A recent Iowa State University (ISU) study found that in times of high feed costs, like those of 2007, the positive economic impact of pharmaceutical technologies increased from $430/beef animal to $524/head. The study by ISU researchers John Lawrence and Maro Ibarburu is an update of a 2005 analysis that measured the economic impact of pharmaceutical technologies commonly used in beef production – parasite control products, implants, ionophores and beta-agonists – using current feed and cattle prices.

In the initial study, performance data from university studies conducted over the past 20-25 years were combined using meta-analysis, a widely accepted technique for combining empirical data. The performance data were converted to dollar impact using budget data from 10 universities in various U.S. regions. The combined economics indicate the value of these technologies increased by 22% when factoring in the higher feed costs of 2007.

"Since most of these pharmaceutical technologies improve feed efficiency and/or increase pounds of gain, it should not be surprising that they have a greater impact during times of high feed costs,” Lawrence says. “While the market price for calves and feeder cattle going into the feedlot has decreased as feed costs have increased, the price decline would have been larger if stocker operations and feedlots did not use efficiency-improving technologies."

Lawrence also analyzed the 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 weren’t used in 2007. The model indicates the U.S beef industry would have seen:

  • 14% smaller calf crop
  • 19% reduction in total beef produced
  • 11% increase in retail beef prices
  • 9% decrease in beef consumption
  • 247% increase in beef imports

A segment-by-segment analysis showed that high feed costs and changes in calf prices associated with the bioeconomy era increased total per-head costs for the cow-calf producer by 21% and feedlot costs per head by 7%. The 9% reduction in calf prices more than offset the 23% increase in feed costs for stocker operations, resulting in a 5% net decrease in total per-head costs.

The complete study can be found at: www.econ.iastate.edu/LawrencePaper.pdf.