Abstract
AbstractThis study connects Mexico’s imports of U.S. broiler meat with its imports of feed products. Two demand systems for Mexico are estimated: a two-stage Almost Ideal Demand System (AIDS) model for broiler meat and a demand for feed derived from a translog cost function representing the production of Mexican chickens. The models are estimated using data from 1997 to 2016. Given a change in policy where Mexico completely replaces U.S. broiler meat imports, the imports of U.S. feed products will increase. If Mexico does not completely replace U.S. imports with domestic broiler production, our model suggests that Mexican imports of U.S. feed fall.
Highlights
Mexico is a major producer of both poultry and corn
To represent the lower stage demand, expenditure share equations for U.S, Brazilian, and Mexican chicken meat are specified as an Almost Ideal Demand System (AIDS) model
Mexico is the largest importer of U.S broiler meat and one of the largest importers of U.S feed corn
Summary
Mexico is a major producer of both poultry and corn. Over the past decade, Mexico has become the largest destination for exports of U.S broiler meat and corn. In early 2017, another strain of AI (H7N9) was detected in Tennessee but was quickly contained If another major outbreak of AI in the United States occurs, Mexico’s imports of U.S poultry products could be limited or possibly eliminated. A change in trade policy between the two countries could lead Mexican food importers to diversify their source of broiler meat and corn imports Related to this is the rising consumption of meat products, which has provided an impetus for Mexico’s chicken industry to expand, modernize, and grow more of its own yellow corn. Improvements in Brazil’s roads and ports may soon allow Brazil to export agricultural products from northeastern regions of the country, potentially reducing the cost of shipping to the Mexican markets (Allen and Valdez, 2016) Any of these changes could influence U.S exports of broiler meat and feed products to Mexico.
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