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Abstract

This paper examines the impact of PST on the optimal production/marketing decisions of a grow-finish hog farm operation. The analysis evaluates PST from three angles: the feed efficiency effect, the leaner meat price effect, and the aggregate-supply-induced price effect. When limited to the feed efficiency effect only, the primary response to the new technology is to increase the animal turnover rate of the operation. When the leaner meat price effect is also included, marketing weight increases while turnover rate remains relatively unchanged. Additionally, if the increased aggregate supply depressed the market price by more than 10%, the benefits from improved feed efficiency and learner meat will be completely dissipated. Aggregate price adjustments (reductions) of less than 10 percent maintained positive producer benefits resulting from improved feed efficiency and leaner meat.

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