Updating and Recalibrating Equilibrium Displacement Models of the Australian Livestock Industries: Beef

Abstract

<p>An existing equilibrium displacement model of the Australian beef industry was updated to enable the distribution of the total benefits from the adoption of new technology or promotion investments to be estimated across the beef value chain. Three hypothetical simulations were run to test the impact of recalibrating the model to the new initial equilibrium. The distribution of the gross benefits to the various industry sectors were found to be broadly similar to those reported in the original model. Cattle producers receive between 29 and 40 percent of the potential gross benefits from the hypothetical investments, overseas consumers receive between 11 and 15 percent, while domestic consumers receive between 37 and 47 percent, depending on the scenario. Beef processors, feedlots and domestic retailers all receive much smaller shares of gross benefits, typically less than 5 percent each. While the updated model provides a framework that reflects the current industry size and structure, the results are conditional on the specified price and quantity values, their underlying assumptions and calculations, and the parameter values used to represent industry responses to price changes. </p>