Market Impacts of a Meat Tax

Cornhusker Economics March 20, 2019Market Impacts of a Meat Tax

By Regan Gilmore and Azzeddine Azzam

Over time, animal activists and environmentalists have made calls to put a tax on meat. What effect would that have? To find out, we estimated the impacts that a retail-level greenhouse gas (GHG) tax on meat would have on livestock and grain markets.

The research used a multimarket economic model that integrates the beef, pork, and poultry markets with the corn, distillers’ grain, soybean, soymeal, and ethanol markets. For GHG taxes, we used those provided by Springman et al. based on an emission price (social cost) of $52 per metric ton of carbon dioxide equivalent estimated by EPA. Emissions by meat type include land use, feed production, livestock production, processing, and transport.

Using emission intensities of 26.83 pounds of carbon dioxide equivalent emitted per pound of beef produced, 5.75 pounds for pork, and 5.33 pounds for poultry, the carbon dioxide equivalent taxes as percentages of 10-year USDA retail price averages (2007-2016)  are 13.19%, 3.98%, and 7.52%, respectively. The percent tax for poultry is higher than that of pork because poultry is cheaper per pound, so the tax makes up a greater percentage of the price.

Implementation of the tax, using the same 10-year price averages as baselines, results in an increase in the price of beef by 6.95% and a decline in beef consumption by 3.31%. For pork, the price rises by 3.67% and consumption declines by 0.42%. For poultry, the price increases by 6.12% and consumption declines by 0.38%.

This implies that beef consumption would be more heavily impacted by a GHG tax than pork or poultry. The price of slaughter cattle at the feedlot level declines by 1.48%.

In general, grain markets are minimally affected, with the price of corn decreasing by 0.14% and corn usage decreasing by 0.04%, for example.

Taxing beef, pork, and poultry at retail is estimated to reduce U.S. GHG emissions by 11 million metric tons of carbon dioxide equivalent per year. This would reduce total U.S. emissions by 0.17%, which is commensurate to taking 2.3 million cars off the road each year. This is approximately equivalent to 7% of cars registered in 2018. 

The research was funded by a competitive grant from the Undergraduate Creative Activities and Research Experience (UCARE) at the University of Nebraska-Lincoln.

Reprinted with permission from “Market impacts of a meat tax” by Regan Gilmore and Azzeddine Azzam, Beef Magazine, volume 55, No. 6, February 2019, pages 64-65.

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Regan Gilmore
Undergraduate Student
Department of Agricultural Economics
University of Nebraska-Lincoln
Regan.Gilmore@yahoo.com

Azzeddine Azzam
Roy Frederick Professor
Department of Agricultural Economics
University of Nebraska-Lincoln
aazzam1@unl.edu