Assessment of the goals and the policies of the National Development Plan 1979-1982 for beef cattle in Costa Rica

Carlos L. Solera-Ruiz

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: Two aspects of the National Development Plan for beef cattle were considered in this study: goals for production and exports and the policies selected to accomplish those goals;The production goal of bringing forth 91,600 metric tons of meat by 1982 could be fulfilled only if production could grow at a rate of 7.9 percent during the planning period, instead of the 2.7 percent chosen by the Plan. This goal implied the exhaustion by 1982 of the Plan's assessed availability of agricultural land. Export goals were projected with an implicit beef cattle import component, unprovided in the Plan;A reduction in the stock of cattle was experienced for the 1975-78 period as production was outpaced by gains in beef cattle exports. Production increments would imply a reversal in this production-supply relationship through investments in beef cattle during 1979-1982;Production and export goals are in need of revision. In the short run, actions ought to be directed to outweigh the stimuli for exports by devising alternative policies to restrict the supply of cattle. The domestic consumption of meat may have to be suppressed;A subset of policies to accomplish those goals was tested for effectiveness in a partial equilibrium microeconomic context. A linear programming model was developed to aid in the process of policy examination. Methodology was elaborated for use in the model to represent the multi-stage (calf cropping, developing and finishing) multi-period output cycle as a 12-month production process;Five (from fifteen) farms visited were selected for policy examination. These were two small, one medium and two large size farms from a bioclimatic beef cattle region. Three input cost and three production constraint scenarios formed the frame of reference for the examinations of policy effectiveness. There were 45 optimizations of the production programs;Cost of factors was first reduced 20% and then increased by 20%, the calf cropping credit cost was brought to 11% for all farms and the cattle finishing credit cost was increased by 25%. The constraint scenarios were the optimization of the actual production progam, the optimization of that program with a reduction of 25% in calf cropping credit, and the optimization of the original program once the imposed constraints to production were either eliminated or reduced;The policies tested were relatively inefficient for bringing forth beef cattle production, excepting amount of credit, and interest rate differentials were economically unjustified. Inefficiency in resource allocation explained the low production response to factor cost variations. For veterinary medicines the shadow price was 22 times its unit market cost in the medium size farm, and for credit it was 33 times larger than the interest rate in a small farm.

Date: 1981-01-01
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