1. 07 0.39 5.47 2.86 1.67 Canada [1] P e r c e n t a g e d i f f e r e n c e s between a v e r a g e s i m u l a t e d v a l u e s ; Cwt: 100 p o u n d s .  73.59 and a c t u a l  59  T a b l e 9 Hog I n v e n t o r y t h e 1987-1992 P e r i o d  and s l a u g h t e r  R o o t Mean Square Errors Predicted Variable  RMSE  % RMSE  T h e i l ' s UStatistic Measures U  1  U  2  Hog Inventory  Validation Statistics f o r  Mean  Values  Simulated Value  Actual Value  Million  Head  Difference  %  North America  12.41  0.15  0.07  0.8  73.89  66.11  11.77  United States  10.87  0.2  0.09  1. 06  64.77  55.47  16.78  Southeast  0.98  0.11  0.06  0.6  8.05  8.6  -6.5  Midwest  11.21  0.24  0.11  1.3  56.72  46.87  21  Canada  1.85  0.17  0. 09  0.9  9.12  10.64  -14.2  Atlantic  0.15  0.24  0.2  1.23  0.33  0.41  -20  Quebec  0.62  0.2  0.11  1.05  2.51  3  -16.1  Ontario  0. 52  0.16  0.09  0.78  2.83  3.12  -9.3  Western Canada  0.75  0.18  0.1  1. 02  3.45  4.11  -16.06  Real  US$/Cwt  Hog Prices  %  Midwest  38.67  0. 65  0.42  2.45  25.03  59.42  -57.87  Atlantic  26.12  0.58  0.34  2.3  26.03  44.86  -41.97  Quebec  24.28  0. 55  0.32  1. 68  26.22  43.21  -39.32  Ontario  25.92  0.58  0.36  2.31  25.85  44.18  -41.5  Western Canada  23.94  1.05  0.33  2.2  25.16  41.46  -39.32  60 9,  Table  continued  Predicted Variable  %  RMSE  RMSE  u  Ui  2  Slaughter  Simulated Value  Actual  Difference  Value  M i l l i o n Cwt  %  North America  10.47  0.28  0.12  1.07  46.44  45. 39  2.95  United States  6.69  0.17  0.08  0.87  40.54  39.27  4.08  Northeast  1.25  0.43  0.18  1.96  3.92  3 . 04  29.15  South  4.77  0.9  0.3  3.59  9.93  5.84  70.16  Midwest  4.39  0.15  0.08  0.74  25.69  27.9  -7.94  West  3.31  0. 37  0.64  1.82  1. 01  Canada  1.16  0.19  0.1  0.91  5.9  6.12  -3.37  Atlantic  0. 03  0.12  0. 06  0.56  0.22  0.24  -5. 05  Quebec  0.57  0.29  0.16  1.37  1. 68  1.95  -13.84  Ontario  0.6  0. 32  0.17  1.52  1. 68  1.78  -5.69  Western Canada  0.27  0.13  0. 06  0. 63  2.32  2.15  7.65  Validation results consistent  across  -59.58  ( T a b l e 8) f o r t h e 1981-1986 p e r i o d a r e  t h e hog p r o d u c t i o n  and s l a u g h t e r i n g  sector,  o v e r e s t i m a t i n g M i d w e s t h o g a n d p o r k p r o d u c t i o n b y 19% w h i c h , i n turn, to  U  overestimates 1  statistics,  comparable  except  US a n d N o r t h A m e r i c a n p r o d u c t i o n . a l l hog  and pork  production  f o r pork s l a u g h t e r i n g i n Ontario  Canada. P r i c e p r e d i c t i o n s a r e l e a s t a c c u r a t e a l l p r i c e underestimates in  t h e Midwest,  determined.  production  results  are  and Western  i n t h e Midwest and  arerelated to production  the largest  According  overestimates  r e g i o n where p r i c e s a r e  P r e d i c t i o n s o f some v a r i a b l e s f o r c e r t a i n  regions  61 are  equivalent  extrapolation Regardless,  to  predictions  model, the  obtained  by  adequate  since  based  results  Spinelli  on  the U  for  Canada  (1991).  the  model  of  America,  policies  by  does  (2.97%),  occur  overestimation  during  underestimation  i n other  21%  Discrepancies  costs  in  confidential.  improve t h e s u p p l y overestimates all  the  (non-feed retail  period  simulated  compares  In  slaughter  (Table  across is  the  North  9).  This  regions:  balanced  by  and  actual  data  and p r i c e a r e i n e v i t a b l e to  estimate  that  t b 1.4%  are increased  the an  better  and  others  cost  data  on  since are could  and 5.4%, by  20%;  r e s p e c t i v e l y , when  Canadian  inventories  1 3  o f American  prices,  Detailed  but  are  data  for certain  Canadian  variables  c o s t s , w h o l e s a l e - r e t a i l p o r k margins, c h i c k e n and b e e f  differences  3  a r e reduced  use  results  scenarios.  Midwest  evidence  underestimated.  The  those  f u n c t i o n i s t h a t N o r t h A m e r i c a n and M i d w e s t  regional costs  remain  across  distributed  difficult  Further  US  9.  regions.  between  are  and  than  i s s t a b l e , i t can estimate  i n v e n t o r i e s and h e n c e p r o d u c t i o n certain  i n Table  better  forecast,  1987-1992  i s not e q u a l l y of  statistics  no-change  o f i n v e n t o r i e s (11.77%) a n d the  overestimation  naive,  are  not  comparing  overestimations  2  a  Canadian  s c e n a r i o s . A s l o n g a s t h e model effects  of  and t r a n s p o r t a t i o n c o s t s ) may  between  results  simulated  and  are not reported.  actual  be r e s p o n s i b l e f o r data  for  Canada.  62 Aggregate r e s u l t s and  a t t h e North American  underestimates tending Model  Canada  t o t h e US,  simulates 3.92  predictions  exports  million  accurate.  t o cancel  each  f o r t h e sum  over  level  of l i v e  t h e whole p e r i o d ,  Quarterly  exports,  when t h e r e  hog e x p o r t s  a r e good.  from  T h e model  the actual value i s  however,  I n 1991, most h o g s a r e e x p o r t e d  over  other.  o f 4.01 m i l l i o n h e a d w h i l e  head.  are better,  a r e n o t as  i n t h e second  quarter,  i s no c o u n t e r v a i l i n g d u t y .  P r e d i c t i o n s o f q u a r t e r l y pork exports,  m a i n l y from Western  Canada t o W e s t e r n US, a r e b e t t e r . P o r k i s e x p o r t e d countervailing c h a n g e when  duty  i s applied  the discount  rate  and t h e s e  e v e n when a  conclusions  i s lowered  to test  do n o t  t h e model's  sensitivity.  Sensitivity The despite  Analysis  choice the  literature, sensitivity discounting,  of the discount  fact often  that  r a t e i s somewhat a r b i t r a r y , a n d  i t is a  subject  i t i s chosen t o equal  scenario  consists  but at a  low  of  rate.  of  debate  the interest  measuring Lowering  the  i n the  r a t e . The impact  the discount  of rate  i n c r e a s e s t h e l e v e l s o f i n v e n t o r y compared t o t h e b a s e l i n e ,  thus  raising  10) .  average  inventory  levels  i n most  regions  (Table  L o w e r i n g t h e l a t t e r r a t e f r o m 8% t o 1%, i n c r e a s e s N o r t h A m e r i c a n i n v e n t o r i e s b y 4%, US i n v e n t o r i e s b y 3% a n d C a n a d i a n i n v e n t o r i e s by  12%. N o r t h  American  slaughter  levels  are consistent  with  63  inventory be  l e v e l s v a r y i n g by  higher,  base  scenario  level  of  herd The  The  not at  model  are  i s not  period.  not  The  decrease contain the  fixed level  does not  results  a  t h a t c o u l d be  simulation 1987,  did  inventory  quarter. the  following  5%.  percentage d i f f e r e n c e could  i n the a  discount  constraint  North  American  i s set to prevent  t r i g g e r e d by sensitive to  S t a r t i n g the  significantly presented.  level  discount  starting  simulation  change t h e  imposing in  i f a  the  fixed  the  last  early liquidation  a high the  rate,  in  1988  r e s u l t s and  of  rate. date  of  the  instead hence  of  these  64 T a b l e 10 S e n s i t i v i t y A n a l y s i s f o r t h e 1987-92 Regions  Baseline  Discount 1%  rate:  Period Percentage Change f r o m Base  A v e r a g e Hog I n v e n t o r i e s i n M i l l j .on Head North America  73.89  76.93  4.11  US  64.77  66.73  3.03  Southeast  8.05  8.08  0.37  Midwest  56.72  58.65  3.4  Canada  9.12  10.2  11.84  Atlantic  0.33  0.33  0  Quebec  2.51  2 . 51  0  Ontario  2.83  3.88  37.1  Western Canada  3.45  3.49  1.16  Average S l a u g h t e r L e v e l s i n M i l l i o n Cwt North America  46.44  48.6  4.65  United States  40.54  42.46  4.74  Northeast  3.92  3.95  0.77  South  9.93  10.32  3.93  Midwest  25.69  27. 09  5.45  West  1.01  1.11  9.9  Canada  5.9  6.14  4.07  Atlantic  0.22  0.23  4.55  Quebec  1.68  1.69  0.6  Ontario  1.68  1.82  8.33  Western Canada  2.32  2.4  3.45  65 Table  10/  continued  Sum Canada US  Discount 1%  Baseline  Region  to  US t o Canada  rate:  Percentage Change f r o m Base  o f L i v e Hog E x p o r t s 19871992 i n M i l l i o n Head  4 . 01  4.65  0  0  15.96  Sum o f P o r k E x p o r t s f r o m SPS t o Demand S e c t o r 1987-1992 i n M i l l i o n Cwt Canada US  to  US t o Canada  4.75  6.33  33.26  30.6  29.12  -4.84  Dynamic R e s p o n s e o f t h e Results  from  the  Model  e c o n o m i c model p r e s e n t e d  i n chapter  a r e c o n s i s t e n t w i t h t h e o r y and an i n c r e a s e i n t r a d e and in  prices  in  the  importing  country  after  predictions.  A  second  example i s t h e  run supply e l a s t i c i t y with data run  supply  calculated over  e l a s t i c i t y i s not by  measuring  percentage  consistency of the  short-  i n the l i t e r a t u r e .  Short-  changes  of  hog  can  be  marketings The  q u a n t i t y c h a n g e s i n c l u d e b o t h s h i f t s i n , and movements a l o n g  the  curve.  The  price  a  theoretical  i n p u t i n t h e model, but  percentage  of  changes t h r e e q u a r t e r s e a r l i e r .  supply  farm  an  found  decrease  removal  c o u n t e r v a i l i n g d u t y i s one example o f a g r e e m e n t w i t h  VI,  choice of using four quarters f o r the  short-  66 term  eliminates  elasticity  over  seasonal four  effects  quarters  0.09  on  i s 0.19  f o r Ontario,  supply.  f o r the  0.06  f o r Quebec,  0.11  f o r the A t l a n t i c provinces while Moschini  r e p o r t a s h o r t - r u n hog  supply  0.08  The  two  US  supply regions,  f o r W e s t e r n Canada  elasticity  of  and M e i l k e  and  (1993)  0.042.  Possible Modifications The  impact  production  could  of  grain  programs  be  incorporated.  which  For  can  influence  example,  Canadian  hog  grain  14  transport Western  policies  Canada  have caused  where  there  pork production  was  a  grain  to  surplus  shift to  from  Eastern  Canada, t r a d i t i o n a l l y f a c i n g a g r a i n d e f i c i t , by s u b s i d i z i n g t h e movement o f  feed grains to d e f i c i t  Adding simulation  Mexico of  American Free Finally,  as  1 5  structure  14  To  trading  environmental  and  partner  economic  would  impacts  of  allow the  the North  T r a d e Agreement. i n c o r p o r a t i n g economies o f  enhancing technologies model.  a  regions.  take  would  advantage  i s evolving into  .  .  .  improve t h e of  fewer,  .  size  in productivity-  cost structure of  economies  of  size,  the  larger firms clustering  the farm near  .  T r a n s p o r t s u b s i d i z a t i o n e n d e d i n 1996, b u t had an i m p a c t d u r i n g |^he s i m u l a t i o n p e r i o d . The m a n u r e - r e l a t e d c a p i t a l r e q u i r e m e n t s p e r sow u n i t i n B r i t i s h C o l u m b i a d e c r e a s e d f r o m CND$1,088 f o r a 100-sow u n i t t o CND$616 f o r a 400-sow u n i t ( F u l l e r t o n , 1990). Furthermore, i n 1990, p r o d u c t i o n c o s t s were US$60 p e r h u n d r e d w e i g h t on a 140-head f a r m compared w i t h l e s s t h a n US$45 p e r h u n d r e d w e i g h t on a 10,000 h e a d f a r m (Pagano and A b d a l l a , 1 9 9 4 ) .  67 processing  facilities  and A b d a l l a ,  with specialized infrastructures  (Pagano  1994).  A r k a n s a s ' T y s o n Foods I n c . , one o f t h e c o m p a n i e s t h a t earlier transformed poultry into an automated conception-to-consumption business, i s turning to pork... P o r k i s where p o u l t r y was i n t h e 1970s, s a y s J o h n T y s o n . Now the t r a i n i s l e a v i n g the s t a t i o n . ( G l o b e and M a i l , A p r i l 1, 1 9 9 4 ) . Large-scale  operations,  coordination, 15%  net  and  growth  c h a r a c t e r i s e d by l o w e r c o s t s ,  improved  of  the  quality, could  industry  over  increased  be r e s p o n s i b l e  the  next  for a  decade  (Hurt,  1994) . I n d e e d , N o r t h C a r o l i n a and Quebec h a v e e x p e r i e n c e d m a j o r increases North  i n hog  Carolina,  pork  p o u n d s t o 1,473 increase whose  production  numbers  concentrations  production  million  o f o v e r 75%  and  increased  from  pounds p e r y e a r f r o m  1984  (Roka, 1 9 9 3 ) . Farms o f 1,000  increased  by  47%  between  1987  and  of  839  1995).  occurred  I n Quebec, t h e l a r g e s t g r o w t h  between  inventories Production  from  1976 1.5  and  million  has s i n c e l e v e l l e d  f r o m 8,000 i n 1981 t o 3,614 farms the  ( K a r a n t i n i n i s e t al.,  burden  production  1980  on  local  units  with  i n 1975  Purvis  and O u t l a w ,  an  h e a d o r more, 1992,  made  a  ( S m i t h and  o f t h e hog  an  increase  3.5  million  industry in in  hog 1980. fell  i n 1991 t h r o u g h t h e c o n s o l i d a t i o n o f 1995). T h i s c o n c e n t r a t i o n  less  on  even  1995).  increases  i f large-scale  fertilizer,  manure n u t r i e n t v a l u e t h a n s m a l l e r f i r m s in  million  o f f , b u t t h e number o f f a r m s  environments  spend  to  In  t o 1991,  major c o n t r i b u t i o n t o t h e development o f t h e i n d u s t r y Kuch,  farms.  and  utilize  swine more  (Van A r s d a l l and N e l s o n  68 CHAPTER V - THE  The  Erosion  environmental Different  measure  P r o d u c t i v i t y Impact  model  which  quantities  inventories  under  the  ENVIRONMENTAL MODEL  of  is  impact  of  linked  manure,  different  Calculator to  the  (EPIC)  i s the  economic  model.  corresponding  policies  are  to  inputs  alternative scenarios  live  i n t o EPIC  on  water  hog and  quality  (Figure 1). EPIC  was  d e v e l o p e d by  Agricultural  Research  productivity  and  practices  EPIC  places  is  erosion  EPIC validation  Department  (USDA-ARS)  problems  of  Agriculture  to  related  assess  to  the  cultivation  c i t e d i n L a k s h m i n a r a y a n e t al. ,  i s used t o address water q u a l i t y i s s u e s .  E P I C w i t h i n t h e l a r g e ensemble  described  environmental  US  Station  ( W i l l i a m s e t al. , 1984  1996), b u t o f t e n chapter  the  and  the  rationale  indicators, nitrates,  inputs  and  r e s u l t s and  outputs  o f models.  behind  the  This  Later,  choice  of  and p h o s p h a t e s , i s g i v e n .  are  identified  proposed m o d i f i c a t i o n s  followed  to  by  the  present  water  quality  methodology.  D e s c r i p t i o n of Chemical Transport Most contain  chemical standard  groundwater,  and  transport  models  components  erosion  Models addressing  such  components  as:  (Antle  and  surface-runoff, Capalbo,  1993).  69 In the  surface-runoff generation  transformation and  soil  of  profile  component, w h i c h d e s c r i b e s  precipitation into  runoff,  are  for  major  controls  the  the  soil  surface  response  of  s u r f a c e w a t e r system. Land use p r a c t i c e s s u c h as t i l l a g e , the  infiltration,  runoff,  and  erosion  processes.  Department o f A g r i c u l t u r e S o i l C o n s e r v a t i o n model  i s commonly u s e d t o e s t i m a t e  direct  runoff to daily  rainfall  r e p r e s e n t i n g s o i l type,  the  the  affect The  US  S e r v i c e C u r v e Number  runoff.  T h i s method r e l a t e s  as a f u n c t i o n o f a c u r v e number  s o i l drainage p r o p e r t i e s , crop type,  and  management p r a c t i c e . A  second  component  of  the  transport  g r o u n d w a t e r component w h i c h d e s c r i b e s the unsaturated These  models  adsorbed  soil  estimate  particles  Volatilization  and  the  and  p o r t i o n of chemical  A third  zone and  nutrient not Loss  dissolved  soil  i s transported  soil  Equation,  which  i n the  loss.  o f f the  to  accounts  a  chemicals  and  models  zone.  between  determine  the  water.  modelled.  i s the  erosion  i s important since  field  v i a eroded  groundwater. for  chemical  a l s o be  This  the  movement t h r o u g h  sediment or s o i l  d e c a y o f c h e m i c a l s may  available for leaching  been used  by  of  component o f many t r a n s p o r t  that  is  sometimes i n t o t h e s a t u r a t e d  transported  s l o p e c o n d i t i o n s , and has  chemical  partitioning  component, w h i c h e s t i m a t e s  models  The  rainfall,  soil  Universal  crop  a is  Soil  management,  e r o s i o n c o n t r o l p r a c t i c e s , i s a model t h a t past  Chemical t r a n s p o r t  to c a l c u l a t e s o i l  models c o n t a i n i n g  l o s s per  the  three  acre. components  70 can  be  divided  management,  or  into  three  screening  broad  models.  categories: Research  research,  models  provide  q u a n t i t a t i v e e s t i m a t e s o f w a t e r and s o l u t e movement, b u t u s u a l l y h a v e e x t e n s i v e d a t a demands on t h e s y s t e m t o be s i m u l a t e d ( e . g . d a i l y o r h o u r l y c l i m a t e d a t a ) . Management m o d e l s a r e l e s s intensive,  less  quantitative  i n design,  and  less  p r e d i c t i n g w a t e r and s o l u t e movement u n d e r v a r i o u s conditions. demands,  The  screening  can evaluate  under a l t e r n a t i v e inexpensive  to  categorization The  models  and compare  environmental use.  One  of chemicals  performance  and  have  data-  robust  at  environmental  relatively  low  n u t r i e n t t r a n s p o r t and  data fate  c o n d i t i o n s , and a r e r e l a t i v e l y  output  of  i n t o broad  these  models  i s the  behavioral classes.  characteristics  of  twelve  d e s c r i b e d i n t h e l i t e r a t u r e and b e l o n g i n g t o t h e t h r e e  models  different  16  categories performance  a r e reviewed. of  CREAMS,  Bingner SWRRB,  e t al.  EPIC,  e s t i m a t i n g r u n o f f and s e d i m e n t y i e l d .  (1987)  ANSWERS  compared t h e AND  AGNPS  in  No s i g n i f i c a n t d i f f e r e n c e  Acronyms u s e d i n t h i s c h a p t e r a r e d e f i n e d a s f o l l o w s : AGNPS, A g r i c u l t u r a l N o n p o i n t S u r f a c e P o l l u t i o n m o d e l CREAMS, A f i e l d s c a l e model f o r C h e m i c a l , R u n o f f , a n d E r o s i o n f o r A g r i c u l t u r a l Management S y s t e m s SWRRB, S i m u l a t o r f o r W a t e r R e s o u r c e s i n R u r a l B a s i n s E P I C , E r o s i o n P r o d u c t i v i t y Impact C a l c u l a t o r ANIMO, A g r i c u l t u r a l N i t r o g e n M o d e l DAISY, D a n i s h S i m u l a t i o n model f o r t r a n s f o r m a t i o n a n d t r a n s p o r t of m a t t e r and energy i n t h e s o i l p l a n t atmosphere system RENLEM, R e g i o n a l N i t r o g e n L e a c h i n g M o d e l SWATNIT, S o i l W a t e r A c t u a l T r a n s p i r a t i o n a n d N i t r o g e n m o d e l ANIMO, A g r i c u l t u r a l N i t r o g e n M o d e l LONFAS, L e a c h i n g o f N i t r a t e f r o m A g r i c u l t u r a l S o i l s NMIN, M i n e r a l N i t r o g e n NTRM, N i t r o g e n T i l l a g e R e s i d u e Management SWATRE, S o i l W a t e r A c t u a l T r a n s p i r a t i o n R a t e E x t e n d e d  71 was o b s e r v e d of the  between t h e y e a r l y , measured and p r e d i c t e d v a l u e s  r u n o f f a t t h e 95% c o n f i d e n c e l e v e l Flannigan  watershed.  among t h e f i v e  Vereecken  et  al.  models f o r  (1991)  compared  n i t r o g e n l e a c h i n g a n d c r o p u p t a k e b y E P I C , RENLEM, ANIMO, and  SWATNIT a n d t h e m a i n f e a t u r e s o f t h e i r  below. F o r a l l s i t e s ,  results are reported  DAISY e x p l a i n s a b o u t  v a r i a b i l i t y w i t h a r o o t mean s q u a r e  error  DAISY  90% o f t h e m e a s u r e d  (RMSE) o f 27.2%. ANIMO  and E P I C h a v e a b o u t t h e same p e r f o r m a n c e e x p l a i n i n g 78% a n d 77%, respectively, 37.1%,  of the v a r i a b i l i t y  respectively.  The  w i t h RMSE v a l u e s  lowest  performance  o f 36.2% a n d  i s obtained  RENLEM a n d SWATNIT, e x p l a i n i n g o n l y 52% o f t h e v a r i a b i l i t y a RMSE o f 53%. B e f o r e  by with  d i s c u s s i n g t h e performance o f t h e models  i n p r e d i c t i n g t h e p l a n t u p t a k e o f n i t r o g e n , o n l y E P I C a n d DAISY simulate  crop  nitrogen.  production  SWATNIT  and  a n d ANIMO  the  use a  corresponding potential  nitrogen  f u n c t i o n which v a r i e s according t o t h e a v a i l a b i l i t y in the s o i l  profile.  and f o r a l l s i t e s ,  22.9%.  Results  and  uptake  of nitrogen  I n RENLEM, t h e p l a n t n i t r o g e n u p t a k e i s a n  input,  underestimated  demand f o r  RMSE  values  are overestimated  with  vary  between  DAISY  15.2% a n d  a n d SWATNIT a n d  w i t h ANIMO. E P I C o v e r e s t i m a t e d u p t a k e on one s i t e  underestimated  i t on two o t h e r  Since the relative  sites.  performances o f d i f f e r e n t models v a r i e s  a c c o r d i n g t o s i t e s p e c i f i c i t i e s , t h e c h o i c e o f m o d e l i s b a s e d on the  model  several  characteristics.  tables  describing  Vereecken nine  et  models:  al.  (1991)  include  NTRM,  EPIC,  CREAMS,  RENLEM, ANIMO, LONFAS, NMIN, DAISY a n d SWATNIT. O n l y  five of the  72 models EPIC,  include  animal  manure  as a  source  of nitrogen:  RENLEM, ANIMO AND DAISY, a n d f r o m t h e s e ,  DAISY a r e r e s e a r c h decision  models  analysis.  EPIC,  NTRM,  NTRM a n d  a s o p p o s e d t o management m o d e l s f o r  Finally,  according  to  Leavesley  et  al.  ( 1 9 9 0 ) , E P I C p r o v i d e s t h e most d e t a i l e d a n d c o m p l e t e s i m u l a t i o n s o f n i t r o g e n and phosphorus f r a c t i o n s and t r a n s f o r m a t i o n s .  Hence,  E P I C was s e l e c t e d a s t h e most s u i t a b l e model f o r t h i s s t u d y . T h e model h a s been c a l i b r a t e d f o r N o r t h A m e r i c a , i s w e l l and i n c l u d e s t h e d e s i r e d  indicators.  The E r o s i o n P r o d u c t i v i t y  Impact C a l c u l a t o r  EPIC  is  a  comprehensive  documented,  (EPIC)  research  model,  developed  s p e c i f i c a l l y f o r a n a l y z i n g t h e e r o s i o n / p r o d u c t i v i t y p r o b l e m . The drainage  area  because  model  i s generally  small  parameters  are  homogeneous; h e n c e  ( i . e . around assumed  i ti s a field-scale  to  physical  one  hectare),  be  spatially  process  model  ( L a k s h m i n a r a y a n e t al. , 1 9 9 6 ) . I n v e r t i c a l d i r e c t i o n s , t h e m o d e l can  work w i t h  Williams, erosion, plant  any v a r i a t i o n  1990).  properties  I t h a s t e n components:  nutrients,  environmental  (Table 11).  i n soil  soil  temperature,  control,  pesticide  (Sharpley and  weather,  crop  growth,  fate,  and  hydrology, tillage, economics  T a b l e 11 Components o f t h e E P I C M o d e l Component Weather  D a i l y i n p u t s o f p r e c i p i t a t i o n , maximum a n d minimum t e m p e r a t u r e , s o l a r r a d i a t i o n , w i n d , a n d r e l a t i v e humidity; c o l l e c t e d and/or generated i n p u t s c a n be used  Hydrology  Processes of surface runoff, p e r c o l a t i o n , l a t e r a l subsurface flow, e v a p o t r a n s p i r a t i o n , and snow m e l t  Erosion  Wind a n d w a t e r e r o s i o n a r e s i m u l a t e d ; t h r e e options a r e a v a i l a b l e t o s i m u l a t e water e r o s i o n  Nutrients  P r o c e s s e s o f n i t r o g e n and phosphorus t r a n s f o r m a t i o n s , c r o p uptake, l e a c h i n g , and r u n o f f (both s o l u t i o n and eroded phases)  Soil temperature  C a l c u l a t e d a s a f u n c t i o n o f a i r t e m p e r a t u r e and ground c o v e r  Crop  A g e n e r i c c r o p g r o w t h model i s u s e d t h a t p e r m i t s t h e s i m u l a t i o n o f complex r o t a t i o n s  growth  Tillage  D i f f e r e n t l e v e l s o f t i l l a g e c a n be s i m u l a t e d ; s p e c i f i c implements a r e a c c o u n t e d f o r  Plant environment control  D i f f e r e n t l e v e l s o f i r r i g a t i o n , f e r t i l i z e r , and l i m e ; d r a i n a g e and f u r r o w d i k i n g c a n be simulated  Pesticide fate  P e s t i c i d e r o u t i n e s f r o m t h e GLEAMS (Groundwater L o a d i n g E f f e c t s o f A g r i c u l t u r a l Management S y s t e m s ) model h a v e b e e n i n c o r p o r a t e d ; processes of p e s t i c i d e degradation, leaching, and r u n o f f ( b o t h s o l u t i o n a n d e r o d e d p h a s e s )  Economics  Crop budgets and a c c o u n t i n g subsystem k e e p i n g t r a c k o f t h e c o s t s o f p r o d u c i n g and m a r k e t i n g the c r o p s and incomes g e n e r a t e d from t h e activity S o u r c e : a d a p t e d f r o m B o u z a h e r e t al. (1993a) An component  important which  feature  comprises  for this both  study  the nitrogen  i s the and  nutrient  phosphorus  c y c l e s , environmental i n d i c a t o r s chosen f o r reasons e x p l a i n e d i n the  following.  74 Environmental i n d i c a t o r s Water physical,  quality chemical  is a  multidimensional  and b i o l o g i c a l  (199 3b)  summarize  nonpoint  s o u r c e p o l l u t i o n from  nitrite  plus  nitrogen,  ground  nitrate  and  concept  i n d i c a t o r s . Bouzaher  surface  water  animal waste  nitrogen,  ammonium  et a l .  indicators  They u s e  nitrogen,  Kjeldahl  phosphate, c h l o r i d e and sodium f o r groundwater,  nitrogen,  nitrate  nitrogen,  total  of  runoff.  suspended s o l i d s and v a r i a b l y suspended s o l i d s , ammonium  including  total  total  nitrogen,  phosphorus,  soluble  p h o s p h o r u s , c h l o r i d e , pH, B i o l o g i c a l Oxygen Demand, a n d c o l i f o r m bacterial  count f o r surface  This  study,  Assessment  which  in  water.  contrast  considers  to  a broad  an  Environmental  Impact  s e t o f i n d i c a t o r s , and i n  l i n e w i t h t h e t r a d i t i o n o f c o s t - b e n e f i t a n a l y s i s w h i c h u s e s one indicator,  uses  phosphates. legislation widespread, Pollution it  They  threshold.  affect  protects  commonly water  and  i n feed.  Nitrate  detectible  with  and  before  nutrients i n  They  reach  are lost  Phosphates  mainly  a  water,  while  are  specified  n i t r a t e s and phosphates  being  i n runoff  problems.  losses  f o r e n v i r o n m e n t a l and h e a l t h h a z a r d s  introduction.  also  t o f a r m s where  phosphate  they  are  specific  i s specific  Even a t low c o n c e n t r a t i o n s ,  surface  n i t r a t e s and  regulated  quality.  d e t e c t i b l e , and a s s o c i a t e d  are responsible  nitrates,  a r e t h e most  which  i s included  the  environmental i n d i c a t o r s ;  f r o m c o p p e r , f o r example,  widespread  in  two  less  soluble  and e r o s i o n ,  nitrates are lost  identified  and  than hence  i n runoff  and  75 leachate contaminating The  levels  specific  of  management  s u r f a c e and g r o u n d w a t e r s .  the  two  indicators  practices  described  after the outline of selected  Data  assessed  under  i n t h e next  section  i n p u t s and o u t p u t s .  Inputs The  impact  of different  scenarios  s i m u l a t e d w i t h E P I C a t two s i t e s ; Pont-Rouge, compare  Quebec.  scenarios  environmental  Important thesis  Since  rather  impacts,  areas w i t h i n each  quality  C a r o l i n a and  of this  t o assess  is  study  cumulative  i s to  regional  s i m u l a t i o n s w i t h E P I C a r e done on s m a l l  used  i n Table  from t h e author,  t o reach the objectives 12. I n p u t  files,  of this  which  c a n be  i n c l u d e t h e f o l l o w i n g monthly d a t a on  average  monthly  temperatures,  monthly  minimum d a i l y  a i r temperatures,  monthly  water  Raleigh, North  the objective than  parameters  weather:  on  region.  are presented  obtained the  are  standard  standard deviation  maximum  deviation average  of the daily  and  minimum  o f t h e maximum  monthly  a i r and  precipitation,  precipitation,  monthly  skew c o e f f i c i e n t f o r d a i l y p r e c i p i t a t i o n , m o n t h l y p r o b a b i l i t y o f a wet d a y o c c u r r i n g a f t e r wet rain  day o c c u r r i n g a f t e r i n a month,  precipitation, generated  a d r y day, monthly p r o b a b i l i t y  a wet d a y , a v e r a g e  and average  monthly  a i r temperature,  stochastically  using  and  number  solar  o f days o f  radiation.  solar  t h e EPIC weather  of a  radiation  Daily are  g e n e r a t o r and  76 information provided The soil  input  layer:  layer,  files  above. also  depth of the  wilting  point,  include soil  field  the  layer,  following data bulk  capacity,  density sand  content,  o r g a n i c n i t r o g e n c o n c e n t r a t i o n , s o i l pH,  content,  coarse  fragment content,  phosphorus c o n c e n t r a t i o n ,  and  crop  for  each  of the  soil  content,  silt  organic  carbon  nitrate concentration,  labile  residue  concentration.  Table Input  12 S e l e c t e d EPIC Variable  I n p u t s S p e c i f i e d by t h e User  Units General  Watershed drainage area  hectare  Runoff curve number Average channel slope  m/m  Quebec  North Carolina  Data 15  17  1  65  69  1  0  Channel factor  roughness  0.1  0  Surface factor  roughness  0.1  0.41  Latitude  degrees  51  35. 65  Average watershed elevation  m  100  100.6  Water c o n t e n t o f snow on g r o u n d a t start of simulation  mm  67  NA  Average concentration of nitrogen i n rainfall  g/m  0.9  0.8  Concentration of carbon d i o x i d e i n atmosphere  PPM  330  350  3  When t h e model i s r u n w i t h a d r a i n a g e a r e a o f 1 h a , t h e l e v e l o f n i t r a t e s i n r u n o f f and g r o u n d w a t e r a r e t h e same, a n d t h e l e v e l o f p h o s p h a t e s i n r u n o f f c h a n g e s f r o m 0.55 t o 0.51 kg/ha w i t h a n i n p u t o f 60 k g o f N p e r h a .  Table  12, c o n t i n u e d  Input V a r i a b l e  Units  Quebec  North Carolina  Water E r o s i o n Data Slope  length  m  140  10  Number b e f o r e decimal s p e c i f i e s water e r o s i o n e q u a t i o n (0=MUSLE l=AOF 2=USLE). Number a f t e r decimal i s slope steepness  0.01  0.05  Erosion control practice factor  1  1  Wind E r o s i o n D a t a Field  length  km  1  2  Field  width  km  0.3  2  Clockwise angle of f i e l d l e n g t h from N o r t h  degrees  0  90  S t a n d i n g dead crop residue  t/ha  1  0  0.1  0.18  5  10  0  0  0.8  0  Soil Soil  albedo  Maximum number o f s o i l layers Minimum t h i c k n e s s o f maximum s o i l layer  m  Initial soil water contentfraction of f i e l d capacity  Data  Minimum d e p t h t o water t a b l e  m  0.5  [1]  Maximum d e p t h t o water t a b l e  m  8  [1]  79 Table  12,  continued  Input V a r i a b l e  Units  Quebec  North Carolina  I n i t i a l depth t o water t a b l e  m  2  [1]  2  [1]  S o i l weathering code [1] n o t needed applicable  since  leaching  Management p r a c t i c e s they  than  simulated;  NA:  b e t w e e n t h e two r e g i o n s  f o l l o w t h e g u i d e l i n e s f o r experiments  Rather it  differ  i s not  used  not  since  for validation.  i n c l u d i n g management i n f o r m a t i o n d a t a  i n t a b l e 12,  i s d e s c r i b e d i n s e p a r a t e s e c t i o n s f o r t h e two s i t e s s t u d i e d .  Management I n f o r m a t i o n In  f o r North C a r o l i n a  North C a r o l i n a , t h e experiment  (1987)  i s reproduced  climate  norms,  Raleigh, Station  US  with  and mean w i n d  Department  speed  (USDA-ARS). The s t a t i o n  norms  which p r e v a i l  Elevation,  latitude,  and d i r e c t i o n  of Agriculture  southeast of the experimental climate  EPIC.  d e s c r i b e d by Burns e t a l .  aire  from t h e  Agricultural  Research  i s located approximately  8 km  p l o t s and i s assumed t o h a v e mean  representative of, i f not i d e n t i c a l over  mean  the experimental  plots.  No  t o , those  special  wind o r  water e r o s i o n c o n t r o l p r a c t i c e s a r e i n s t a l l e d . The  soil  pedon d e s c r i p t i o n  clay  loam  i s obtained  from  treatment,  the  s i m u l a t i o n a l l o w s f o r s i x y e a r s o f low f e r t i l i t y / l o w y i e l d  when  (clayey, k a o l i n i t i c , the  EPIC  soil  f o r the Cecil  thermic Typic Hapludults)  database.  Prior  t o t h e manure  sandy  80 the  summer p a s t u r e  i s e s t a b l i s h e d . Summer and  s i m u l a t e d by E P I C , a r e composed p r e d o m i n a n t l y were p a s t u r e s  from  which  the  North  winter of t a l l  pastures, fescue  C a r o l i n a experimental  as  data  were o b t a i n e d . The p l o t s a r e t h e n i r r i g a t e d w i t h e f f l u e n t d u r i n g four  years.  The  effluent  irrigated  i s assumed  to  contain  0.1%  s o l i d s and t h e f r e q u e n c y o f a p p l i c a t i o n s f o r t h e s t u d y p e r i o d i s given  i n Table  Table Site  13  13.  Frequency of E f f l u e n t  Month  First  Year  Irrigations  Second  Year  on  Third  the  Experimental  Year  Fourth Year  March  5  3  April  4  4  May  4  4  4  4  June  4  4  4  5  July  5  5  4  4  August  4  4  4  4  September  4  4  4  5  October  5  5  4  5  2 2 November 2 2 Source: p e r s o n a l communication w i t h J.C. Burns, Professor, D e p a r t m e n t o f C r o p S c i e n c e and A n i m a l S c i e n c e , N o r t h C a r o l i n a State University. P e r i o d i c grazing i s too d i f f i c u l t plots,  and  i s thus  simulated  by  using  t o c o n t r o l on periodic  p l o t s w i t h a mechanized h a r v e s t e r . Harvests  d a t e s on w h i c h 95% are given  i n Table  harvesting  on t h e  p l o t a r e h e n c e more f r e q u e n t t h a n h a r v e s t s t o s e l l  of  experimental the crop.  of the s t a n d i n g p a s t u r e biomass are 14.  individual  The  harvested  81 T a b l e 14 H a r v e s t D a t e s First  Month  f o r the Experimental Second  Year  Year  29  March April  7  May  5  3,19  June  5  8,30  July  24  August  13  11, 31  12,31  16,21 8,21  4  7,22  5  14  section,  Quebec a r e i d e n t i f i e d .  ( i n Quebec,  summer  13 J.C. Burns, Professor, Science, North Carolina  management p r a c t i c e s  f o r Pont-Rouge,  L e s s d a t a , f o r management p r a c t i c e s ,  i n Quebec t h a n  cooler  a  20  30  11,28  8  In the next  twice  18  22  20 December Source: p e r s o n a l communication with D e p a r t m e n t o f C r o p S c i e n c e and A n i m a l State University.  to  Fourth Year  28  November  seven  Year  13,22  October  and  Third  24  September  required  Period  i n North  season,  Carolina:  due  to the  forage i s harvested l e s s  shorter  frequently  f o r a g e i s h a r v e s t e d t h r e e t i m e s a y e a r compared  eleven times year  i n North  i n Quebec  i r r i g a t e d with slurry  while,  C a r o l i n a ) and i n North  manure  Carolina,  are  to  i s spread fields  are  o n c e a week.  Management I n f o r m a t i o n f o r Quebec The for  database  from t h e S o i l s Department a t L a v a l  Portneuf county  i s used  University  t o r u n E P I C i n Quebec. The  climate  82 is  based  reported Rouge  on  of  Sainte-Catherine.  i n Gangbazo e t al.  soil,  below  that  60  a Morin  cm.  depending  on  The soil  soil sand  depth  Management  (1995) a r e p e r f o r m e d  w i t h more t h a n content and  10%  varies  plot  on  the  gravel  from  analyzed.  practices  at  83%  depths  to  Clay  and  Pont-  99.5%, organic  m a t t e r c o n t e n t d e c r e a s e w i t h d e p t h . Wind s p e e d and d i r e c t i o n a r e not  incorporated. For  summer run;  five  years  before the  pasture. After  one  with silage  p l a n t e d b e f o r e any  this  experiment,  period,  c o r n and  two  the  land  under  series  are  the o t h e r w i t h f o r a g e . Crops  are  manure a p p l i c a t i o n ,  simulation  is  which  averages  4.8%  dry  matter. Forage 7th.  i s h a r v e s t e d on  Since h a r v e s t i s not  June  as  21st,  July  10th  f r e q u e n t i n Quebec  and as  October i t is in  N o r t h C a r o l i n a , n u t r i e n t a b s o r p t i o n by f o r a g e i s n o t as l a r g e i n Quebec a s i n N o r t h  Output  Variables  As two  mentioned  environmental  variables,  previously,  nitrates  indicators.  Hence,  variables  through runoff, crop  Carolina.  of greatest  and  from  interest  2) s o l u b l e p h o s p h a t e  phosphates the  158  a r e : 1)  the  output  nitrate  loss  l o s s t h r o u g h r u n o f f and  3)  yield. The  mineral  nitrogen  loss  in  percolate  is  v a r i a b l e f o r Quebec b u t n o t f o r N o r t h C a r o l i n a . The of  EPIC  are  n i t r a t e s beyond  an  output  percolation  t h e r o o t i n g zone i s l a r g e l y d e t e r m i n e d by t h e  83 depth  and  movement  of  groundwater  and  by  the  rooting  depth.  E x p e r i m e n t a l d a t a from t h e N o r t h C a r o l i n a s t u d y a r e e x p r e s s e d i n terms  o f n i t r a t e c o n c e n t r a t i o n as a f u n c t i o n o f s o i l  g i v e s no the  i n f o r m a t i o n on t h e d e p t h o f t h e g r o u n d w a t e r  rooting  groundwater  depth.  Validation  i n North Carolina  Furthermore, and  depth,  forage  while  the  of  table,  nutrient  losses  North  i n Quebec  Carolina  included  study  was  both  North  in  corn  performed  f o r a g e o n l y . S i m u l a t e d r e s u l t s w i t h c o r n c o u l d n o t be for  or  i s therefore impossible.  experiment  the  the  but  on  validated  Carolina.  Three  options  are  available  regarding  the  choice  of  v a r i a b l e s f o r comparison:  1) r e p o r t s i m u l a t i o n r e s u l t s on c o r n ,  and  nitrates  the  percolation  Carolina,  even  variables that more  results  of  though  they  are  c a n be v a l i d a t e d  of  in  unvalidated,  an  unbalanced  chosen,  since the objective  comparison  Unfortunately,  data  f o r the  economic  model.  model.  focus  or  3)  in Carolina third  upon  report which  option  is  of various  regions. are  available  Conducting  i s more  field  obtain data necessary to perform a s t a t i s t i c a l f e a s i b l e due  North  case s t u d i e s , not t o perform  e n v i r o n m e n t a l model and v a l i d a t i o n o f r e s u l t s than  in  i s t o a s s e s s the impact  between two  less  than  d e s i g n . The  p o l i c i e s on w a t e r q u a l i t y u s i n g two a s y s t e m a t i c comparison  2)  i n both regions,  s i m u l a t i o n s i n Quebec  creates  groundwater  for  difficult  experiments a n a l y s i s was  t o t h e r e s o u r c e demands n e e d e d t o r u n t h e  the  to not  economic  84 Validation  Results  Results  from  experiments  Carolina  and  i n Pont-Rouge,  section,  are  compared t o t h e  Quebec,  by  EPIC.  s i n c e the This  between a n n u a l s i m u l a t e d Two  are  introduces and  results  actual  simulations, corresponding  generated  followed  by  validation  i n the  North  previous  to validate  the  results  stochastically  additionnal  discrepancy  data. t o two  i n each r e g i o n f o r the v a l i d a t i o n s . R e s u l t s are  Raleigh,  a v e r a g e s a r e compared, w h i c h i s  weather data  procedure  in  described  simulated  model. Rather than annual data, preferable  performed  from  treatments,  are  used  from N o r t h C a r o l i n a Quebec.  Additionnal  s i m u l a t i o n s a r e run t o e s t a b l i s h r e l a t i o n s h i p s between i n p u t s o f manure chapter  fertilizer VI).  and  output  variables  (Figures  5  to  7  in  85 V a l i d a t i o n R e s u l t s f o r North In t h e experiment al.,  performed  i n North C a r o l i n a  (Westerman e t  1987) , two e f f l u e n t i r r i g a t i o n t r e a t m e n t s were u s e d  lagoon 400  Carolina  mm  effluent:  200 mm  per year  (about  per year  (about  1200 k g N / h a / y e a r ) .  f o r hog  600 k g N / h a / y e a r ) a n d Yield  and r u n o f f  l e v e l s o f n i t r o g e n and phosphorus f o l l o w i n g t h e s e t r e a t m e n t s a r e compared t o e x p e r i m e n t a l d a t a  i n T a b l e 15.  Average simulated l e v e l s  of nutrients  years final  i s compared sampling  t o the experimental  d a t e . The t o t a l  i n r u n o f f over  data  collected  four  on t h e  n i t r o g e n i n r u n o f f was r e c o r d e d ,  w h i l e EPIC s i m u l a t e s t h e l e v e l  of nitrates,  the principal  form  of nitrogen i n runoff.  T a b l e 15 C o m p a r i s o n C a r o l i n a D a t a [1]  between  Simulated  First  Runoff-N  kg/ha  Runoff-P  Yield  t/ha  and E x p e r i m e n t a l  Treatment  Sim.  Exp.  Nitrates 12.52 (-3.69)  Total 13 [2]  2.35 (-2.08)  2.4  10.7 (-4.21)  11.17  [2]  Second  N  North  Treatment  Sim.  Exp.  Nitrates 27.55 (-55.56)  Total N 62 [2]  7.35 (-61.32)  19  10.7 (-14.4)  12.5 [3]  [2]  [3] [1] P e r c e n t a g e d i f f e r e n c e s b e t w e e n a c t u a l a n d s i m u l a t e d v a l u e s a r e i n p a r e n t h e s i s [2] S o u r c e : T a b l e 4 (Westerman e t a l . , 1 9 8 7 ) [3] S o u r c e : T a b l e 4 ( B u r n s e t a l . , 1 9 8 7 ) Sim.:Simulated; E x p . E x p e r i m e n t a l ; kg/ha:kilogram p e r h e c t a r e ; t / h a : t o n n e p e r h e c t a r e ; T o t a l N: t o t a l n i t r o g e n c o n s i s t i n g o f ammonium n i t r o g e n and n i t r a t e s .  86 Simulation simulation not  of  the  first  o f the second  used  in  the  treatment  treatment  higher  spectrum,  is  accurate  while  i s n o t . Hence, t h e m o d e l i s represented  by  the  second  t r e a t m e n t , t o e s t a b l i s h r e l a t i o n s h i p s b e t w e e n i n p u t s and  outputs  in  C h a p t e r V I : t h e h i g h e s t s i m u l a t e d a p p l i c a t i o n i s 820 k g  An  application  of  684  kg  o f N/ha  i s used  as  N/ha.  the base s c e n a r i o 18  for  comparisons  than the f i r s t treatment Two Quebec,  (identified  a s common p r a c t i c e ) .  I t i s higher  treatment but c o n s i d e r a b l y lower than the  (1200  kg).  treatments both  second  of  are  which  b e t w e e n E P I C i n p u t and  also  used  provide  to  validate  insight  into  the  the  results  in  relationship  o u t p u t v a r i a b l e s as d i s c u s s e d n e x t .  V a l i d a t i o n R e s u l t s f o r Quebec Simulated with  results  Gangbazo  et  reasonable application,  results from  the  al.  experiment  (1995)  range. in  f o r Pont-Rouge,  the  The  to  spring,  conducted  determine  first of  Portneuf,  i f  are  compared  i n Lennoxville they  are  within  by a  treatment  consisted  of  an  chemical  fertilizer  at  the  recommended r a t e , a c c o r d i n g t o t h e n i t r o g e n r e q u i r e m e n t s : 180  kg  Recommended n i t r o g e n a p p l i c a t i o n r a t e s r a n g e f r o m 40 t o 50 l b s o f n i t r o g e n p e r d r y t o n o f b e r m u d a g r a s s hay ( Z u b l e n a e t al. c i t e d i n Cox, 1993). An a v e r a g e o f 45 l b s i s m u l t i p l i e d by t h e c r o p y i e l d o f 11.17 t / h a ( B u r n s e t al., 1987) t o g i v e 228 k g / h a . T h r e e t i m e s t h e recommended r a t e c o r r e s p o n d s t o 684 k g / h a .  87 of  N/ha  on  corn  (Association  des  and  55  kg  fabricants  on  forage  d'engrais  without du  Ganbazo, 1 9 9 5 ) . W i t h t h e s e c o n d  treatment,  of  h o g manure  fertilizer  was  applied with  hog  Quebec  manure  cited  in  t h e recommended r a t e at twice  this  rate:  180 a n d 55 k g o f n i t r o g e n f r o m manure were a p p l i e d i n t h e s p r i n g (May  21-25)  and  fall  (October  1-30)  on  corn  and  forage,  r e s p e c t i v e l y . A v e r a g e s o v e r t h e e x p e r i m e n t a l p e r i o d a r e compared i n Table  16.  88 T a b l e 16 C o m p a r i s o n D a t a [1] Crop  between  S i m u l a t e d a n d E x p e r i m e n t a l Quebec  First  Variable  Treatment  Second  Treatment  T21  C o r n : 1 8 0 - 0-0 F o r a g e : 5 5 -0-0  Corn  C o r n : 1 8 0 - 180-180 F o r a g e : 5 5 -55-55  Sim.  Exp.  Sim.  Exp.  3.17 (-2.16)  3.24  6.43 (46.8)  4.38  Runoff-P  0. 51 (-19.05)  0. 63  0.64 (30.61)  0.49  Leaching -N  15.5 (-69.18)  50.29  62.48 (-48.8)  122.03  Crop Uptake-N  145 (91.04)  75.9  150 (58.39)  94.7  Crop Uptake-P  20.7 (9.52)  18.9  21.15 (-15.74)  25.1  t/ ha  8.3 (45.61)  5.7  8.46 (19.15)  7.1  1.35 (84.93)  0.73  1.67 (234)  0.5  kg  Runoff-P  0.20 (-65.52)  0.58  0.28 (-44)  0.5  Leaching -N  2.02 (-81.21)  10.75  3.81 (-73.71)  14.49  Crop Uptake-N  86 (-12.07)  97.8  102 (-5.99)  108.5  Crop Uptake-P  12.24 (17.69)  10.4  14.42 (33.52)  10.8  Runoff-N  kg  / ha  Yield Forage  Runoff-N  / ha  4.37 4.6 3.71 4.4 t/ (-15.68) (-5) ha [1] P e r c e n t a g e d i f f e r e n c e s b e t w e e n a c t u a l a n d s i m u l a t e d v a l u e s are i n p a r e n t h e s i s [2] M i n e r a l f e r t i l i z e r - S p r i n g m a n u r e - F a l l manure (kg/ha) S i m . : S i m u l a t e d ; E x p . : E x p e r i m e n t a l ; k g / h a : k i l o g r a m per h e c t a r e ; t/ha:tonne p e r hectare. Yield  89 Results while  for levels  simulated  experimental  leaching fact  and  that  results  data.  underestimated  of n u t r i e n t s  by  The the  level  precipitation  was  the more  leaching of  are  phosphates  reasonable,  lower  than  the  i n runoff i s  also  simulations. Underestimation  phosphorus  during  for  i n runoff are  r u n o f f can  second than  be  of  nitrate  explained partly  year  of  the  twice  the  29  by  experiment, year  the  winter  average.  Also,  e a c h o f t h e t h r e e w i n t e r s e a s o n s had a l a r g e number o f d a y s w i t h temperatures and for  t h a t were m i l d enough t o i n i t i a t e  s u b s u r f a c e d r a i n a g e . Even i f t h e t o t a l annual each  single the  of  the  events  field.  three  years  was  comparable  precipitation  to  the  could s i g n i f i c a n t l y increase nutrient  This  accumulates is,  snowmelt r u n o f f  is  particularly  i n the s o i l  true  (being l e s s  for  losses  phosphorus,  soluble than  i n p a r t , washed away d u r i n g s t o r m s .  average,  because  nitrate  the simulation  leaching  period  to  Thus, f o r t h i s r e a s o n e n v i r o n m e n t a l  Simulated lower  might  than  the  experimental  results  f o r the  Fabrewitz  28%  to  results  56%.  are  (1991),  better who  are  forage are  than  take  (Hanley, expected  results.  by  Engelke g r a s s by  simulated  uptakes  These  storms.  underestimated  impacts  n i t r o g e n crop  treatments. and  be  t o l e a c h t o groundwater  be w o r s e t h a n what i s shown by  and  U n f o r t u n a t e l y EPIC does  i s e i g h t y e a r s w h i l e i t can  up t o f o r t y y e a r s f o r n i t r a t e s 1990).  which  nitrogen)  n o t s i m u l a t e l o s s e s due t o u n u s u a l e v e n t s s u c h a s m a j o r Furthermore,  in  first  12% and  and  6%  second  those  obtained  by  underestimated  N-uptake  by  90 Sensitivity Analysis Sensitivity can  vary  with  increased results  to  t o i n c r e m e n t a l changes  application reach  reported  o f 720  leaching  i n Table  a p p l i c a t i o n s o f 540  levels.  The  similar  base  2  to  simulating  the  are  experimental  scenario consisting  and 165 k g o f N i s r e p l a c e d b y  and 385 k g N on c o r n and f o r a g e  Scenario  applications  A p p l i c a t i o n s o f manure  levels  16.  i n manure  of  applications  respectively.  removal  of  the  pork  and  hog  c o u n t e r v a i l i n g d u t i e s and s t a b i l i z a t i o n payments d o e s n o t i n d u c e any  significant  change  i n the  levels  of nitrates  in  drainage  w i t h e i t h e r b a s e s c e n a r i o . S c e n a r i o 3, w h i c h a d d s t h e r e m o v a l o f the  ban  on  US  imports  of l i v e  t r i g g e r s a d e c r e a s e o f 1.73% in  drainage  results  under  corn  are different  and  hog  into  and 4.98% forage  Canada  to  scenario  i n the l e v e l s of n i t r a t e s cover  respectively.  from t h e ones r e p o r t e d i n T a b l e  t h e n i t r a t e l e v e l d e c r e a s e s by 2.58%  2,  and 1.3%  These  21 where  on c o r n and  forage  r e s p e c t i v e l y s h o w i n g t h a t r e l a t i o n s h i p s between n u t r i e n t s i n p u t s and  outputs  are not l i n e a r .  However,  these  differences  do  not  change t h e q u a l i t a t i v e n a t u r e o f t h e c o n c l u s i o n s . S c e n a r i o 2 has no i m p a c t quality.  on w a t e r q u a l i t y w h i l e s c e n a r i o 3 i m p r o v e s g r o u n d w a t e r  91 Possible An  Modifications a l t e r n a t i v e approach  statistically  based, s p a t i a l  would  be t o u s e a metamodel,  sampling design,  to obtain  a  results  f o r t h e p h y s i c a l model a t a l a r g e r s c a l e i . e . f o r a w a t e r s h e d , a province, extension  or nation to  ( L a k s h m i n a r a y a n e t al. 1 9 9 6 ) . S e c o n d l y , a n  the present  a q u i f e r model a g g r e g a t i n g the  stock  of  concentration  flows  This  would  i n t h e a q u i f e r which  i n this  i n runoff  t h e s i s estimate  incorporate flows  give  could  the  nitrate with the  i s n o t , however, s e t  or leachate. flows  an  t o estimate  b e compared  o f 10 mg/L. T h i s s t a n d a r d  of pollutant  indicators  would  different pollution  pollution.  Canadian standard for  methodology  Environmental  rather than  stocks of  pollutants. The  organic  sediment  nitrogen  are simulated  indicators  since s o i l  Finally, contamination  EPIC  and  with  the  EPIC  phosphorus  and  could  l o s s e s c a n be c a r r i e d  could  be  modified  losses  be  with  additionnal  to surface  t o simulate  waters.  t h e water  b y ammonium n i t r o g e n . I n t h e E P I C n i t r o g e n c y c l e ,  a f t e r ammonium n i t r o g e n i s a p p l i e d a s a component o f manure, i t is  assumed  transformed  to  be  immediately  into nitrates  lost  v i a volatilization,  by n i t r i f i c a t i o n .  This  or  assumption i s  b a s e d on t h e f a c t t h a t ammonium n i t r o g e n i s r a p i d l y n i t r i f i e d i n well aerated nitrogen very  soil  a t t e m p e r a t u r e s b e t w e e n 10 a n d 30 °C. Ammonium  can cause  three  low c o n c e n t r a t i o n s .  types  o f problems,  F o r example,  however,  concentrations  even a t o f <0.02  92 mg/L cited  may  increase  i n Ganbazo,  the r i s k 1995).  of fish During  asphyxia water  (McNeely  treatment,  e t al. ammonium  n i t r o g e n r e a c t s w i t h c h l o r i n e and produces c h l o r a m i n e s which a r e l e s s e f f e c t i v e as d i s i n f e c t a n t s . cause problems with t a s t e low a s 0.1 mg/L  Finally,  and s m e l l ,  (Boucher c i t e d  ammonium n i t r o g e n may  even a t c o n c e n t r a t i o n s as  i n Ganbazo,  1995).  CHAPTER V I  As study  s t a t e d i n the  i s to design  agricultural second  - ANALYSIS AND  and  i n t r o d u c t i o n , the  environmental  under  environmental, To nitrogen  to  assess  various  and  reach  first  objective of  a framework t o m e a s u r e t h e  objective i s to  welfare  EMPIRICAL RESULTS  trade  the  the  on  impacts  water of  combinations  trade,  quality.  trade  of  of  and  The  market  agricultural,  policies.  first  insert  policies  impact  this  objective,  into  EPIC  must  the  quantity  first  be  of  manure  determined.  q u a n t i t y o f manure b e i n g a f u n c t i o n o f l i v e hog  The  i n v e n t o r i e s , the  i m p a c t o f t r a d e s c e n a r i o s on hog  i n v e n t o r i e s i s discussed i n the  next  manure  section.  under  nutrient  section. and  The  quantity  management  Finally,  the  water q u a l i t y are  Manure N i t r o g e n  of  plans,  effect  of  is  inventories  (and  topic on  used of hog  in  the  EPIC, second  management  discussed.  Inserted  quality using  the  regulations  i n t o E P I C u n d e r Two  To m e a s u r e t h e i m p a c t o f t r a d e and water  nitrogen  EPIC,  hence,  e c o n o m i c model u n d e r two  in  the  trade  Policies  agricultural policies  percentage  manure),  Trade  change  obtained  scenarios  (2 and  by  in  on  live  hog  running  the  3) , must  first  94 19  be  found,  Scenario duty  since 2  and  the  involves  quantity the  stabilization  e l i m i n a t i o n of  programs  the  (nontariff barrier). Quebec a r e  reported  manure  e l i m i n a t i o n of  f r e e t r a d e e n v i r o n m e n t by the  of  while  i s an the  input  hog  ban  on  live  i n Table  scenario  %  US  hog  on  Hog  in  Inventory  Inventory  Change f r o m -0.02  Quebec  -0.08  -2.96  i n v e n t o r i e s i n Quebec and removal  of  i n the  2,  in  o f i n v e n t o r i e s i n Quebec o f 2.96% Chapter  ( s c e n a r i o 3) and  Percentage  3  Baseline  Southeast  countervailing duties  Removal o f t h e n o n t a r i f f b a r r i e r  in  a  Canada  Scenario  2  -0.13  described  simulates  imports  Southeast  As  3  17.  Scenario  the  countervailing  P e r c e n t a g e c h a n g e s i n t h e S o u t h e a s t and  Regions  following  EPIC.  adding t o the measures i n s c e n a r i o  T a b l e 17 Impact o f T r a d e S c e n a r i o s Changes Compared t o t h e B a s e l i n e  Both  in  decrease,  (scenario  induces  2) .  a decrease  i n t h e S o u t h e a s t o f 0.02%.  I I I , the  kilograms  of  nutrients  a p p l i e d t o f i e l d s u n d e r t h e common p r a c t i c e i n c r e a s e o r d e c r e a s e according  to  percentage  changes  i n Table  17.  For  example,  the  S c e n a r i o 1 s i m u l a t e s the removal of the pork c o u n t e r v a i l i n g d u t y . S i n c e i t h a s a l r e a d y b e e n removed, i t i s l e s s r e l e v a n t t h a n s c e n a r i o s 2 and 3. F u r t h e r m o r e , t h e p e r c e n t a g e d i f f e r e n c e i n hog i n v e n t o r i e s b e t w e e n s c e n a r i o 1 and t h e b a s e l i n e i s o n l y 0.06 i n t h e S o u t h e a s t and -0.001 i n Quebec.  95 common p r a c t i c e fertilizer  and  (180 k g f r o m nontariff  i n Quebec 110  kg  165  kg  N/ha  f r o m manure) on f o r a g e and  fertilizer  barrier  i s to apply  and  triggers  360  (55 k g  from  k g on  corn  540  kg f r o m m a n u r e ) . Removal o f t h e  a decrease  of inventories  i n Quebec  by 2.96%, h e n c e t h e k i l o g r a m s o f n i t r o g e n a r e d e c r e a s e d by from  165  t o 160  k g on  f o r a g e and  from  540  t o 524  k g on  2.96%  corn.  The number o f k i l o g r a m s o f manure n i t r o g e n u s e d a s an i n p u t in  EPIC  under  the  trade  and  environmental  scenarios,  s u m m a r i z e d i n T a b l e 18. The p r o c e d u r e t o d e t e r m i n e kilograms  of  nutrient  applied,  to  comply  management p l a n s , i s d e s c r i b e d i n t h e n e x t  is  t h e number o f  with  nutrient  section.  Table 18 Impact of Trade and Environmental Scenarios on K i l o g r a m s o f N i t r o g e n (N) and P h o s p h o r u s (P) A p p l i e d p e r H e c t a r e i n N o r t h C a r o l i n a and Quebec Common Practice  Trade  Scenarios  Scenario 2  Environmental Scenarios  Scenario 3 Kg p e r  Nitrogen Plan  Phosphorus Plan  ha  Carolina (Forage)  684  N  683.11 N  683.86 N  73  N  20  P  Quebec (Forage)  165  N  164.87 N  160.12 N  84  N  22  P  Quebec 540 (Corn) [1] S c e n a r i o 4;  N  539.56 N  524.02 N  106 N [1]  [2] S c e n a r i o 6  30 P [2]  96 Manure N i t r o g e n  I n s e r t e d i n t o E P I C u n d e r Two  N u t r i e n t Management  Plans With  n u t r i e n t management  l i m i t e d t o the n u t r i e n t content under  cultivation.  Since  plans,  manure  applications  t h a t c a n be a b s o r b e d by t h e  nutrient  absorption  by  crops  are crop  varies  w i t h n u t r i e n t i n p u t , t h e r e l a t i o n s h i p between n u t r i e n t i n p u t u p t a k e by  region  t o which crop  and  crop  requirements are  n u t r i e n t s a p p l i e d per Figure in  both  grown,  ha)  Carolina  respected  i s also  2 r e p o r t s the  North  i s found w i t h  E P I C . The  ( i . e . the  level  quantity  Quebec. The  simulated  forage  relationship  f i n d s n u t r i e n t u p t a k e as a f u n c t i o n o f n u t r i e n t i n p u t , g i v e n agronomic c o n d i t i o n s 2,  the  range  Carolina the  of  f o r the  inputs  results  at  does not  use  having  a higher  absorptive  The  nutrient point  of  solid  input the  equals  lines  requirements of the and  optimal  crop  approximately the Figure  3  crop.  are At  uptakes,  N/ha,  In  with  for  assumed  1)  Figure North  to validate  both  regions,  North  Carolina 100  i n d i c a t e s where  the  beyond  the  exceed  intersection the  agronomic  i n t e r s e c t i o n of the  simulated  North  to  the  than  Carolina  same a s s i m i l a t i v e c a p a c i t y shows  than  for inputs greater  Inputs  the  less  unavailable  (ratio of  uptake.  i n EPIC. In  levels.  kg  capacity  a t 45°  is  are  input  more t h a n 200  line,  two  data  higher  forage  included  Quebec  because experimental  Quebec  kg/ha.  region  for  of  obtained.  r e s u l t s f o r n i t r o g e n u p t a k e by  and  and  simulation  results  and for  Quebec  have  nitrogen.  for  phosphorus  97 a p p l i c a t i o n p e r ha o f f o r a g e in  the  case  Carolina  of  result  simulated  absorption  i n North of  C a r o l i n a a n d Quebec.  nitrogen,  conditions  i n h i g h e r crop uptake o f n u t r i e n t s ,  and o p t i m a l  two r e g i o n s i s s i m i l a r  uptake  are equal,  (20 k g f o r N o r t h  in  As  North  b u t , where  the absorption  i n the  C a r o l i n a v s . 22 k g f o r  Quebec). The t y p e nutrient  of crop  uptake.  relationship  planted,  i s an  Figure 4 presents  between  inputs  phosphorus p e r ha o f c o r n  and  important  determinant  the optimal  absorption  i n Quebec.  Recall  and  simulated  for nitrogen that  corn Note  i n North that  multiplied  C a r o l i n a are not a v a i l a b l e  the  model  by t h e y i e l d .  assumes  a  and  experimental  d a t a f o r Quebec i n c l u d e more c r o p s and m e a s u r e s o f w a t e r t h a n i n N o r t h C a r o l i n a . D a t a on t h e i m p a c t  of  quality  o f a p p l y i n g manure  on  f o r the area studied.  constant  absorption  rate  (ayvio3H/9M) a w i d n douo  99  o o  CM  o CO  0) CO  o  n  CO  18  o LU  Q. T> M-  C  O C  CO CO  o CM  UL  u LU  o c  o o  O <B co O  o  *  3 0.  < t: •o o c z c  O 00  w  Q.  c  O CO  o  CO  .o  o  O z  i-  3  TO  0  CO CO  O CO  LUI  O O CM  3  E  1  o  a>  pti  cs E  Q 3 O  o CM  r T  O CO  O  O CM  O O  O CO  O  co  (3HV103H/9*) BWldn dOUO  o  o CM  -3 <  100  101 E f f e c t o f Two T r a d e S c e n a r i o s a n d two E n v i r o n m e n t a l S c e n a r i o s o n Hog Management Standards  f o r n i t r o g e n and p h o s p h o r u s ,  expressed  as t h e  20  number  o f market  applications, levels  in  p e r ha  a r e shown  Table  respectively hog  hogs  18  which  of  i n Table  are  divided  land  19. N i t r o g e n by  are the nutrients  at the f i n i s h i n g  stage  available  10.44  and  kg  produced  f o r manure phosphorus  and  5.22  kg  a n n u a l l y b y one  t o o b t a i n t h e number  o f hogs p e r  hectare. For would  North  limit  Carolina,  farmers  recommendations introduce contrasts used  7  market  stringent commonly  f o r manure  c r e a t e an  management  hogs  used  per  (allowing  constraints levels  applications.  r e n t e d by hog p r o d u c e r s should  to  f o r phosphates  more with  the nutrient  o f 65.52  Since  ha.  3.83 on  enough  f o r nitrogen Adding  the  hogs/ha)  would  producers.  This  hogs/ha  land  of  land  i s owned  or  (1 hog/ha i n t h e S o u t h e a s t ) , t h e s e p l a n s  incentive  t o spread  manure  on  larger  areas,  increasing production costs. I n Quebec, manure f r o m 34.48 m a r k e t h o g s i s a p p l i e d on e a c h ha  o f c o r n , w h i c h w o u l d h a v e t o be d e c r e a s e d  the n i t r o g e n plan without  chemical  t o 10.15 b a s e d  fertilization.  Applications  on f o r a g e a r e c l o s e r t o o p t i m a l v a l u e s , r e q u i r i n g d e c r e a s e s 10.53 rented  to by  8.04 hog  market  hogs.  producers  Hogs a t t h e f i n i s h i n g  Since  the area  i s insufficient,  stage e q u a l l i n g  of land the  0.2 a n i m a l  on  owned  from or  environmental  units.  102 policy  could  facilities  n e c e s s i t a t e t h e i n t r o d u c t i o n o f manure  o r a r e d u c t i o n o f hog i n v e n t o r i e s .  Legislation includes animal  an  in  appendix  units  correspond  treatment  to  p e r ha 13.75  Quebec which  (Gouvernement specifies  for different and  20.65  du  t h e maximum  cultures.  market  Quebec,  hogs,  number  Maximum when  1996)  values  manure  a p p l i e d on f o r a g e o r c o r n r e s p e c t i v e l y . T h i s r e q u i r e m e n t  of  is  i s not  as s t r i c t as a compulsory i n t e g r a t e d f e r t i l i z a t i o n p l a n which i s similar  t o the simulated  n i t r o g e n and phosphorus p l a n s  (Table  19) . T a b l e 19 Impact o f T r a d e and E n v i r o n m e n t a l S c e n a r i o s o n M a r k e t Hogs Numbers p e r H e c t a r e i n N o r t h C a r o l i n a a n d Quebec [1] Trade Scenarios Region  Common Practice  2  3  Environmental  Scenarios  Nitrogen Plan  Phosphorus Plan  chem. fert.  No chem. fert.  chem. fert.  No chem fert  North Carolina (Forage)  65.52  65.47  65.52  0  7  0  3.83  Quebec (Forage)  10.53 [2]  10.52  10.53  2.78  8.04  0  4.21  5.74 10.15 0 33.46 0 34.45 34.48 Quebec [4] (Corn) [3] [2] [1] number o f h e c t a r e s u s e d f o r manure a p p l i c a t i o n s , a s s u m i n g t h a t t h e t o t a l l a n d b a s e i s n o t u s e d [2] b a s e d o n 2 p a r t s o f manure f o r 1 p a r t o f recommended c h e m i c a l (chem.) f e r t i l i z e r ( f e r t . ) [3] S c e n a r i o 4; [4] S c e n a r i o 6  103 E f f e c t o f Two T r a d e S c e n a r i o s Water  a n d Two E n v i r o n m e n t a l S c e n a r i o s  on  Quality Figures  5, 6 and 7 show t h e mass t r a n s p o r t  a function of inputs  f o r N o r t h C a r o l i n a a n d Quebec. T h e r e s u l t s  p e r m i t a c o m p a r i s o n o f t h e amount o f n u t r i e n t s leachate, inputs  resulting  under  o f n u t r i e n t s as  from  nutrient  1) commonly a p p l i e d  plans  with  3)  i n runoff inputs  inputs  and/or  a n d 2) t h e  following  trade  liberalization. These t h r e e  f i g u r e s show t h a t r e l e a s e s o f n u t r i e n t s a r e n o t  equal t o zero a t optimal  i n p u t l e v e l s where i n p u t e q u a l s a v e r a g e  c r o p uptake. D i f f e r e n t f a c t o r s , l i k e c l i m a t e and a c c u m u l a t i o n o f nutrients  i n the s o i l ,  uptake  the crop  and  inducing  n u t r i e n t l o s s e s i n t h e e n v i r o n m e n t . F o r example, i f t h e  accumulated a t a high  than  usual  f o r average  make i t  from  i s colder  estimated  uptake  deviate  temperature  the  affect  and  rate i n the s o i l ,  i f phosphorus  uptake estimated f o r average c o n d i t i o n s .  are  nutrient  i n t h e environment  is  being  t h e uptake i s l e s s  the  losses  conditions  Furthermore,  even w i t h o u t  than there  a n y human  intervention. Losses North  Carolina  phosphates P/ha  o f phosphates than  i n runoff,  i s applied,  in  are s i g n i f i c a n t l y Quebec  (Figure  move up a n d down  more 5).  when  important i n  Quantities  more t h a n  s i n c e a p p l i c a t i o n s beyond a c r i t i c a l  of  100 k g  p o i n t can  c a u s e i m b a l a n c e s i n t h e e c o s y s t e m . I m p a c t s o f o u t p u t c h a n g e s on w a t e r q u a l i t y c a n n o t be p r e d i c t e d i n t h a t r a n g e . I n Quebec, more  104 phosphates  are  when f o r a g e  present  provides  i n runoff  when c o r n  a f u l l cover to the  i s c u l t i v a t e d than  soil.  L i k e l o s s e s of phosphates, l o s s e s of n i t r a t e s i n r u n o f f larger  in  North  relationship nitrates a  brief  almost curve  between  i n runoff, pause  flat rises  at  The  i n the  of  The  165  leaching  curve. is  is  available  Quebec, 1 9 9 5 ) . The  input  than  i s higher  applied.  Changes  were u s e d ;  165  could  appear  nevertheless,  liberalization  would  kg/ha,  any  have  l e s s abrupt  d r a i n a g e when manure i s a p p l i e d on The  level  when c o r n  of  nitrates in  these s i t u a t i o n s are but to  as  opposed  to  Quebec  60%  of  the  the  changes  in  level  the  0.09  to  with  manure  first  is  year  due  on  points  to  trade  nitrates  and  Figure  leaching 7.  The  in  in  Quebec,  phenomena i n cover,  l e a c h i n g o f n i t r a t e s range from 5  the  commonly  i f more d a t a  effects  of  upward when  increases  is  where  s i m i l a r to those observed i n forage  a t a d i f f e r e n t s c a l e . The 100  for  forage.  runoff  i s c u l t i v a t e d i s shown on  (except  The  amount w h i c h  noticeable  the  f r o m manure t h a n  during  inventory  to  begin,  curve kinks  the  The  for  nonlinear.  since only  (Gouvernement du  level  pronounced  kg/ha d e r i v e d  fertilizer,  kg/ha)  more  6) .  applied,  curve  kg/ha  to  84  input  runoff  curve  (Figure  nitrogen  compared  leaching  kg/ha from m i n e r a l  Quebec  at every  kg/ha).  slightly,  (50.4  in  amount  increases  i s lower, with  nitrogen  than  a p p l i c a t i o n s of  forage  nitrates  the  600  until  output observed  55  Carolina  are  kg/ha  (on  forage).  Again,  12 the  105 quantity  of  nitrates  a p p l i c a t i o n o f 180 the leaching  in  k g N/ha,  curve.  leaching  rises  noticeably  after  and t h e r u n o f f c u r v e i s f l a t t e r  the than  CO  Lf)  CO  CN  (3UV10aH/0>0 S31VHdSOHd  i -  o  107  3  c O  E E o O  CO  CD  .2 £ 2  cn  .ti ro Z o.  96"9€Z Q. < /) _ O = Q. Q.  Z6"W9  Q.  •  o  89*1.69  3  uT 60009  o  n  S o  o g>  O  o  O  f=  CO  «= 3  u_  5  I  CO  <r>  u  a> T  o z  t*^  t  or  CM  (3UV103H/9>-) S 3 1 V U 1 I N  5  Q.  108  c o o o J>  C 0) O 3 © .E  UJ  Z  c o 0  CO  J3 - E J g °  i  IS D_ +* (0  Q_  1  1-  o  O O Q.  K-  4-.  CO  o c CO (0  — <n • Cfl r>- co 3 C Dl O  (3HVlO3H/9>0 S31VH1IN  109 Results f o r l e v e l s of n u t r i e n t s corresponding t o s c e n a r i o s a r e summarized T a b l e 21  i n T a b l e 20  f o r Quebec. F i r s t ,  scenarios  among  uncertainty comparisons baseline,  to  and  the  these  choice  between t h e n i t r o g e n are  used  to  f o r North Carolina  and  in  t h e s e r e s u l t s compare e n v i r o n m e n t a l  themselves  related  different  of  and  assess  comparisons a  baseline.  phosphorus  the  avoid  impact  of  the  Second,  p l a n s , and  the  environmental  scenarios. Regarding phosphorus  Carolina,  to  conclusion  higher  levels  d e p e n d s on  phosphorus  The  the  slurry  in  treatment  and  t o 8:1.  than  shows  nitrogen  adopted  nitrogen, plan  5:1  of  nutrients  sprayed  volatilization  which (73 kg  i s chosen  on  the  after  1987),  than  of nitrogen).  that  at  least  soil  80%  lagoon  ranges  from  phosphorus,  recommended  under  A nitrogen-phosphorus  having  impacts  on  i s on t h e water  kg the  ratio dose  quality;  environment  quality.  Both p l a n s decrease the l e v e l s by  is  p l a n , c o r r e s p o n d s t o a t l e a s t 100  i s more  to  This  which  since the focus i n t h i s s e c t i o n  applied  plan.  and  ratio,  field  ( B u r n s e t al.,  i m p a c t s on a i r and w a t e r  runoff  the  nitrogen-  on t h e t o t a l amount o f n u t r i e n t s r e l e a s e d i n t h e  having  that  f o r the  Hence, t h e i d e a l c r o p i n p u t o f 2 0 k g o f  of  in  the  nitrogen-phosphorus  a c c o r d i n g t o t h e phosphorus  not  with  the assumption  ratio.  observed  nitrogen  20  requirements which b r i n g the l e v e l s o f phosphates  nitrates  of  Table  p l a n recommends manure a p p l i c a t i o n s a c c o r d i n g t o c r o p  agronomic  5:1  North  compared  of n i t r a t e s to  the  and  actual  phosphates runoff.  In  110 North  Carolina,  the  effect  of  trade  inventories  i s t o o s m a l l t o h a v e any i m p a c t  and  does  hence  environmental  not  policies  change  the  net  liberalization on w a t e r  effect  Common Practice  quality,  trade  and  (Table 20).  T a b l e 20 Impact o f Trade and Environmental Q u a l i t y i n North C a r o l i n a [1] Nutrients i n Runoff  of  on  S c e n a r i o s on Water Nitrogen Plan  Scenario 3  Scenario 2  Phosphorus Plan  Kg/Ha o f N u t r i e n t s i n R u n o f f Phosphates (forage)  13.64 13.64 Nitrates (forage) (0) [1] Percentage changes from parenthesis.  As  opposed  phosphorus p l a n plan,  but the  to  the  i n Quebec impacts  of  0. 51 (-80.25)  4.34 (0)  4.34 (0)  4.34  0.73 (-83.18)  1.66 2.11 13.64 (-87.83) (-84.53) (0) t h e common practice are i n  findings i s more  in  North  stringent  t h e phosphorus  Carolina,  than  and  the  the nitrogen  nitrogen  plans  d i f f e r by no more t h a n 5%. F o l l o w i n g t h e i m p l e m e n t a t i o n  of these  policies,  be  improvements  i n groundwater  quality  should  more  o b v i o u s t h a n improvements i n s u r f a c e water q u a l i t y . D e c r e a s e s i n the  level  levels  of nitrates  of nitrates  l e v e l s o f phosphates are  i n force.  i n leachate vary  i n r u n o f f drop  from  79% t o 88%, w h i l e  b y 6% t o 35%. S i m i l a r l y t h e  i n r u n o f f d r o p by 31 t o 39% when b o t h p l a n s  Ill In  Quebec,  stabilization  removal  payments  withdrawal of the quality.  of  the  have  hog  no  countervailing  impact  on  water  n o n t a r i f f b a r r i e r (scenario  Through  changes  b a r r i e r decreases the  in  hog  3)  duty  and  quality,  but  improves water  inventories,  the  nontariff  l e v e l of n i t r a t e s while l e a v i n g the  level  o f phosphates unchanged. Removal  of  environmental this  trade  0.22%  and  the  conditions  these regions,  rather  are not  97.9%  to  flowing  water  water plans  a l l Canadian  the  since  inventories  of  Increases  in  t h a n i n Quebec o r  the  22).  live  hog  quality  in  through  some  (Primeau  fertilizer  quality, discussed  is  expected  deterioration  and  Western  exports  i s the  Quebec  proper  Quebec  and  during  cited  most  a  minor  Ontario  more  policy  and  to pollution i n  Carolina,  surface is  i n Ganbazo,  s e n s i t i v e US  ( K e l l o g g e t al.,  are  be  a g r i c u l t u r a l areas  environmental  earlier,  North  Grimard  seventh  leaching  and  to in  does not appear t o c o n t r i b u t e  Carolina  protection.  trade  studied  quality  North  nitrogen  in  worsen  Canada  surprising since Ontario  international  cases  mediocre and  of  Western  increase  within  W e s t e r n Canada and  water  small  (Table  i f  contributor  two  a  and  could  period.  Even  the  Ontario  respectively  exported  study  in  duty  0.7%,  A t l a n t i c provinces,  the  countervailing  policy triggers  ^inventories  Canada  hog  like  appropriate  the  1995)  state  1 9 9 4 ) . To  of  to  improve nutrient  than  trade  112 The on  conclusions,  nutrient applied and  loss. only  fall  level in  timing  of land but In  has  the  i n the  a p p l i c a t i o n s has an  data  spring.  applications  impact reported Dividing  increases  on  rise  from  n i t r a t e s i n leachate cultivated.  2.85  to  the  qualitative effect absolute  above,  optimal  quantities  a l l nutrient  of n i t r a t e s i n drainage under the  runoff  no  2.99  r i s e f r o m 13.42  kg/ha t o 14.38  and  inputs  between  losses  nitrogen  levels  the  are  spring  except  plan.  of  the  Nitrates  levels  of  k g / h a when c o r n i s  113 T a b l e 21 Impact o f T r a d e Q u a l i t y i n Quebec [1]  and E n v i r o n m e n t a l S c e n a r i o s  Trade Scenarios Nutrients i n Runoff and i n Drainage  Common Practice  2  on Water  Environmental Scenarios  3  Nitrogen Plan  Phosphorus Plan  Kg/Ha o f N u t r i e n t s Phosphates i n Runoff (forage)  0.31  0.31  0.31  0.21 (-32.26)  0.19 (-38.71)  Phosphates i n Runoff (corn)  0.81  0.81  0.81  0.56 (-30.86) [2]  0.56 (-30.86) [3]  Nitrates i n Runoff (forage)  1  1  0.99 (-1)  0.94 (-6)  0.93 (-7)  Nitrates i n Runoff (corn)  4.35  4.35  4.32 (-0.69)  2.85 (-34.48) [2]  2.79 (-35.86) [3]  Nitrates i n Drainage (forage)  0.77  0.77  0.76 (-1.3)  0.13 (-83.12)  0.09 (-88.31)  Nitrates i n Drainage (corn)  63.99  63.9 9  62.34 (-2.58)  13.42 (-79.03) [2]  12.59 (-80.33) [3]  [1] Percentage changes from t h e common p a r e n t h e s i s [2] S c e n a r i o 4 [3] S c e n a r i o 6  Typically, within effects  US  and  North  Canadian  on p r i c e  scenarios,  like  American  trade  agricultural  practice  are i n  liberalization  schemes  industries  and o u t p u t . A l t e r n a t i v e increases  i n exports  trade  cause  small  liberalization  t o Mexico,  following  114 phasing-out  a  Agreement  20%  tariff  (NAFTA),  elimination  Effect  of  Trade,  Hog  under  could  the  have  North  a  American  greater  Free  impact  Trade  than  the  of c o u n t e r v a i l i n g duties.  Nine  Trade  and  Environmental  I n v e n t o r i e s and  Slaughter  E f f e c t s on w e l f a r e , hog  Scenarios  on  Welfare,  Amounts  i n v e n t o r i e s and  s l a u g h t e r amounts,  o b t a i n e d from t h e economic model, a r e p r e s e n t e d  i n T a b l e 22,  for  trade  Table  for  liberalization  environmental  scenarios,  a s i x - y e a r p e r i o d f o r two  US  two  US-producing  four  regions  welfare i n the Southeast the  East  SPS  minus farm  Midwest the  and  Midwest  SPS,  minus  slaughtered  in  scenarios. For a l l scenarios, welfare  for  and  and  arid  costs i n the  and  West,  farm  costs  i s reported  regions, corresponding Canadian  regions.  costs i n the Northeast  Southeast.  i s the minus in  area  costs the  i n t h e M i d w e s t and  Regional  under the i n the  Midwest. exported  welfare  The  and  costs  to the  Canadian  production  regions  levels,  the  are  the  welfare  e a c h r e g i o n ' s demand c u r v e ,  same  at  the  calculation  minus a l l c o s t s .  i n the  Southern  i s the  of  Western of  demand,  for  South  demand c u r v e s  Midwest  the  Regional  and  m a r k e t , a r e i n c o r p o r a t e d i n t h e M i d w e s t and W e s t e r n US Since  to  i s t h e a r e a u n d e r t h e demand c u r v e s  S o u t h , minus t h e  W e s t e r n US  23  pork, demand  welfare. SPS,  area  and under  115 T a b l e 22 M a r k e t W e l f a r e , Hog I n v e n t o r i e s , S l a u g h t e r L i v e Hog a n d P o r k E x p o r t s a n d P e r c e n t a g e D i f f e r e n c e B a s e l i n e f o r T h r e e T r a d e S c e n a r i o s [1]  Amounts, from t h e  Scenarios  Regions Baseline  2  1  T o t a l W e l f a r e 1987-1992 i n US$  3 Million  54746.84 (0)  54747.03 (0)  54810.88 (0.12)  38728.07  38730.86 (0.01)  38731.5 (0.01)  38921.43 (0.5)  East & S o u t h US  25938.08  25939.86 (0.01)  25942.96 (0.02)  25962.94 (0.1)  Midwest & West US  12789.08  12791.01 (0.02)  12788.54  12958.49  (0)  (1.32)  Canada  16018.99  16015.98 (-0.02)  16015.53 (-0.02)  15889.45 (-0.81)  Atlantic  1586.53  1586.82 (0.02)  1587.23 (0.04)  1589.5 (0.19)  Quebec  4161.49  4161.57 (0)  4171.33 (0.24)  4135.32 (-0.63)  Ontario  5764.1  5765.48  5662.53  (0.02)  5754.95 (-0.16)  4502.1 (-0.11)  4502.01 (-0.11)  4502.11 (-0.11)  North America  54747.06  United States  Western Canada  4506.88  A v e r a g e Hog I n v e n t o r i e s (0)  73.71 (-0.24)  64.772  64.75 (-0.03)  64.75 (-0.03)  64.71 (-0.1)  8.05  8.05  8.05  (0)  8.04 (-0.12)  56.71 (-0.02)  56.71 (-0.02)  56.66  9.14 (0.22)  9.15 (0.33)  9 (-1.32)  73.89  US Southeast  Canada  Head  73.89 (0)  North America  Midwest  in Million  (-1.76)  56.72 9.12  73.89  (0) (-0.11)  116 Table  2 2 , continued Scenarios  Regions  3  2  1  Baseline Atlantic  0.33  0.33 (0)  0.33 (0)  0.32 (3.03)  Quebec  2 . 51  2.51 (0)  2.51 (0)  2.44 (-2.79)  Ontario  2.83  2.83 (0)  2.84 (0.35)  2.77 (-2.12)  Western Canada  3.45  3.47 (0.58)  3.47 (0.58)  3.47 (0.58)  Average Slaughter  Levels  i n M i l l i o n Cwt  (0)  46.47 (0.06)  46.39 (-0.11)  40.54  40.55 (0.02)  40.56 (0.05)  39.21 (-3.28)  Northeast  3.92  3.91 (-0.26)  3.9 (-0.51)  3.92 (0)  South  9.93  9.93  9.94  9.83  (0)  (0.1)  (-1.01)  North America  46.44  US  46.44  Midwest  25.69  25.7 (0.04)  25.71 (0.08)  24.45 (-4.83)  West  1.01  1 (-0.99)  1.01 (0)  1.02 (0.99)  Canada  5.9  5.89 (-0.17)  5.89 (-0.17)  7.18 (21.69)  Atlantic  0.22  0.22  0.22  0.22  (0)  (0)  (0)  1.68 (0)  1.59 (-5.36)  1.98 (17.86)  Quebec  1.68  Ontario  1. 68  1.67 (-0.6)  1.75 (4.17)  2.67 (58.93)  Western Canada  2.32  2.33 (0.43)  2.33 (0.43)  2.31 (-0.43)  117 Table  22,  continued Scenarios  Regions  Total  L i v e Hog E x p o r t s  3  2  1  Baseline  1987-1992 i n M i l l i o n  Head  US t o Canada  0  0  0  91.5  Canada t o US  4.01  4.04 (0.75)  4.71 (17.46)  1.5 (-62.62)  Total US t o Canada  P o r k E x p o r t s f r o m SPS t o Demand S e c t o r , 1987-1992 i n M i l l i o n Cwt  30.6  30.8 (0.92)  30.88 (0.92)  8.45 (-72.39)  6.19 4.89 4.90 (30.32) (2.95) (3.16) [1] P e r c e n t a g e d i f f e r e n c e s f r o m b a s e l i n e a r e i n p a r e n t h e s i s Canada t o US  4.75  118 T a b l e 23 M a r k e t W e l f a r e , Hog I n v e n t o r i e s , S l a u g h t e r Amounts, L i v e Hog a n d P o r k E x p o r t s a n d P e r c e n t a g e D i f f e r e n c e f r o m t h e B a s e l i n e f o r S i x E n v i r o n m e n t a l S c e n a r i o s [1] Scenarios  Reaions 4  5  T o t a l W e l f a r e 1987-1992 i n US$  6 Million  North America  53992.78 (-1.38)  54761.68 (0.03)  53517.73 (-2.25)  United States  37976.58 (-1.94)  38661.67 (-0.17)  37556.5 (-3.03)  East & South  25768.96 (-0.65)  26014.41 (-0.29)  25560.95 (-1.45)  Midwest & West  12207.63 (-4.55)  12647.26 (-1.11)  11995.55 (-6.2)  Canada  16016.2 (-0.02)  16100.01 (0.51)  15961.24 (-0.36)  Atlantic  1581.47 (-0.32)  1585.03 (-0.09)  1583.34 (-0.2)  Quebec  4240.22 (1.89)  4242.37 (1.94)  4369.06 (4.99)  Ontario  5720.79 (-0.75)  5755.84 (-0.14)  5543.30 (-3.83)  Western Canada  4472.72 (-0.76)  4516.77 (0.22)  4465.53 (-0.92)  A v e r a g e Hog Invenit o r i e s  i n M i l l i o n Head  North America  73.36 (-0.72)  74.13 (0.32)  72.87 (-1.38)  US  64.86 (0.14)  65.62 (1.31)  64.96 (0.3)  Southeast  8.03 (-0.25)  8.15 (1.24)  8.01 (-0.5)  Midwest  56.83 (0.19)  57.47 (1.32)  56.95 (0.41)  Canada  8.5 (-6.8)  8.51 (-6.69)  7.91 (-13.27)  Atlantic  0.33  0.33  0.33  (0)  (0)  (0)  119 Table  23,  continued Scenarios  Regions  6  5  4  A v e r a g e Hog I n v e n lb o r i e s i n M i l l i o n  Head  Quebec  1.87 (-25.5)  1.87 (-25.5)  0.68 (-72.91)  Ontario  2.85 (0.71)  2.86 (1.06)  3.46 (22.26)  Western Canada  3.44 (-0.29)  3.44 (-0.29)  3.45 (0)  Levels  Cwt  Average Slaughter  i n Million  North America  46.03 (-0.88)  46.51 (0.15)  45.61 (-1.79)  US  40.32 (-0.55)  40. 85 (0.76)  40.18 (-0.89)  Northeast  3.9 (-0.43)  3.88 (-1.02)  3.89 (-0.77)  South  9.87 (-0.65)  9.82 (-1.14)  9.8 (-1.31)  Midwest  25.57 (-0.46)  26.16 (1.86)  25.51 (-0.68)  West  0.98 (-2.53)  0.99 (-1.87)  0.98 (-2.69)  Canada  5.71 (-3.24)  5. 66 (-3.99)  5.43  0.23 (0.93)  0.23  0.22  (1.41)  (0)  Quebec  1.56 (-7.3)  1. 56 (-6.8)  1.37 (-18.45)  Ontario  1. 64 (-2.27)  1.62 (-3.19)  1.53 (-8.93)  Western Canada  2.29 (-1.4)  2.25 (-3.05)  2.31 (-0.43)  Atlantic  (-8)  120 Table  23,  continued Scenarios  Regions  6  5  4 T o t a l L L i v e Hog E x p o r t s  1987-1992 i n M i l l i o n Head  us to Canada  0  0  0  Canada t o US  3.35 (-16.46)  2.96 (-26.18)  3.26 (-18.7)  Total US t o Canada  Fork  E x p o r t s f r o m SPS t o Demand 1987-1992 i n M i l l i o n Cwt  Sector,  33.41 (9.18)  36.74 (20.07)  4.69 (-1.26)  4.71 (-0.84)  32.43 (5.98)  4.71 Canada t o (-0.84) US [1] Percentage d i f f e r e n c e s  from b a s e l i n e  are i n parenthesis  121 Table  23,  continued Scenarios  Regions  8  7  T o t a l W e l f a r e 1987-1992 i n US$  9 Million  North America  54294.59 (-0.83)  46058.78 (-15.87)  48022.59 (-12.28)  United States  38252.46 (-1.23)  31034.78 (-19.86)  33094.53 (-14.55)  East & South  25817.99 (-0.46)  21655.21 (-16.51)  22479.21 (-13.34)  Midwest & West  12434.46 (-2.77)  9379.56 (-26.66)  10615.32 (-17)  Canada  16042.13 (0.14)  15024 (-6.21)  14928.07 (-6.81)  Atlantic  1587.2 (0.04)  1568.59 (-1.13)  1571.52 (-0.95)  Quebec  4370.97 (5.03)  3948.67 (-5.11)  3937.3 (-5.39)  Ontario  5577.81 (-3.23)  5516.85 (-4.29)  5261.09 (-8.73)  Western Canada  4506.14 (-0.02)  3989.89 (-11.47)  4158.15 (-7.74)  A v e r a g e Hog  Invenlb o r i e s i n M i l l i o n  Head  North America  73.65 (-0.32)  56.55 (-23.47)  52.81 (-28.52)  US  65.73 (1.48)  48.37 (-25.32)  45.32 (-30.03)  Southeast  8.07  6.67  6.03  (0.25)  (-17.14)  (-25.06)  Midwest  57.66 (1.66)  41.7 (-26.48)  39.29 (-30.73)  Canada  7.93 (-13.05)  8.17 (-10.35)  7.49 (-17.82)  Atlantic  0.33  0.19 (-40.48)  0.19 (-41.14)  (0)  122 Table  23,  continued Scenarios  Regions  A v e r a g e Hog  9  8  7  I n v e n l: o r i e s i n M i l l i o n  Head  Quebec  0. 68 (-72.91)  2 .13 (-15.37)  2.11 (-15.9)  Ontario  3 .48 (22.98)  2.45 (-13.5)  2.29 (-19.14)  Western Canada  3.45  3.41 (-1.26)  2.9 (-15.94)  (0)  Average Slaughter  Levels  i n Million  Cwt  North America  46.1 (-0.74)  35.01 (-24.62)  36.47 (-21.47)  US  40.65 (0.27)  30. 38 (-25.06)  29.56 (-27.84)  Northeast  3 . 88 (-0.94)  3.2 (-18.45)  3.33 (-15.16)  South  9.74 (-1.93)  4.36 (-56.11)  4.36 (-56.11)  Midwest  26. 05  22.73  21.47  (1.4)  (-11.53)  (-16.4)  0.98 (-2.39)  0.11 (-89.71)  0.1 (-90.26)  Canada  5.45 (-7.63)  4.62 (-21.63)  7.22 (22.37)  Atlantic  0.22 (-3.67)  0.15 (-32.88)  0.18 (-19.15)  Quebec  1.38 (-17.71)  1.23 (-26.77)  1.54 (-8.03)  Ontario  1.55 (-7.61)  0.67 (-59.99)  2.77 (65.23)  Western Canada  2.3 (-0.73)  2.57 (10.91)  2.72 (17.35)  West  123 Table  23,  continued Scenarios  Regions  T o t a ] L L i v e Hog E x p o r t s  9  8  7  1987-1992 i n M i l l i o n  Head  US t o Canada  0  0  64.78  Canada t o US  3.24 (-19.2)  0.21 (-94.76)  0.32 (-92.02)  Total US t o Canada  P o r k E x p o r t s f r o m SPS t o Demand 1987-1992 i n M i l l i o n Cwt  36. 64 (19.74)  46.44 (51.76)  Sector, 10.53 (-65.59)  17.81 10. 69 4 . 68 Canada t o (275) (125) (-1.47) US [1] P e r c e n t a g e d i f f e r e n c e s f r o m b a s e l i n e a r e i n p a r e n t h e s i s  124 Results  i n Table  22  are discussed  simulating  the  and  2)  f o r t h e e l i m i n a t i o n o f t h e ban  to  Canada  and  discussed nutrient  abolition  of  separately  countervailing duties  (scenario  3) .  Likewise,  separately  for  the  management p l a n s  implementation  for  on US  results  (scenarios  of n u t r i e n t plans  4  Table  6) , t h e  1  exports 23  are  implementation  and  i n Quebec  (scenarios  l i v e hog in  multilateral  scenarios  of  unilateral  (scenarios  5 and  7)  and  the m u l t i l a t e r a l implementation of a moratorium under a c t u a l  and  free trade  Scenarios  conditions  1 and  Canadian  ( s c e n a r i o s 8 and  9).  2  exports  of  pork  increase  by  removal o f the pork c o u n t e r v a i l i n g duty  3.16%  following Table  22).  T h e s e i n c r e a s e s c a n be a t t r i b u t e d t o i n c r e a s e d p o r k e x p o r t s  from  Western  Canada  to  average s l a u g h t e r Canada trade  and and  and duty  the  2,  the  If  the  subsidies,  in  payments  and  decrease  the  by  Inventories 0.43%  and  i n Western  0.01%.  importing  while  net  hog  (once  Canadian  Increased  country  are  in  hog  the  c o u n t e r v a i l i n g duty pork  exports  countervailing  to  from t h e b a s e l i n e . E x p o r t s exports  countervailing the  0.58%  removal of the  brings  h e a d , a 17.46% i n c r e a s e  8%.  Midwest  prices  stabilization  42%,  (4.46%).  theory.  scenario  by  US  i n c r e a s e by  i n the  decreased  i s removed)  increase  Western  levels  prices  accordance with In  the  ( s c e n a r i o 1,  the  effect  f r o m W e s t e r n Canada  duty of  were  removing  offsetting both  the  4.71  million  from  Ontario  increase  by  production  duty  and  the  125 s u b s i d i e s s h o u l d be n e g l i g i b l e . E i t h e r c o u n t e r v a i l i n g d u t i e s a r e higher  than  the  stabilization modelled.  optimal  payments  on  duties  and/or  production  the  impact  d e c i s i o n s are  A c c o r d i n g t o M o s c h i n i and M e i l k e  (1993),  of  improperly  the former i s  true: the estimated c o u n t e r v a i l i n g d u t i e s to r e s t o r e e q u i l i b r i u m are  positive  but  significantly  less  than  the  unit  s u b s i d y on h o g s and p o r k . To d a t e , t h e a c t u a l h o g  production  countervailing  d u t y , w h i c h i s an i n p u t i n t h e m o d e l , h a s b e e n e q u a l t o t h e production  subsidy.  Welfare local:  unit  impacts  North  from t r a d e f l o w m o d i f i c a t i o n s a r e s m a l l  American w e l f a r e does not  and  change.  Scenario 3 A c c o r d i n g t o t h e t h i r d s c e n a r i o where t h e n o n t a r i f f is  removed,  Ontario, Canada  live  exports  presently forbidden,  over  exports  hog  the  of pork from  from flood  six-year period decrease  from  the  reach  3 0.88  to  Midwest  to  Quebec  US  exports  market. 91  million  8.45  million  1.5  m i l l i o n h e a d . As a c o n s e q u e n c e , s l a u g h t e r i n c r e a s e s b y by  3.28%  i n the  by  63%,  cwt.  exports  decreases  decrease  head  hog  i n Canada and  Canada t o t h e US  the  barrier  removal of the n o n t a r i f f  scenario  with  percentage scenarios.  the  most  b a r r i e r which  significant  0.12%  i s the  impact.  i n i n v e n t o r i e s are  while Live  4.01  to  21.7%  following  trade  Regional  policy welfare  d i f f e r e n c e s a r e a t t h e most 1.76%, i n t h e f i r s t Decreases  to  US.  N o r t h A m e r i c a n m a r k e t w e l f a r e i n c r e a s e s by the  from  and  partly  three  compensated  by  126 pork  price  each  other.  Scenarios  increases  and consumer a n d p r o d u c e r  effects  offset  4 and 6  The f o u r t h and s i x t h s c e n a r i o s r e s t r i c t Quebec i n v e n t o r i e s t o 96% and 35% o f 1987 i n v e n t o r i e s , and i n c r e a s e c o s t s regions These  i n accordance with plans  cause  inventories. Ontario  3% and  prices  25%  t h e gap  between  and  73%  production  of and  plans. Quebec demand,  adjustment,  i s the  increase  Scenarios  6,  only  by  region  0.74%  and  following inventory  decreases  where 5.43%  welfare  increases;  (scenarios  4  and  hog 6  restrictions.  5 and 7  Scenarios policies  Canadian pork p r o d u c t i o n  8%.  respectively)  and  of  fill  this  Quebec  4  reductions  and p h o s p h o r u s  i n v e n t o r i e s i n c r e a s e b y 0.71% and 22% i n s c e n a r i o s 4 and  6. D e s p i t e by  To  the nitrogen  i n other  5  and  7  simulate  unilateral  environmental  i n Quebec. T h e s e s c e n a r i o s a r e e q u i v a l e n t t o s c e n a r i o s but  without  increased  costs  i n regions  outside  of  Quebec. Lenient  environmental  interpreted  as  a  production.  If this  policies  disguised were  subsidy the  case,  i n other  regions  triggering  an  could  be  increase  in  representatives  from  the  Quebec h o g / p o r k i n d u s t r y c o u l d a r g u e i n f a v o r o f a c o m p e n s a t i o n f r o m t h e Quebec Government.  127  C o m p a r i s o n s Between S c e n a r i o s As  expected,  increased  4 and  5.  and  inventories i n regions  (by a b o u t  1%)  by  the  6 and  outside  l a r g e r areas  7  results  scenarios  production  4  and  c o s t s due  6) .  firms  can  w h i c h may  offset  Scenarios  8 and  Scenarios  In the long run,  s u c c e s s f u l l y adopt early cost  show  and  costs  that  not  and  increased region  i n c l u d e d i n the  alternative  technologies  disadvantages.  9 8 and  North  America  trade  conditions.  d e c r e a s e by  The  are  (scenarios 5  t o e n v i r o n m e n t a l r e g u l a t i o n s i n one  reduce competitiveness. model,  o f Quebec  elimination of additional  r e l a t e d t o manure a p p l i c a t i o n s on vs.  7  on  23%  9 simulate  1987 In  and  m e a s u r e d among t h e  implementing a moratorium  inventory scenario  welfare  levels 8,  North  d e c r e a s e s by  9 s c e n a r i o s . The  under  actual  American  16%  to the  across  and  free  inventories lowest  value  decrease i n i n v e n t o r i e s f o r  Quebec i s l e s s t h a n i n s c e n a r i o 4 w h i c h i s c o n s i s t e n t , s i n c e restrictions  i n scenario  8 are  not  as  s t r i n g e n t as  in  the  scenario  4.  live  In  scenario  9,  US  hog  exports  as  i n the  processed  mainly  pork  i n Ontario  exports  third and  are  partly substituted  scenario.  These l i v e  W e s t e r n Canada.  hogs  by are  128 Trade Patterns Across  Scenarios  I n t h e p r e v i o u s s e c t i o n , t r a d e p a t t e r n s were d i s c u s s e d welfare,  inventory,  compare  live  scenarios. flows  both  regional. and  As  and  hog  and  can  be  ways Pork  pork seen  across  i s traded  t h e M i d w e s t and  pork  decrease  virtually exports t h e US  hog In  trade the  the  (to  US,  by  up  a  to  from  up  Ontario  hogs from O n t a r i o 5.5  to  41%.  the  more t h a n  pork  Figure  border  since  Canada and  hog  on US  the  9  is  Canada  Eastern  US.  l i v e hog  exports  increase at the  expense  exports in  and  trade  between Western  95%  52%,  4 to  to  the  scenarios live  head),  US  3  and  hog  while  also 9,  trade  US  pork  Canadian pork exports  million  an  restrictions on  of  and from  b e t w e e n 16%  to  from  exports Western  which does not  Quebec  the  t o Quebec i n c r e a s e  on  to  US. from  Quebec  patterns.  487,000 h o g s  end,  t o 24%  head.  trade  decreases  Exports  and  7,  impact  exports  come  i n c r e a s e by  live  9,  million  significant  W e s t e r n US losses  nine  (moratorium),  0.21  i n scenarios  scenarios,  Eastern  decrease  and  f r o m Canada t o t h e US  four  the  in  and  125%.  Furthermore, have  across  exports  8  t o Canada i n c r e a s e by  inventories  patterns baseline  live  (63%  scenario  i n c r e a s e by  8  where t h e ban  Canadian  disappears  Figures  Canada/US  l i v e hog  significantly In  changes.  simultaneously  9,  US  exports.  respectively).  i n the  between E a s t e r n  t o Canada i s l i f t e d , US  trade  the  I n s c e n a r i o s 3 and  of  slaughter  with  Live  and  26%.  Quebec  from Canada  Ontario to  compensate Net  to  the for  exports  of  338,000 h e a d  to  129 In by  6%  the  to  four  20%.  i n c r e a s e by Exports 29% 4  In  6%  scenarios  and  exports  US  pork exports  to Ontario  increase to  a r e r e s p o n s i b l e f o r t h e d i f f e r e n c e between In  scenarios  than  baseline.  about  baseline. 73%  5,  Canada  Canada  from  by  are  4 and  to  f r o m t h e M i d w e s t t o W e s t e r n Canada, w h i c h i n c r e a s e  increase  the  while  pork exports  10%.  5.  the  9%  US  i n c r e a s e by  t o 76%, and  scenarios,  This  lower  inventories.  20%  6  while  Exports  and  7,  US  exports to  the  to  exports  Ontario  Quebec jump by  i s understandable  than  pork  baseline  since due  scenarios  are  75%  Quebec  to  to  Canada  18%  higher  and  82%  from  inventories  restrictions  on  130  co  TJ TJ c  CO  O  = w  co O  cz (A  co C .2 e o o cu o o 9* Q - Q . S a> 9> -SQ = CO "5 TJ TJ 3 c r- r- a> — co a c " co a j? ^ 0 0 0 5 c c CO C  J= J=  c  cz  0 CU CL CO CU  O 73  TJ  CD  CO  3 e e C O  a. n.  cu Tj cu co « 1—  cr cr rr. o . . .  CU  D) CZ  CZ 3  CZ 3  'co  TJ TJ  co c  0  (0  o o  TJ >  o  I  CO  co TJ  •*—'  o o  CU (Z 3  O  CO  •  0  g a: < z 111 o  3  CO  (0  CM  l_  (0  CO  TJ  0  T -  CO  00  0  Q3  3  TJ  0)  £ o > o o o t z C CL CL o o cu CO CO io £ £ E = cu o "10c— O) O) o J= JZ: C CD <D (D 2 o o 0- Q.  CO  <  CO 3  00 TO JO CO CO E E E 2 3 3 o o •c *c co co n. 0. £ sz 0 0 > > £  o o o  • • co  ~  "Q5. '0>.  CO cz  CO  sujiaseg  0 DD  o  CT>  O CO  o  O  co  o  10  H  o  QV3H Nomiw  o  CO  0  CM  h 0  0 T -  ro CO •o ZD ro c o CO O 7CO 3 CO o c CO CO ZD O  m mi  * TJ  c o o  CO TJ (0  c  a) -a  o ° "g 2 S °5 a $ •a "> < u CO o < = -S D) X a ro ^ O  <U  or  C  c _ ZD c °co 3 E o -c co a> o > > o — E co 2 co 8 2 o cu -j  °CM  o c  Z  Lri  E 2 r- a.  CO .a  o  TJ C  "5  CO  *  10  TJ >  Q.  c Ta> J o ro  5) g £ CO cn 3 « Q. a> ro O o g o  o o CL  O  =  (0  Q_  3  «(0 5 o > > o o E E 2 8 a> a> or or Z 0CO  T-"  CO  —h o  1  <5 J ?  o c 0JZ ro m O  >> -*— 3 CO T J  CD  TJ  .=  11 £  CO o  3Uj|3seg  Iii 00  o  o  H  «  LO  CO  o  LO CM  O  CM  CO  (•J.M0) saNnod N o m i w  h  132 North American While North  less  t r a d e l i b e r a l i z a t i o n s c e n a r i o s have l i t t l e  American  trigger  W e l f a r e Changes A c r o s s S c e n a r i o s  welfare  (Figure  vs.  environmental  d e c r e a s e s i n market w e l f a r e . As expected,  i m p o r t a n t when e n v i r o n m e n t a l p o l i c y  i n Quebec t h a n when p o l i c i e s lower  10) ,  are applied  costs are entered i n the objective 6) .  decrease  A  moratorium  o f almost  16%, N o r t h  below t h e b a s e l i n e l e v e l a moratorium  across  North  scenarios  decreases are  i sapplied  unilaterally  i n a l l regions function  America  American  impact on  (scenarios 7  brings  inventories  ( s c e n a r i o 8 ) . The impact  because  about being  a 2 3%  on w e l f a r e o f  i s tempered under f r e e t r a d e c o n d i t i o n s s i n c e t r a d e  f l o w s a r e o p t i m a l when u n c o n s t r a i n e d  (scenario 9).  133  ro c  T3 C (0 o c a> (0  ro CQ o  V "O c 3  (0  CM  cn o>  o  O .2  DC <  * - "C  z  ro co c o> o io  E o  LU O CO  w  c ro o  'iZ  E < o  3  savrioa sn Nomia  134 Regional Market Welfare Since level,  and  welfare  Versus  Environmental  measures  water q u a l i t y  are  occurs  calculated  at the  local  Impacts at  the  level,  regional  the  trends  r a t h e r t h a n t h e m a g n i t u d e s o f w a t e r q u a l i t y and w e l f a r e c h a n g e s , are  compared  objectives  to  determine  conflict.  i f  Increases  economic  and  decreases  and w a t e r q u a l i t y a r e i n d i c a t e d a s + and 24)  for  the  four  environmental  scenarios  simulated  and  environmental  i n market  welfare  -, r e s p e c t i v e l y with  the  (Table  economic  and  models.  T a b l e 24 W a t e r Q u a l i t y C a r o l i n a and Quebec  and  Market  Welfare  Changes =  =  i n North ^ ^ ^ =  =  =  =  Scenarios  Location 2  3  6  4  Southeast  Market Welfare  +  +  -  -  Raleigh, North Carolina  Water Quality  nil  nil  +  +  Quebec  Market Welfare  +  -  +  +  PontRouge,  Water Quality  nil  +  +  +  Quebec  Of  the  four  scenarios  for  the  two  regions,  three  o c c u r w i t h t r a d e - o f f s between m a r k e t w e l f a r e and w a t e r scenarios Changes Table  4 and  6 i n North  involving  24.  Carolina,  trade-offs  are  and  cases  quality:  s c e n a r i o 3 i n Quebec.  identified  in  bold  type  in  135 In  the  welfare  Southeast,  decreases  including  caused  by  North  increased  Carolina, costs  regional  imposed  under  s c e n a r i o s 4 and 6 a r e c o m p e n s a t e d t o some d e g r e e b y d e c r e a s e s o f n i t r a t e s and p h o s p h a t e s after  implementing  i n r u n o f f . Decreases  environmental p o l i c i e s ,  i n market w e l f a r e ,  c a n i n d i c a t e minimum  monetary v a l u e s a t t r i b u t e d t o environmental q u a l i t y , welfare  t o i n c r e a s e o r remain  for social  u n c h a n g e d . I n s c e n a r i o s 4 and  a g g r e g a t e b e n e f i t s d e r i v e d from e n v i r o n m e n t a l q u a l i t y from 1992  would  million, On  a  have  per  6,  capita  and  at  least  US$169  million  and  1987US$377  to prevent a decrease i n s o c i a l welfare.  basis,  minimum  t o US$0.32 and  benefits  US$0.71 p e r  are  year  negligible,  for scenarios 4  respectively.  In water  be  respectively,  corresponding and  to  6,  Quebec,  quality  the  allows  trade-off  with  change  positive.  a  exists  s c e n a r i o 3:  i n water  imports  of  hogs  increases plans  scenarios  from  the  4  and  6)  impacts  on  inventories  water  quality  change  both  and  into  negligibly.  Quebec  issue  which  because  n i t r o g e n and  increases  in  environmental  Carolina  Net  i n Canada  i n Quebec.  s c e n a r i o s 1 and  i n North  nitrogen i s  imports  trade-off  induce  by  hog  Midwest  the  (as d i s c u s s e d e a r l i e r )  Free trade, modelled  live  and  i s negative  respect to  inventories  i n w e l f a r e . I n Quebec,  (scenarios  welfare  elude  with  on US  accompanies a d e c r e a s e o f hog Other  t h e w e l f a r e change  quality  E l i m i n a t i n g t h e ban  between market w e l f a r e  trade  2, or  and  of  phosphorus  both  market  quality. has  no  Quebec  direct because  environmental  136 impacts are p o s i t i v e changes  are  Southeast,  f o r t h e S o u t h e a s t and Quebec s i n c e  positive.  i s also  The  net  positive.  effect  to  scenario  3,  welfare for  the  137 CHAPTER V I I  - CONCLUSIONS AND  POLICY IMPLICATIONS  Conclusions Trade  liberalization  environmental  does  appear  fact,  contention  that  environmental for  and  degradation  increases minor  duty  i n hog  or  Canada since  expected  to  provide  Since  does  hence,  hold  of  anticipated  protection  to  to  true  the  triggers  in hog  small  effect is  international trade  significant  the  deteriorate  removal  policy  the  not  could  the  trade  barriers to a  1990)  conditions  this  and  i s a primary contributor  following  inventories.  n i l though,  Quebec  (Shrybman,  Environmental  Western  countervailing  in  i n t e r n a t i o n a l trade  these cases.  Ontario  decreases  Carolina  to  Rouge, Quebec g i v e n t h e a s s u m p t i o n s u s e d i n t h i s s t u d y . I n nitrates  North  contribute  Pont-  of  i n Raleigh,  to  or  leaching  degradation  not  are  not  environmental  endowments. Even  i f international trade  appears  to  be  a  minor  or  i n s i g n i f i c a n t c o n t r i b u t o r t o water q u a l i t y d e t e r i o r a t i o n i n North some  American of  the  hog/pork  regions  sector,  studied.  water  Properly  quality  i s mediocre  enforced  an the in  environmental  p o l i c y t a k i n g i n t o account the ecosystem's a s s i m i l a t i v e c a p a c i t y is  better  than  trade  protection  measures  to  improve  water  quality. B o t h s u r f a c e and g r o u n d w a t e r q u a l i t y i n c r e a s e when n u t r i e n t management expected,  plans since  are  implemented.  nutrient  inputs  are  Although lowered,  this  outcome  was  the  magnitude  of  138 impacts,  d i s c u s s e d i n c h a p t e r V I I , was  impacts first  of environmental  p o l i c i e s on w a t e r q u a l i t y  (part of  the  second  market  welfare  trade  policies.  from the v a r i o u s q u e s t i o n s  o b j e c t i v e : assessment under  various  The  of  trade  the  agricultural,  effects  of  the e f f e c t s  on  decrease o f US  The  policies  environmental  environmental,  reduction  pork exports  impact  have  in  o f C a n a d i a n l i v e hog  Trade  and and  trade  and  f o l l o w e d by  welfare.  Environmental patterns.  arising  patterns  a g r i c u l t u r a l p o l i c i e s on t r a d e a r e summarized f i r s t ,  and  to  a  Quebec  clear  impact  inventories  e x p o r t s t o t h e US  on  trade  triggers  and  an  a  increase  Canada.  agricultural  policy  scenarios  have  a  larger  on t r a d e p a t t e r n s t h a n on w e l f a r e and w a t e r q u a l i t y . When  t h e ban  on US  l i v e hog  e x p o r t s t o Canada i s l i f t e d ,  e x p o r t s t o Canada i n c r e a s e a t t h e e x p e n s e o f US C a n a d i a n l i v e hog The welfare  exports to the  are  different  from  Trade  policy  American  welfare  while  f o r decreases cost  decrease  to  US  live  hog  pork exports  and  US.  t r e n d s and m a g n i t u d e o f i m p a c t s  policies.  the  the  objective). O t h e r c o n c l u s i o n s stem  from  measured t o e v a l u a t e  impacts  scenarios  from t r a d e p o l i c i e s  induced  trigger  environmental  by  environmental  increases  policies  are  in  i n welfare  America i s simulated.  manure i s the  on  larger  largest  areas  increases.  when a m o r a t o r i u m  S i n c e t r a d e l i b e r a l i z a t i o n has  North  responsible  i n w e l f a r e w h i c h c o u l d c e r t a i n l y be e x p e c t e d spread  on  a  in  after The North  positive  139 impact  on  welfare,  the  somewhat a t t e n u a t e d The  welfare  on  Following  trade  from  a  moratorium  regional  of environmental  market  welfare  liberalization,  the  also  and  trade  differ  maximum  policy  markedly.  regional  welfare  c h a n g e f r o m t h e b a s e l i n e i s 1.76%, w h i l e u n d e r t h e m o r a t o r i u m hog  is  under f r e e t r a d e c o n d i t i o n s .  magnitude of impacts  scenarios  decrease  i n v e n t o r i e s , t h e maximum c h a n g e i s  on  27%.  Policy implications New  p o l i c y r e c o m m e n d a t i o n s must t a k e  i n s t i t u t i o n s and the  US  is  hence, the l e g i s l a t i v e  described.  comprehensive overview the  Clean  Water  Smith  o f US  Act  and  Kuch  1990  the  (CAFOs) must  Elimination storage.  System  Permitted  discharge  into  delegated  to  (NPDES)  surface  states,  performance standards The states Control  a  permit,  waters,  Zone  Act  Pollution  which  federal  except  in  agencies  feeding  on  waste  standard the  of  case  develop  and  Protection  a  implement  federal  discretion.  implement Programs"  of  no-  NPDES p r o g r a m i s  CZARA r e q u i r e s t h e t w e n t y - n i n e c o a s t a l , and G r e a t  to  Re-  Discharge  focuses  s t o r m . The  whose  at t h e i r  a  federal statutes,  Coastal  National  twenty-four-hour  forty  Two  provide  concentrated animal  CAFOs must meet t h e  US  twenty-five-year,  obtain  (1995)  and  (CZARA) impose r e g u l a t i o n s on  l i v e s t o c k o p e r a t i o n s . U n d e r t h e CWA, operations  existing  s t r u c t u r e i n Canada  legislation.  (CWA)  a u t h o r i z a t i o n Amendments o f  and  i n t o account  enforceable that  meet  Lakes  "Coastal  Nonpoint  specific,  federal  140 performance  standards  300 a n i m a l  units  50  animal  standards that  f o r larger  units,  must  at the state  livestock  o p e r a t i o n s . CAFOs down t o  must meet t h e same, n o - d i s c h a r g e  r e q u i r e d b y t h e CWA to  for livestock  enterprises  o p e r a t i o n s . S m a l l e r CAFOs, down  minimize  level.  s t a n d a r d as  discharge  In addition,  according  many s t a t e s  a p p l y i n g animal  waste  to  require  on c r o p l a n d  h a v e a n u t r i e n t management p l a n f o l l o w i n g p r e s c r i b e d  management  practices. As with t h e CWA, decentralization of CZARA implementation i s meant to allow for states' accommodation o f weather, geography and l i v e s t o c k technology i n translating federal standards into s t a t e - l e v e l programs. . . C u r r e n t p a t t e r n s o f i n t e r s t a t e r e g u l a t o r y v a r i a t i o n and CAFO d i s t r i b u t i o n a p p e a r t o r e f l e c t t h e p o l i t i c a l economy much more t h a n t h e y mimic an economically efficient solution to environmental p r o t e c t i o n . . . States d i f f e r i n t h e i r i n t e r p r e t a t i o n s o f when o r i f a NPDES p e r m i t i s required, in how they translate no-discharge performance standards into requirements for f a c i l i t i e s , i n the extent t o which they exceed f e d e r a l guidelines, and i n how rigorously they enforce i m p l e m e n t a t i o n . . . R e g u l a t o r y r i g o r d o e s n o t seem t o correlate well with degree of environmental sensitivity to threat from c o n c e n t r a t e d livestock p r o d u c t i o n ( S m i t h and Kuch, 1 9 9 5 ) .  Kenyon, suggest  that  Carolina hog  and Z e a r i n g  less  stringent  were an i m p o r t a n t  farms  into  legislation management mass l o a d  Hurt  is  that  state  being  (cited  water q u a l i t y factor  regulations  influencing  i n the early  implemented;  p l a n s were i m p l e m e n t e d for total  i n A b d a l l a e t a l . , 1995)  July  for 1,  i n North  t h e movement  1990s.  However,  of new  example,  nutrient  1997 w i t h  a maximum  nitrogen, i f the assimilative  capacity f o r  141 nitrogen  i n a n u t r i e n t - s e n s i t i v e w a t e r body  The  maximum l o a d  6.0  mg  N/L,  shall  a  Senate  installation  gradient  exceed the  discharge  over-allocated. a l l o c a t i o n , or  whichever i s l e s s .  Similarly, the  not  is  of  at  Bill  proposes,  least  monitoring wells  one  tested  among o t h e r  up-gradient  and  two  of l i v e s t o c k , i n c l u d i n g  copper,  fecal coliform.  A  y e a r m o r a t o r i u m a l s o became e f f e c t i v e J a n u a r y  1  and  down-  semi-annually f o r contaminants  a s s o c i a t e d with the production z i n c , phosphorus,  articles,  nitrogen,  temporary  one-  1997.  I n Canada, r e g u l a t i o n o f e x t e r n a l i t i e s f r o m a g r i c u l t u r e i s largely are  c o n d u c t e d on  described  Information legislation  a provincial basis.  to  on  indicate  livestock  one  Regulations  approach  waste  in d i f f e r e n t countries  to  regulation.  management  practices  or  provinces  Canadian  b e e n c o m p i l e d by Runka ( 1 9 9 5 ) . I n Quebec, r e g u l a t i o n s 1981  r e q u i r e c e r t i f i c a t i o n o f any  related ha,  facilities.  depending  animal  unit  on  of  crop  livestock.  grown, One  area ranging must  animal  directly  to  or the  frozen ground,  water source. Also, m  ( d e p e n d i n g on  confined  River  was  forbidden  applications must be  located  at  each  as  five  30  m  of  least  from r e s i d e n t i a l a r e a s . E x p a n s i o n  but  moratoriums  have  to  applied  p r o h i b i t e d i n t h e C h a u d i e r e , Yamaska  basins,  2  for  unless within  or  to  Manure a p p l i c a t i o n s  as  enterprise  f r o m 0.24  i s defined  are  are  have  enacted i n  available  ground  farm s i z e )  operations  l'Assomption  an  be  unit  m a r k e t h o g s w e i g h i n g between 20-100 kg. snow-covered  and  expansion of animal housing  A minimum l a n d  the  i n Quebec  been  a 150 of and  lifted.  142 Since  the  included i s now  requirement  for a  i n the l e g i s l a t i o n ,  fertilization  plan  was  the pressure t o l i m i t  inventories  l i n k e d t o a s s i m i l a t i v e c a p a c i t y . R e s u l t s from t h i s  show t h a t  inventories  application facilities  of are  i n Quebec  nutrient  should  management  decrease  plans,  unless  moratorium an  s e c t o r . The  while  t o market  optimal  from  necessarily  treatment  Carolina  1,  1997.  an  prices  just  and  that the  i t does  changes  a  one-year  i s not optimal not  allow  i n technology.  p e r s p e c t i v e because  according to assimilative  supply  to  I t i s not i t is  capacity.  of production at the time  from  not  It is  a  moratorium  i s i m p o s e d i s e i t h e r above o r b e l o w t h e o p t i m a l l e v e l  determined  by e n v i r o n m e n t a l  level  lifted its  implemented  A moratorium  environmental  designed  instruments  Government o f Quebec h a s  p e r s p e c t i v e because  respond  possible  North  on J a n u a r y  economic  the  installed.  i n t h e hog  moratoriums  thesis  following  To summarize, m o r a t o r i u m s a r e i m p o r t a n t p o l i c y used  recently  c o n d i t i o n s and p u b l i c demand f o r e n v i r o n m e n t a l  quality. Both  Quebec  and  North  n u t r i e n t management p l a n s b a s e d Results  presented  advantages improves 39%  in this  Carolina  policy  now  on c r o p a g r o n o m i c  thesis,  highlight  the  implemented requirements. environmental  of e n f o r c i n g these plans, s i n c e s u r f a c e water q u a l i t y  by r o u g h l y 80%  i n R a l e i g h , N o r t h C a r o l i n a and by  i n Quebec, compared w i t h t h e The  have  overall  depends,  impact of  of  course,  these on  6%  to  baseline. plans  their  and  any  enforcement.  environmental Recently,  a  143 group  of  complaint  18 with  non-governmental the  Environmental  organizations Co-operation  registered  a  Commission  of  NAFTA a l l e g i n g t h a t t h e Government o f Quebec n e g l e c t e d t o to  environmental  norms  related  to  agricultural  originating  f r o m a n i m a l , e s p e c i a l l y hog,  example  the  of  international  growing forums.  importance  of  adhere  pollution  p r o d u c t i o n . 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Winnipeg, Manitoba. Westerman, P.W., L a r r y D. K i n g , J . C . B u r n s , G.A. Cummings, and M.R. O v e r c a s h . 1987. Swine Manure a n d L a g o o n E f f l u e n t A p p l i e d t o a Temperate Forage M i x t u r e : I I . R a i n f a l l R u n o f f and S o i l Chemical Properties. Journal of Environmental Quality, 16(2):106-112. W i l s o n , P. N. and V. R. Eidman. 1983. An E m p i r i c a l T e s t o f t h e I n t e r v a l Approach f o r E s t i m a t i n g R i s k P r e f e r e n c e s . Western Journal of Agricultural Economics, 8:1070-82.  151 APPENDIX - THE ECONOMIC MODEL  The  presentation  (1991) s t a r t s w i t h The  list  and  o f t h e model b a s e d  the identification of the subscript  o f endogenous v a r i a b l e s , t h e p r e d e t e r m i n e d  coefficients  used  e q u a t i o n s o f t h e model Subscripts = production  and  j = 1, 2,..., 6 ) ,  k = slaughter  region  region  feed  type  (f  t  = quarter  The  The  variables  listed.  The  (j only  i f y o u n e e d more t h a n  one) ( i  (k = 1, 2,..., 8) (1 = 1, 2,..., 8) =  corn,  soybean  o f animal  meal,  mineral/vitamin  supplement),  (a = 1, 2, o r 3 ) ,  t  ordering  (production  indices.  the variables are:  s u p p l e m e n t , b a r l e y , wheat, p r o t e i n a = age c o h o r t  are then  thesis  follow.  1 = consumption r e g i o n =  i n t h e model  associated with  i,j  f  on S p i n e l l i ' s  f o r subscripts  then  slaughter  will  be:  age  then consumption),  s u b s c r i p t T denotes t h e f i n a l  time  cohort,  region  and time  period.  period.  21  The  Endogenous V a r i a b l e s The  describe  following  variables  (denoted  t h e farm p r o d u c t i o n - f e e d i n g  by  capital  letters)  subsystem:  A b b r e v i a t i o n s used: d o l = d o l l a r s ; cwt = h u n d r e d w e i g h t ; l w t = l i v e w e i g h t ; head c a p a c i t y e q u i v a l e n t ; hd = head; c a r = c a r c a s s ; r e t a i l ; m i l = m i l l i o n ; a n d , l b = pound.  hce = ret =  152 N  = number  ait  region M  ait  of pigs  i , during period  t  o f age c o h o r t  a,  i n production  (mil hd);  = m a r k e t i n g s f o r s l a u g h t e r o f h o g s o f age c o h o r t in  production  slaughter TR  and h o g s  region  regions  i  and  available  during period t  a, p r o d u c e d  f o r shipment  to  (mil hd);  = number o f p i g s a n d h o g s o f age c o h o r t a, t r a n s f e r r e d f r o m  aiJt  production t BARQL  t  region  i to production  region  j , during  period  (mil hd); = q u a n t i t y o f b a r l e y used  Canada i n p e r i o d t HOGEND = t h e t o t a l  i n swine p r o d u c t i o n  i n Western  (mil l b s ) ;  number o f a n i m a l s r e m a i n i n g a t t i m e p e r i o d T  (mil hd); SLAUEND = t h e p r o d u c t i v e facilities CAPFARMING  lt  =  capacity  i n slaughter  remaining a t time p e r i o d T the incremental  change  and  processing  ( m i l cwt c a r ) ;  i n the quantity  of  farm  b u i l d i n g s a n d e q u i p m e n t w h i c h c a n be u s e d i n p i g p r o d u c t i o n in period t i n production CAPFARMj  t  =  physical  available  kt  =  i (mil hce);  (e.g.,  buildings  f o r use i n t h e p r o d u c t i o n  production CAPSLAUINC  quantity  region  region the  of pigs  i , i n time p e r i o d t  incremental  change  and  equipment)  and hogs i n  (mil hce);  in  the  quantity  of  s l a u g h t e r and p r o c e s s i n g c a p a c i t y i n p e r i o d t i n s l a u g h t e r processing-storage CAPSLAU  kt  = the physical  capacity t  (SPS) r e g i o n k quantity  ( m i l cwt c a r ) ;  of slaughter  and  processing  a v a i l a b l e f o r u s e i n SPS r e g i o n k i n t i m e  ( m i l cwt c a r ) ;  period  153 CULLS  it  = number  production LWT  ajt  of culled region  aikt  =  weight  production during  The  cuts)  =  are  quantity  Coefficients = number quarter  in k  basis).  determined  at  the  SPS-  i n region  k during stored  cuts  period t ; ( m i l cwt c a r ) i n  (this quantity w i l l  be  f o r period t+1);  region  (this  k  cuts  ( m i l cwt c a r ) s u p p l i e d  t o consumption  quantity  can  of r e t a i l region  port  1 during  and P r e - D e t e r m i n e d born  (pigs/hd);  cuts  region  originate  o r from s t o r e d p o r k i n r e g i o n  of pigs  produced  ( m i l cwt c a r ) o f w h o l e s a l e p o r k  produced  slaughter  a  level:  o f wholesale pork  t  during  s h i p p e d t o SPS r e g i o n  (carcass weight  variables  stocks  consumption  bir  i and a c t u a l l y  cohort  k a t t h e end o f p e r i o d t  slaughter lt  age  SPS r e g i o n  period  D  in  o f wholesale pork cuts  from  (mil hd);  a produced i n production  = quantity  quantity  =  region  production  carry-in °-kit  animals  sub-system  = current  k l t  of  time p e r i o d t  (primal S0  time p e r i o d t  in  ( m i l cwt l w t ) ; and,  following  consumption kt  the breeding stock  i a n d a v a i l a b l e f o r s h i p m e n t t o SPS r e g i o n s ,  time p e r i o d t  P  i during  from  = w e i g h t o f a n i m a l s i n age c o h o r t region  SLWT  animals  ( m i l cwt  1  from  during current  k ) ; and, r e t ) demanded i n  period t .  Variables  per individual  i n age c o h o r t  3 per  154 dea  a  = d e a t h r a t e o f p i g s and  awcull  =  average  market  h o g s o f age  weight  of  a  cohort  cull  a  from  (%); age  cohort  3  (cwt/hd); awbreeder =  average market weight  retained fprice  during  nfcost  a i t  of  period t  pigs  shrhog =  and  losses  hogs,  hogs  of  j k  3 throughout type  its life  age  cohort  and  a  (cwt/hd);  f i n production  region  production  i n production  from  deaths)  region  incurred i n transit  production  i  region  i  to  for  slaughter  (%);  - = transportation cost  f o r moving p i g s  regions  = t r a n s p o r t a t i o n cost per  from  been  (US$/hd);  a between p r o d u c t i o n tchog  a n i m a l which had  (US$/lb);  (shrinkage  traveling  region k a i j  an  = non-feed v a r i a b l e cost a s s o c i a t e d with the  during period t  tcpigp  cohort  = a v e r a g e p r i c e o f f e e d by  f i t  i  i n age  of  production  region  i  i and unit  to  j  and  hogs o f  age  (US$/hd);  o f moving s l a u g h t e r  slaughter  region  k  hogs  (US$/cwt  lwt) ; mcpig  l t  = a v e r a g e h a n d l i n g - c o m m i s s i o n c h a r g e s t o m a r k e t a hog  slaughter ecap  a i t  =  (US$/hd);  expected  cohort  a  for  in  average d a i l y production  feed  region  intake i  f o r animals of  during  age  time  period  t  age  cohort  a  (lbs/hd/day); wt  a  =  average  terminal  weight  of  animals  of  (cwt/hd); tvalhog = terminal value  of animals at the  end  of time p e r i o d  T  155 (US$/hd); tvalslau  = terminal  at the  end  value  of  slaughter  of time p e r i o d T  quarter  survivfarm  =  deprecslau  f a r m b u i l d i n g s and  r a t e on  f a r m b u i l d i n g s and  =  depreciation quarter  rate  of  slaughter  equipment  per  quarter  and  processing  (%);  s u r v i v s l a u = s u r v i v a l r a t e o f s l a u g h t e r and  processing  capacity  (%);  c u l l r a t e = p r o p o r t i o n o f new the  equipment  (%);  capacity per  per  capacity  (%);  survival  quarter  processing  (US$/hce);  d e p r e c f a r m = d e p r e c i a t i o n r a t e on per  and  breeding  herd  breeding  after  one  stock which i s c u l l e d  quarter  i n the  age  from  cohort  3  (%) ; diehards  = p r o p o r t i o n o f e n t r i e s i n t o age  until  the  last  quarter  e x p e c t a n c y o f a hog pdiff  t  = a constant  age space  a  cohort  3  of  cohort  the  3 which  entire  survive  assumed  life  (%);  d o l l a r p r i c e p e n a l t y on t h e s a l e o f h o g s f r o m (US$/cwt l w t ) ;  = minimum s p a c e r e q u i r e m e n t f o r a hog  i n age  cohort a  (sq.  ft./hce); r  = s o c i a l welfare  /0 = t  discount  rate  (%);  (1 + r/4) * = q u a r t e r l y s o c i a l w e l f a r e  capcostf  =  capital  buildings recostfarm  and  cost  involved  equipment  = recurring costs  in  discount  (%) ;  establishing  new  farm  fixed  farm  (US$/hce); related to maintaining  156 capital, capcosts  i . e . taxes  and  insurance  (US$/hce);  = c a p i t a l c o s t i n v o l v e d i n e s t a b l i s h i n g new  processing recostslau  =  capacity  (US$/hce);  recurring  slaughter  slaughter-  costs  processing  related  facilities,  to  maintaining  i . e . taxes  and  fixed  insurance  (US$/hce); fform  = daily  f a i  age  amount o f  cohort  a  feed  i n order  requirement  to  meet minimum  requirements i n production percent  when  f  =  corn  a  w h i c h means t h a t 69 p e r c e n t  ninit,- = adist  i n i t i a l number o f p i g s  = the p r o p o r t i o n of the  a  cohort  a to maintain  =  =  a k  k 6  a  slaughter  costs  nutritional equals  f a i  for production  69  region  i  (lbs/hd/day); and  hogs i n r e g i o n  population  a "steady  i  ( m i l hd) ;  t h a t must be  o f age  state" population (90  days);  f o r h o g s o f age  cohort  a  a  (%);  i n SPS  region  (US$/cwt l w t ) ;  = dress  car per process  cwt k t  out  p e r c e n t a g e f o r h o g s o f age  cohort  a  (%  = processing  retail k l  to storcost  o f cwt  of  of lwt = c a r / l w t ) ; costs  i n SPS  region k  (US$/cwt);  c u t t o e a t = p o u n d s o f w h o l e s a l e c u t s n e e d e d t o make one  tcpork  of  of the d a i l y r a t i o n f o r growing  d a y q u = number o f d a y s i n a q u a r t e r kill  1  animals  daily  region i , i . e . fform  and  p i g s must c o n s i s t o f c o r n  f fed to  cuts  (1.06  cwt  of car per  cwt  of r e t =  1  = q u a r t e r l y storage  region  (US$/cwt c a r ) ; cost f o r pork  of  car/ret);  = t r a n s p o r t a t i o n c o s t o f m o v i n g p o r k f r o m SPS consumption r e g i o n  pound  (US$/cwt c a r ) ;  k  157 imports^  = exogenously s p e c i f i e d  quantity  of imports o f frozen  p o r k t o SPS r e g i o n k i n t i m e p e r i o d t exports  = exogenously s p e c i f i e d  k t  quantity  of exports of frozen  p o r k t o SPS r e g i o n k i n t i m e p e r i o d t military  = exogenously s p e c i f i e d  k t  by m i l i t a r y  sector  quantity  f r o m SPS r e g i o n  ( m i l cwt c a r ) ;  ( m i l cwt c a r ) ; of frozen pork  k during  used  time p e r i o d  t  (mil c a r cwt); toterritor  k t  =  shipped  t o US  period t calfac  t  exogenously  specified  territories  from  quantity SPS  of  frozen  pork  k  during  time  region  ( m i l cwt c a r ) ;  = c a l i b r a t i o n factor to adjust econometrically estimated  demand  coefficients  with  actual  prices during the estimation period  demand  quantities  and  ( r e a l US$/cwt on r e t a i l  basis) ; inter  = i n t e r c e p t t e r m o f demand f u n c t i o n f o r p o r k i n r e g i o n 1  l t  i n time period t porksl  = partial  l t  (cwt r e t ) ;  derivative of quantity  o f p o r k demanded w i t h  respect t o pork p r i c e i n region 1 i n time p e r i o d t  (US$/cwt  ret) ; beefs  l t  = partial  derivative of quantity  of pork  demanded  respect t o beef p r i c e i n region 1 i n time p e r i o d t  with  (US$/cwt  ret) ; chicksl  = p a r t i a l d e r i v a t i v e o f q u a n t i t y o f p o r k demanded w i t h  l t  respect  t o chicken  price  i n region  1  i n time  period  t  (US$/cwt r e t ) ; perincsl  l t  = p a r t i a l d e r i v a t i v e o f q u a n t i t y o f p o r k demanded w i t h  158 respect  t o personal  income  i n region  1  i n time  period  t  (US$/cwt r e t ) ; brp  = retail  l t  beef p r i c e i n region  1 i n time p e r i o d  t  (US$/cwt  ret) ; crp  =  l t  retail  chicken  price  i n region  1  i n time  period  t  period  t  (US$/cwt r e t ) ; perinc  =  l t  personal  income  in  region  1  in  time  (thousands o f d o l l a r s ) ; pop cpi  = average p o p u l a t i o n  lt  = t h e consumer p r i c e  t  time p e r i o d t rwps  =  t  real  i n r e g i o n 1 i n t i m e p e r i o d t ( m i l hd) ; index  o f e i t h e r t h e US  o r Canada i n  (1984-86 = 1 ) ;  wholesale-retail  price  spread  by  quarter  (real  US$/cwt r e t ) ; chtariff  = Canadian hog t a r i f f  1 k t  cptariff exr  t  (CND$ p e r cwt l w t ) ;  = Canadian pork t a r i f f  k l t  = Canadian - United  (CND$ p e r cwt c a r ) ;  S t a t e s d o l l a r exchange r a t e  Four v a r i a b l e s a r e constructed presentation. ahatf rcrp  l t  =  l t  -  l t  (inter  rnfcosta  = a j t  rexpenfeed  l t  l t  + calfac  + beefsl  t  l t  * rbrp  +  l t  chicksl  * rperinc ) ; l t  (l/(porksl = rnfcost a i t  from parameters t o s i m p l i f y  They a r e :  + perincsl  porkslf  (CND$/US$);  i t  l t  * pop )) ; t t  * s p a c e ; and, a  = d a y q u * fform fai  * ecap  a i t  * rfprice  f l t  .  l t  *  159 Equation S p e c i f i c a t i o n The e q u a t i o n s e t i s composed of  the  objective  bounds  function.  on  the  initial  variables.  The  Non-linear  Optimization  There are eleven invent  on  contains  f o r the  with  a t t h e farm  and a g i n g  several  endogenous  the Modular  (MINOS) a l g o r i t h m  Incore  o f GAMS.  level.  Birth  and  o f t h e h e r d and t e r m d i s t  the  t o ensure t h e replacement o f farm and p i g c a p ) .  model  the a v a i l a b i l i t y  of barley  Five  constraints  related  are  cullmart,  olddies,  determines the terminal The  levels  are solved  constraints  equipment ( i n c f a r m  (culleq,  also  and  l e v e l a t t h e f i n a l p e r i o d . Two c o n s t r a i n t s a r e p l a c e d  farm p r o d u c t i o n  and  model  final  System  address the b i r t h  population  The  and  constraints  of seventeen c o n s t r a i n t s  remaining  demand l e v e l s . replacement  value  One c o n s t r a i n t i s n e e d e d t o i n Western  to  herd  livewt  and  Canada  (barley).  population  dynamics  lvtcull).  Termqhog  o f a hog.  constraints  apply  to  I n c s l a and m e a t c a p d e a l  decision;  buildings  shippedlw  and  the  SPS  and  retail  with the slaughterhouse  atsps  model  the  physical  losses incurred i n the processing  and m a r k e t i n g o f p o r k f r o m t h e  SPS  use;  site  to the  final  consumer  demand and u t i l i z a t i o n ; slaughtering  hogs  sds handle  Termqs d e t e r m i n e s t h e t e r m i n a l  - Feeding  driving force  which  and  pork  value  of  production  of  facilities.  The P r o d u c t i o n The  Dem  is a  Sub-System  o f t h e model  function  i s t h e farm  of the size  and  composition  of the  160 herd.  The  latter  v a r i e s with  input  Input  p r i c e s a r e exogenous w h i l e  and o u t p u t  output  price  changes.  p r i c e s a r e endogenous,  being the marginal value associated with quantity being p r i c e d .  i.)  Herd  Size  S i z e r e f e r s t o t h e a b s o l u t e number o f a n i m a l s The of  c u r r e n t p e r i o d ' s number o f a n i m a l s a  region  is a  function  of  i n the herd.  i n t h e swine  t h e pas  period's  population farrowings,  deaths,  n e t i n t e r - r e g i o n a l movements o f p i g s , c u l l s f r o m t h e age  cohort  3 a n d m a r k e t i n g s f o r s l a u g h t e r f r o m age c o h o r t s 2 and 3.  i . a ) Number The  o f P i g s Born  current  production  (birth ) i t  period's  region  i is a  number  of pigs  i n age c o h o r t  function of that  region's  1 in  number o f  b r e e d i n g s t o c k i n t h e h e r d and t h e i r b i r t h r a t e from l a s t p e r i o d plus the net transfer of individuals  N  i,,,t i =  b  i  +  r  * 3,it -E N  1  l.b.)  Maturation  TR  i n cohort  l,ij,t l  T R  +  1 i n t+1:  l.ji f l f  1/2/••#6/ t 112 f •••T•  of the Population  (invent  a i t  )  A n i m a l s p r e s e n t a t t h e b e g i n n i n g o f p e r i o d t must e i t h e r 1) remain  i n the herd  slaughter breeding is  and  age  one  period,  a s a m a r k e t h o g 3) be m a r k e t e d o r f e e d i n g purposes,  allowed  t o l i v e more t h a n  2)  be  marketed f o r  inter-regionallly for  o r 4) d i e a n a t u r a l d e a t h . 12 q u a r t e r s .  No h o g  161 N-i.i.fi  = d-dea )*N a  3,i,t l = (l"dea ) +  +  * N .  3  (l-dea )  3fl  * N -  2  t  + E TR -  aijt  ajl  a = 1; i = 1,2,...6;  if N  - M,, - E T R  a i t  2fl  - M  t  - M .  t  2l  t  t = 1,2,...T.  - E TR ,.  3#it  3  - E TR j  2 i j t  t  jt  + E TR  + E TR  3|jl  -  t  2 j i t  3  when a = 2,3 ; i = 1,2,...6; t = 1,2,...T.  ii.)  Composition The  across  o f t h e Herd  composition  the three  o f the herd  age c o h o r t s .  i s the d i s t r i b u t i o n o f the herd  Any c o n t r a c t i o n o r e x p a n s i o n  t h e h e r d d e p e n d s on t h e s i z e o f c o h o r t retained breeding and  death  ii.a)  previous  number o f a n i m a l s  from marketings  culled  t + 1  )  from age c o h o r t  3 are a fixed  entering t h ecohort  i n the  quarter:  -  iit+l  E TR j  2i j t  = (N . 2fl  t  + E TR j  - M 2j i t  2(it  ) * (l-dea )  Minimum Number M a r k e t e d  (defined  (culleqj  o f t h e number o f a n i m a l s  CULLS  The  h e r d . The  losses.  proportion  2  i n i i . a ) a r e marketed  Forced  jt  < M  * (cullrate) .  from Age C o h o r t  f o l l o w i n g c o n s t r a i n t ensures  CULLS ii.c)  numbers a r e t h e r e s i d u a l  Number o f C u l l s M a r k e t e d The  ii.b)  herd  3, t h e b r e e d i n g  of  that  3 (cullmart ) j t  at least  from age c o h o r t  3 each  the culls quarter:  3fit  M a r k e t i n g s o f T h r e e Y e a r O l d Hogs (olddies,- )  Hogs o f c o h o r t  t + 9  3 must b e m a r k e t e d a f t e r  nine  quarters:  162 ( 2,it  "  N  ii.d)  M  Liveweight Culls  animals  from  i i . e)  3fit  Capital Dynamics  (lvtcull than  j t  3fift+9  )  mature  breeding  age c o h o r t :  < a w c u l l * CULLS,-,. + a w b r e e d e r * ( M  marketed animals ait  < M  1 0  3  be l i g h t e r  o f Others Marketed  c o n s t r a i n t accounts  LWT  * (l-dea )  i n Marketings  3 will  cohort  Liveweight This  iii)  of Culls  from t h i s LWT  * (diehards)  2,it)  fortotal  i n age c o h o r t s < wt  a  (livewt  a ) t  3<lt  - CULLS  3 l t  )  )  carcass  weight  of the  1 a n d 2:  * Mai  t  Formation i n hog p r o d u c t i o n  does  not only  involve the  physical production  l i n k a g e s between q u a r t e r s a n d t h e p o r t f o l i o  choice  o f marketing current stock  o f producers  t o produce but  also  farm  f u t u r e r e v e n u e s a s shown i n t h e p r e v i o u s  t h e replacement  a n d SPS l e v e l s .  fixed  outlay  recurring  or retaining i t  o f durable  The c a p i t a l  i n the quarter  expenditure  based  production  cost  enters  the assets upon  equations,  assets  each  level  are acquired  the costs  at the as a  and a s a  o f i n s u r a n c e and  taxes. i i i . a)  Farm C a p i t a l  Farm  i nPlace  production  ( p i g cap ) i t  facilities  are a  function  of the  hog  inventory: E space a iii.b)  a  Farm C a p i t a l  * N  ajt  < CAPFARM  Dynamics  The a c t u a l f a r m c a p i t a l  it  (incfarm ) j t  i s a f u n c t i o n o f d e p r e c i a t i o n and  163 incremental  changes i n  CAPFARM iii.c)  SPS  i i i . d)  - survivfarm  it  Capital 1. 5  SPS  In P l a c e  * P  22  Capital CAPSLAU  capital:  <  kt  * CAPFARM,^., <  decreases  CAPSLAU  sow)  the  3  iv.a)  k t  - s u r v i v s l a u * CAPSLAU^^ <  hog  These  affect  inventory,  Terminal which  Conditions  is  fixed,  constraints  the  (e.g.  distribution  of  number the  hog  of  for  Stock  increases  or  biological  piglets  inventory  weaned between  cohorts. Initial The  Population  initial  bound on iv.b)  kt  kt  a c c o r d i n g t o economic i n c e n t i v e s g i v e n t h e  constraints. per  CAPSLAUINC  kt  Dynamics ( i n c s l a u )  kt  initial  lt  (meatcap )  i v . ) I n i t i a l . " S t e a d y S t a t e " , and V a r i a b l e s i n Farm P r o d u c t i o n The  CAPFARMINC  each  Distribution  r e g i o n a l hog  inventory  i s entered  as  a  fixed  cohort.  Terminal  "Steady  State"  Population  Distribution  (tremdist - ) ai  T  E ((-dist *N bb a  iv.c)  Terminal Terminal  SPS  levels  b b # M  ) i f a*bb +  (l-dist ) a  *  C o n d i t i o n on Number o f Hogs  q u a n t i t i e s must be  otherwise  imposed  the maximization  at  i f a = bb)  (termqhog) both  problem w i l l  m a r k e t i n g o f a l l hogs t o be consumed a s p o r k w i t h o u t  Multiplication in processing.  by  1.5  allows  f o r any  = 0  the  farm  and  trigger  the  taking  into  intra-seasonal variation  164 account  the  production  value  that  future  ai  Terminal  C o n d i t i o n o n SPS S l a u g h t e r  v. ) B a r l e y Supply  that  step  Capacity  (termslau):  T  i t  supply  function i s constructed rather  than  prices  to reflect have  an  the fact  effect  on  production:  y  L qfeedUSe a < BARQL  t  b a r t e y a j U e s t  + BARQMl  C a n a d a t  * N ,West Canada,t a  + BARQM2  t  + BARQM3  t  + BARQM4  + BARQH  1  The  hog  (barley ):  availabilities  livestock  of  T  SLAUEND < E CAPSLAU. k  A  place  capacity. HOGEND < E E N a 1  i v . d)  generations  SPS - C o n s u m p t i o n S u b - S y s t e m  t  t  Level  P o r k p r o d u c t i o n on a c a r c a s s w e i g h t b a s i s i s t h e sum o f t h e total  l i v e weight marketings adjusted  out  l o s s e s shipped  vi.  a)  from p r o d u c t i o n  regions  L i v e Hog S h i p m e n t s t o SPS S i t e s  E SLWT k vi.b)  ajkt  < LWT  Wholesale Primal P  P  f o r t r a n s p o r t and d r e s s -  kt  kt  < E E 5 i a  i s expressed  a  a i t  t o e a c h SPS s i t e .  (shippedlw  a i t  )  *(l-shrhog)  Cut Production  * SLWT  a t SPS S i t e  (atsps ) k t  aikt  i n total  w e i g h t on a c a r c a s s w e i g h t  basis  165 available  vi.c)  f o r storage  o r s h i p m e n t t o demand  Pork U t i l i t i z a t i o n The  flows  i n period  pork remaining into  (sds ) : k t  following equation  and u s e a c r o s s  storage  Row  period  exports,  i s an a c c o u n t i n g  t+1 i n s l a u g h t e r  pork  +  P o r k Demand demand  i n from  trimming  k t + 1  i s t h e amount o f  period  t,  lt  military  regions:  <  k t + 1  S0  slaughter  k t  the t o t a l  regions  adjusted  marketing  weight  of  carcass  f o r "cut to eat"  level:  Skit cuttoeat  Function  objective  under each region's  Hence  function  i s t o maximize  the  p o r k demand f u n c t i o n i n e a c h q u a r t e r  i n production,  distribution.  t + 1  k t + 1  can not exceed  * E  model's  component.  imports,  lt  The O b j e c t i v e  costs  carried  (dem )  k  The  +  losses at the r e t a i l  D  all  k  P  + toterritor  vii. )  during  k . t 1 + E Qki.fi - k,t 1 " i m p o r t s , 1  + exports  Total  of pork  i n period t : storage  production  +  shipped  region  m i l i t a r y u s e a n d q u a n t i t i e s s e n t t o demand S0  v i . d)  equation  t i m e p e r i o d . The q u a n t i t y o f p o r k h e l d i n  from t h e a c t i v i t i e s t,  regions.  marketing,  there  is a  slaughter,  revenue  area minus  p r o c e s s i n g , and  component  and  a  cost  166 vii.a)  The Revenue Component  Revenue f r o m t h e s a l e takes the following E B* t The  composite pork product  form:  E ( ahatf *D 1  t  vii.b.)  of the f i n a l  t  l t  + 0. 5 * p o r k s l f * D lt  )  2 lt  C o s t Component:  Costs  at  each  level  (farm,  SPS,  and  consumption)  are  presented, vii.b.1)  Feed C o s t s  Feed  requirements are m u l t i p l i e d  by  feed p r i c e s .  a n i m a l o f age c o h o r t a, an a v e r a g e d a i l y f e e d i n t a k e provide region.  the  nutritional  Potential  mineral/vitamin  requirements  feeds  is  include  supplement,  each  (ecap  ) to  specified  corn,  barley,  For  for  soybean  wheat,  and  a i t  each meal,  protein  supplement. Each r e g i o n ' s s p e c i f i e d feed s e t i s c o n t a i n e d i n t h e parameter daily  fform  ration  f a j  . Quarterly feed costs c o n s i s t  multiplied  by  the  number  (dayqu) t i m e s t h e p r i c e o f e a c h f e e d t y p e number o f l i v e s t o c k -E  * B  t  t * fform -E  B  t  t  vii.b.2)  i n e a c h age  * ecap  a  * E E rexpenfeed a i  Non-Feed V a r i a b l e  Non-feed  * N,  a i t  variable  days  (rfprice  in a f i t  )  average quarter  times the  cohort:  * E E E dayqu * a i f f a j  of  of t h i s  t  a i t  rfprice  f j t  ; or, *  N  a1t  Costs  costs  are v e t e r i n a r i a n  expenses,  fuel,  167 electricity,  and b r e e d i n g  -E fi t  * E E rnfcost a i  t  vii.b.3) Farm cost  c o s t s on a p e r h e a d b a s i s :  Fixed  capital  costs  enter  i n t o t h e model  o u t l a y a t t h e time o f a c q u i s i t i o n the f a c i l i t y  -E /3 * E r c a p c o s t f t i t  -E fl t  * E rrecostf i  t  vii.b.4)  Hog M a r k e t i n g  Handling  as l a r g e  initial  and r e c u r r i n g q u a r t e r l y  i s completely  * CAPFARMINC  t  t  * CAPFARM  depreciated:  )t  it  Costs  a n d c o m m i s s i o n c h a r g e s a r e l e v i e d o n e a c h h o g when  a r e marketed:  -Efl. fl ** LE LEr m c p i g t  t  vii.b.5) Pigs then  ait  Costs  expense o u t l a y s u n t i l  they  * N  a i t  ai  Feeder P i g T r a n s f e r which  shipped  t  Costs  a r e r a i s e d on one f a r m  across  transportation  production  t o feeder  regions  p i g s i z e and  t o another  farm  t  * E E E rtcpigp a i j * l  Transportation  Transport  costs  Cost  i j t  * TR ai  jt  t o Slaughter  o f market  hogs  Plant  to slaughter  plants are  c h a r g e d on a l i v e w e i g h t b a s i s : -E  fl  t  * E E E rtchog  t  vii.b.7)  incur  charges:  -E fi t vii.b.6)  * M-  i t  a i  Slaughter  a i k  Cost  i k t  * (  1 1 -  ) * SLWT shrhog  aikt  168 Costs r e l a t e d t o the slaughter -E t vii.b.8)  B  * E E E * rkill a i k  t  Processing  A l l production and  processed  a k t  and S t o r a g e  i n t h e case  vii.b.9) As  B  * E k  t  Fixed with  (rprocess  C o s t s on SPS  farm c a p i t a l  m e a t s . Once  to retail  and s t o r a g e * P  k t  sites  or tstorage f o r  costs are:  + rstorcost  kt  processed,  t  * S0 ) kt  Capacity  costs,  t h e model as a l a r g e i n i t i a l expense  ajkt  Costs  o f prepared  shipment. P r o c e s s i n g -E t  * SLWT  must b e c u t i n t o p r i m a l c u t s f o r f r e s h meat,  w h o l e s a l e meat may go d i r e c t l y later  o f hogs a r e a s f o l l o w s :  SPS c a p a c i t y  costs  enter  into  c o s t o u t l a y and r e c u r r i n g q u a r t e r l y  outlays: -E j9 t -E t  vii.b.10)  B  t  t  * E recapcosts k * E rrecosts k  t  * CAPSLAUINC  * CAPSLAU  t  Pork T r a n s p o r t a t i o n  kt  kt  Costs  T r a n s p o r t a t i o n c o s t s o f w h o l e s a l e meat l e a v i n g t h e SPS s i t e for  the r e t a i l -E t  vii.b.11) Fat  demand c e n t e r s  B  t  * E E rtcpork k 1  P r i c e Discounts  enter  a t a discounted  market hogs. The p r i c e p e n a l t y  t  B  t  * E E pdiff i k  klt  on F a t Hogs  hogs a r e marketed  -E  * Q  k l t  the objective as:  t  price  compared t o  i s modelled as f o l l o w s :  * (  1 1 - shrhog  ) * SLWT  3Jkt  169 vii.b.12) The this  Marketing  Margins  w h o l e s a l e - r e t a i l p r i c e spread  i s seasonal  and e n t e r s i n  way: -  vii.b.13)  * E rwps 1  t  Terminal  The terminal  E B t  salvage period  t  * D  lt  Values values  f o r the  slaughter  terminal  facilities  period  a r e added  herd  and  t o t h e revenue  component: +  vii.b.14)  (TVALHOG*HOGEND) + (TVALS LAU* SLAUEND)  US C o u n t e r v a i l i n g  Tariffs  Duties  on C a n a d i a n h o g s and p o r k e x p o r t e d  t o t h e US a r e  modelled as c o s t s : -  E B t  if  t  * E E E rchtariff a i k  -E )0 t  t  and  * SLWT  ajkt  i = A t l a n t i c p r o v i n c e s , Quebec, O n t a r i o Canada p r o d u c t i o n r e g i o n and  if  l k t  k = US SPS s i t e :  * E E rcptariff k i  k = C a n a d i a n SPS 1 = US demand  k j t  * Q  site  site  klt  o r Western  170 vii.b.15) A  West C a n a d i a n B a r l e y  step  created  supply  Supply  function  b y s e t t i n g bounds  f o r Western  oh s e p a r a t e  quantities  W e s t e r n Canada, e a c h s u b s e q u e n t q u a n t i t y (real  Canadian  having  barley  is  of barley i n  a higher  price  US$/lb): -E t  B  t  *  ( 0.02*BARQL  0.04*BARQM2  t  t  + 0.03*BARQMl  + 0.08*BARQM3  t  t  +  + 0.09*BARQM4  t  +  0. l*BARQH ) t  vii.b.16) The a proxy  Risk  f r o m Hog P r i c e  standard  d e v i a t i o n o f endogenous hog p r i c e s i s u s e d a s  for risk: -E t  vii.b.17)  B  t  * 0.3 RISK  Stabilization  Expected provided  Variability  Payments:  stabilization  3 quarters -E t  t  B  t  before  payments  a r e government  t h e hogs a r e m a r k e t e d :  * 0.12 RSTAB  t  subsidies  

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