An assessment of regional competitiveness in the North American egg markets

Seok-Joong Kim, Purdue University

Abstract

Structural change in U.S. egg production has occurred continuously since 1950. Production costs have been the major factor in influencing regional shifts in production. The recent movement to a freer trade environment in agricultural products could have a major impact on egg production and processing activities in the North American egg markets. A twenty-two region spatial-equilibrium model of the North American egg market is developed to determine the equilibrium values of certain variables under various scenarios. Alternative assumptions about supply response and the policy regime are made in order to capture possible future directions of regional competitiveness in the North American egg market. In addition, a quarterly model is constructed to explore the seasonality of the variables in question. The result from the basic model, which as price-responsive regional demand and supply curves and Canadian policy variables, reveals that the East North Central, the West North Central, the South Atlantic, and the West South Central regions are competitive in the U.S. Similarly, Manitoba and Prince Edward Island and the North region have competitive advantage in egg industry in Canada and Mexico, respectively. A model with perfectly elastic supply curves at current cost levels reveals that all regions in Canada and Mexico are not competitive in egg production, but that the egg industry is concentrated in several regions in the U.S. The quarterly model provided some patterns of seasonality in the variables. The patterns differ across countries and are specific to the particular variable in question. The major implications of this study are that (a) the regions with low production costs have a competitive advantage which is attributable mainly to differences in regional feed costs, and (b) among the three countries that comprise the North American egg market--Canada, the U.S., and Mexico--the U.S. has a competitive advantage in the egg industry.

Degree

Ph.D.

Advisors

Schrader, Purdue University.

Subject Area

Agricultural economics

COinS