Beef Export Price Response to Sanitary Status and Traceability Systems: Implications for Paraguay

Abstract

Global beef markets are highly influenced by sanitary issues, mainly related to animal health and food safety, which have been determining levels and trends in global beef trade. Food safety issues affecting human health such as bovine spongiform encephalopathy (BSE) associated with Creutzfeldt-Jacob Disease (vCJD) in humans, and other diseases affecting production such as foot and mouth disease (FMD) has encouraged putting these issues to beef trade attention. A way to address these concerns and comply with international standards is the use of traceability systems in order to quickly identify hazard sources and assure beef quality and safety. The goal of this research was to assess the effect of exporting countries sanitary status of BSE and FMD, and traceability systems in beef export prices and to examine Paraguayan beef exports relative to other exporting countries. Data of the top beef exporters was collected from the United Nations Commodity Trade Database (UN Comtrade), including export operations volume and receipt with each of their trading partners, from 2000 to 2012. Four commodities were studied: Frozen and Fresh/Chilled bone-in and boneless beef cuts. The data was analyzed using ordinary least squares regression methods (a hedonic price equation). Five models were run, one for each commodity and lastly one with all four together. Results revealed that both FMD and BSE affect negatively to beef exports prices, as well as shipments from India, that has no official FMD status and any traceability system in place. Apart from sanitary status, epidemiological events also have v a negative impact on beef prices. On the other hand, the implementation of traceability systems improves prices. In this scenario, Paraguay lags behind in the adoption of emerging markets standards for traceability systems, therefore does not access most competitive markets, which pay higher prices. As such, Paraguay faces challenges to maintain and expand beef exports, especially in regards to keeping the country's FMD free status. vi ACKNOWLEDGMENTS I would like to express my gratitude to my committee for their continued support and encouragement: Dr. James Ahern and Dr. Neal MacDougall; I offer my sincere appreciation for the learning opportunities you provided. The completion of this master's program could not have been accomplished without the support of the Fulbright Scholarship and Itaipu Binacional. I would like to thank not only for their financial support, but most importantly for providing the opportunity of achieving further studies in the U.S to many young Paraguayans; who are willing to contribute and share knowledge, which is fundamental to mitigate the excruciating deficiencies of our country. A mi familia y seres queridos: Gracias por el constante cariño y apoyo que siempre me demostraron. Gracias Dios. "Be strong and courageous. Do not be afraid or terrified, for the LORD your God goes with you; he will never leave you nor forsake you" Joshua 1:9.