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The Effects Of U.S. Meat Packing And Livestock Production Technologies On Marketing Margins And Prices

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  • Brester, Gary W.
  • Marsh, John M.
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    Abstract

    Real livestock prices and farm-wholesale marketing margins have steadily declined over the past 20 years. Studies examining the causes of these declines have generally failed to account directly for technological change in livestock production and red meat slaughtering. We estimate reduced-form models for beef and pork farm-wholesale marketing margins and cattle and hog prices that include specific measures of technological change. Empirical results indicate cost savings generated by improved meat packing technologies have reduced real margins and positively influenced real cattle and hog prices. However, technological change embodied in cattle production weights has led to substantial declines in real slaughter cattle prices. Nonetheless, the net effect of improved meat packing technology has been to increase cattle price by $1.75/cwt and reduce the farm-wholesale beef marketing margin by 22.8 cents/lb.

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    Bibliographic Info

    Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

    Volume (Year): 26 (2001)
    Issue (Month): 02 (December)
    Pages:

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    Handle: RePEc:ags:jlaare:31052

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    Web page: http://waeaonline.org/
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    Keywords: Demand and Price Analysis;

    References

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    1. Sherwin Rosen & Kevin M. Murphy & Jose A. Scheinkman, 1993. "Cattle Cycles," NBER Working Papers 4403, National Bureau of Economic Research, Inc.
    2. MacDonald, James M. & Ollinger, Michael & Nelson, Kenneth E. & Handy, Charles R., 2000. "Consolidation In U.S. Meatpacking," Agricultural Economics Reports 34021, United States Department of Agriculture, Economic Research Service.
    3. Schroeder, Ted C. & Ward, Clement E. & Mintert, James R. & Peel, Derrell S., 1997. "Value-Based Pricing of Fed Cattle: Challenges and Research Agenda," 1997 Annual Meeting, July 13-16, 1997, Reno\Sparks, Nevada 35837, Western Agricultural Economics Association.
    4. Donald W. Anderson & Brian C. Murray & Jackqueline L. Teague & Richard C. Lindrooth, 1998. "Exit from the Meatpacking Industry: A Microdata Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 96-106.
    5. Eales, James S., 1994. "The Inverse Lewbel Demand System," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(01), July.
    6. Martinez, Stephen W., 1999. "Vertical Coordination in the Pork and Broiler Industries: Implications for Pork and Chicken Products," Agricultural Economics Reports 34031, United States Department of Agriculture, Economic Research Service.
    7. DeJong, David N, et al, 1992. "Integration versus Trend Stationarity in Time Series," Econometrica, Econometric Society, vol. 60(2), pages 423-33, March.
    8. Purcell, Wayne D., 1989. "The Case of Beef Demand: A Failure by the Discipline," Choices, Agricultural and Applied Economics Association, vol. 4(2).
    9. Anderson, John D. & Trapp, James N., 2000. "Corn Price Effects On Cost Of Gain For Feedlot Cattle: Implications For Breakeven Budgeting," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(02), December.
    10. James Kliebenstein & Peter F. Orazem, 1999. "The Structure of Wages and Benefits in the U.S. Pork Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 144-163.
    11. John M. Antle, 1999. "The New Economics of Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 993-1010.
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    Cited by:
    1. Oral Capps Jr. & Sergio Colinā€Castillo & Manuel A. Hernandez, 2013. "Do Marketing Margins Change with Food Scares? Examining the Effects of Food Recalls and Disease Outbreaks in the U.S. Red Meat Industry," Agribusiness, John Wiley & Sons, Ltd., vol. 29(4), pages 426-454, 09.

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