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Who will pay for improved health standards in U.S. meat-processing plants? Simulation results from the USAGE model

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Listed:
  • Peter B. Dixon
  • Maureen T. Rimmer

Abstract

It is possible that Covid will produce permanent changes in work practices that increase costs in U.S. meat-processing plants. These changes may be beneficial for the safety of meat-processing workers and the health of the community more generally. However, they will have economic costs. In this paper we use USAGE-Food, a detailed computable general equilibrium (CGE) model of the U.S., to work out how those costs would be distributed between farmers and consumers of meat products. We also calculate industry and macroeconomic effects. Despite modelling the farmers as owning fixed factors, principally their own labour, we find that the farmer share in extra processing costs is likely to be quite moderate. Throughout the paper, we support simulation results by back-of-the-envelope calculations, diagrams and sensitivity analysis. These devices identify the mechanisms in the model and key data points that are responsible for the main results. In this way, we avoid the black-box criticism that is sometimes levelled at CGE modelling.

Suggested Citation

  • Peter B. Dixon & Maureen T. Rimmer, 2021. "Who will pay for improved health standards in U.S. meat-processing plants? Simulation results from the USAGE model," Centre of Policy Studies/IMPACT Centre Working Papers g-314, Victoria University, Centre of Policy Studies/IMPACT Centre.
    • Handle: RePEc:cop:wpaper:g-314
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    References listed on IDEAS

    as
    1. Dixon, Peter B. & Koopman, Robert B. & Rimmer, Maureen T., 2013. "The MONASH Style of Computable General Equilibrium Modeling: A Framework for Practical Policy Analysis," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 23-103, Elsevier.
    2. Peter B. Dixon & Maureen T. Rimmer & Daniel Mason-D'Croz, 2020. "Computable general equilibrium simulations of the effects on the U.S. economy of reductions in beef consumption," Centre of Policy Studies/IMPACT Centre Working Papers g-311, Victoria University, Centre of Policy Studies/IMPACT Centre.
    3. Jayson L. Lusk & Glynn T. Tonsor & Lee L. Schulz, 2021. "Beef and Pork Marketing Margins and Price Spreads during COVID‐19," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(1), pages 4-23, March.
    4. Peter B. Dixon & Maureen T. Rimmer & Robert G. Waschik, 2017. "Updating USAGE: Baseline and Illustrative Application," Centre of Policy Studies/IMPACT Centre Working Papers g-269, Victoria University, Centre of Policy Studies/IMPACT Centre.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    split of meat-processing costs between farmers and consumers; computable general equilibrium simulations; back-of-the-envelope explanations; diagrammatic analysis;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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