The Economic Effect of COOL on the Mexican and United States Cattle Price Relationship

Country of Origin Labeling (COOL) was introduced in 2002 but not implemented until September, 2008. COOL required covered commodities to indicate their country of origin. Among other commodities, COOL applied to muscle cuts and ground beef. Canada and Mexico won a WTO complaint against the U.S. forcing USDA to rewrite the COOL regulations. The WTO finding on the re-written COOL regulation is due to become public any day. This paper analyzes the impact of COOL on stocker and feeder cattle price differences between the U.S. and Mexico. Cattle trade with Mexico is a longstanding market relationship. The U.S. imports stocker and feeder cattle from Mexico. Weekly AMS reported prices of Mexican cattle and Texas feeder cattle prices are used to construct a price spread. An econometric model is developed to analyze factors that affect the Mexican-U.S. feeder cattle price spread. A dummy variable is included for COOL implementation. COOL was found to have a statistically significant positive affect on the price spread for 300-400 and 500-600 pound feeder cattle. The results indicate that the Mexican cattle have received a significant discount following COOL implementation.


Keywords:
Issue Date:
2015
Publication Type:
Conference Paper/ Presentation
Record Identifier:
http://ageconsearch.umn.edu/record/196864
PURL Identifier:
http://purl.umn.edu/196864




 Record created 2017-04-01, last modified 2018-01-22

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