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The closure of the US border to Canadian live cattle and beef products after the confirmation of a single Canadian BSE case in May, 2003 seriously jeopardized the Canadian beef cattle industry, which had relied heavily on exports. The inventory of cattle rapidly increased and farmers were paid record low prices for live cattle. But at the same time, the cattle slaughtering industry experienced a substantial increase in profits. The enlarged price spread between the value of live cattle and beef steak raised concerns about oligopsony market power in the live cattle market. This thesis investigates the hypothesis that the Canadian slaughtering industry exercised this market power in the months following the discovery of BSE. Two models, the conjectural variation model from the New Empirical Industrial Organization and an asymmetric price transmission model were used and the results from both models do not support the hypothesis of oligopsony market power.

Analyse of various factors of production of beef and pork meat in relation to competition

Explanatory feeder cattle basis models were developed for 16 different Virginia markets by season, futures contract month, weight, lot size, sex, breed and USDA grade differentials. The models are more disaggregated and explain up to 80 percent more of feeder cattle basis variation than any previous research. Since the variables in these explanatory models are all known in advance, these basis models are also predictive. Basis estimates from these models make it possible for a Virginia feeder cattle forward pricing agency to offer forward price and minimum price contracts to small size operators. / Master of Science