## Export Meat Demand Calculations
Nominal wholesale meat prices - Calculated by USDA/ERS from data collected and published by USDA/AMS. Deflated wholesale meat prices - The nominal wholesale meat prices are deflated using the Consumer Price Index for all urban consumers (CPI) published monthly by the BLS Formula: The deflated wholesale meat price equals the nominal wholesale meat price divided by the CPI Formula: The percent change in deflated wholesale meat price equals the deflated wholesale meat price in month X divided by the deflated wholesale meat price in month (X minus 12) times 100 minus 100.
Monthly exports of meat - Calculated by USDA/ERS from data collected by the Foreign Trade Division of the Bureau of the Census. http://www.ers.usda.gov/data/meattrade/ Monthly world population - my calculations assume a 1% annual growth rate for world population Formula: The monthly percent change in per capita meat exports equals the monthly meat exports in month X times 99% divided by meat exports in month (X minus 12) times 100 minus 100.
Own price elasticity is an economic term that measures the relationship between a change in quantity sold and the accompanying change in price. The formula for elasticity is percent change in quantity sold divided by the percent change in price. For example, if the price of an item goes up by 1% and sales drop by 1%, then the calculated elasticity is -1 (-1% divided by +1%). Over time, the calculated elasticity of meat at wholesale tends to average reasonably close to -0.5, e.g. a 1% price increase is likely to result in a 0.5% decrease in quantity sold. Note: I use a Marshallian demand function rather than a Hicksian demand function. My demand model is simply D=f(% change in deflated price and % change in per capita usage). Formula: The expected percent change in per capita meat exports equals the percent change in deflated wholesale meat price times -0.5. Formula: The percent change in meat export demand equals (the actual percent change in per capita meat exports plus 100) divided by (the expected percent change in per capita meat exports plus 100) minus 1, times 100.
Prices - price data for a month is usually published about 20 days into the following month and is rarely revised. Meat trade - The export data for a month is usually published about 6 weeks after the end of the month with usually very minor revisions over the next year.
Garbage in garbage out - The estimate of export demand for meat is no more accurate than the data used in the calculation.
Others who attempt to calculate meat demand may chose to use a different data series, use unrevised data, use different elasticities or use an entirely different model for demand. |