New Study Measures Economic Impact Of Pharmaceutical Technologies

US - Pharmaceutical technologies – parasite control products, growth promotant implants, sub-therapeutic antibiotics, ionophores and beta-agonists – have a profound impact on the U.S. beef industry.
calendar icon 26 April 2007
clock icon 2 minute read

 The improvement in growth and efficiency produced by these products impacts all phases of beef production – cow-calf, stocker and feedlot – significantly increasing the volume and decreasing the cost of beef we produce in the U.S.

Dr. John Lawrence, Ph.D., professor of economics at Iowa State University and director of the Iowa Beef Center, recently completed an economic analysis of the impact of pharmaceutical technologies on U.S. beef production using 2005 cattle prices and production input costs. Performance data from university studies conducted over the past 20-25 years for each of the technologies were combined using meta-analysis, a widely accepted technique for combining empirical data. The performance results were converted to dollar impact using budget data from ten universities in various regions of the U.S. The combined economics indicate that these technologies produced a direct cost savings to producers of $365.00 per head of beef cattle raised. Selling prices would have to increase by 36 percent to cover the increase in costs without these technologies.

Lawrence also analyzed these results using the Food and Agricultural Policy Research Institute (FAPRI) model of U.S. agriculture to estimate the impact on beef production, price and trade if these pharmaceutical technologies were not available. The FAPRI model indicates that U.S. beef industry would be impacted as follows:

  • 14% smaller calf crop

  • 18% reduction in total beef produced

  • 180% increase in net beef imports

  • 13.5% increase in retail beef prices

    Pork and poultry production would expand to fill the void for domestic and export customers.
Lawrence analyzed each production segment individually. Because deworming programs have a significant impact on both pregnancy rates, survival and weaning rate, the overall impact of eliminating these combined technologies on the cow calf segment was a 47 percent increase in breakeven selling prices, or $225 per head. Pharmaceutical technologies also had a significant impact on breakeven selling prices in the feedlot segment. Implants, ionophores, antibiotics, beta-agonists and dewormers combined impact breakevens by 12% or $126.00.

Source: Drovers
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