of 2.6 cents per pound. The scenario with substitutes is set equal to one-half of that value. The key point of this substitute scenario is that some substitution will inevitably occur and it will diminish the effect of a ban. Because these substitutions will occur in the future, there is no accurate way to know what they or their likely magnitude will be. The committee used a value of one-half as a crude estimate of the likely effect of substitution.
For turkeys FCE was assumed to change from 1.68 to 1.75 tons of feed per ton of meat, a 4.2 percent increase. Feed was assumed to represent 70 percent of total production costs. The total cost increase was calculated at 2.94 percent. The 1997 turkey price of $1.05 per pound was then used to calculate a 3.1-cent-per-pound increase in the scenario without substitutes. The value with substitutes was arbitrarily assumed to be one-half of that value.
Personal communications with Richard Cowman (nutrition expert at the National Cattlemen’s Beef Association, 1995) indicated that the consequence of a ban would be an increase of $0.06 per pound in the price of beef. However, this expert did not consider that these particular uses stated were subtherapeutic, because the treatments were for preventing liver abscesses and stress-related diseases and, therefore, suggested a zero value. The retail price used was $2.80 per pound to derive a no-substitutes value of 6 cents per pound. The scenario with substitutes was one-half of that value. The analysis assumes that only 60 percent of all beef animals are affected by such a ban.
The pork data are taken from the Pork Industry Handbook (1996). The data showed a change in FCE of 6.5 percent for the first 40 pounds of gain and a change of 3.18 percent for the remaining 145 pounds of gain.
The ration costs and FCE for young pigs were $150 per ton and 2.04, respectively. The values for fattening were $120 and 3.0, respectively. These 4 values were used to weigh the changes in feed conversions. The weights were calculated to be 4.3:1. Thus, the 6.5 percent change in FCE in the starter ration came to approximately 19 percent of total ration costs. The 3 percent change was added to the remaining 81 percent. The total change in FCE was, therefore, calculated at 3.6 percent. Assuming that ration costs equal 70 percent of total production costs, the total change in retail prices represent a 2.5 percent increase. The retail price used for 1997 was $2.30 per pound to arrive at a 6-cent-per-pound increase in the scenario without substitutes.