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Consolidation In U.S. Meatpacking

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Author Info

  • MacDonald, James M.
  • Ollinger, Michael
  • Nelson, Kenneth E.
  • Handy, Charles R.

Abstract

Meatpacking consolidated rapidly in the last two decades: slaughter plants became much larger, and concentration increased as smaller firms left the industry. We use establishment-based data from the U.S. Census Bureau to describe consolidation and to identify the roles of scale economies and technological change in driving consolidation. Through the 1970's, larger plants paid higher wages, generating a pecuniary scale diseconomy that largely offset the cost advantages that technological scale economies offered large plants. The larger plants' wage premium disappeared in the 1980's, and technological change created larger and more extensive technological scale economies. As a result, large plants realized growing cost advantages over smaller plants, and production shifted to larger plants.

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File URL: http://purl.umn.edu/34021
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Bibliographic Info

Paper provided by United States Department of Agriculture, Economic Research Service in its series Agricultural Economics Reports with number 34021.

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Date of creation: 2000
Date of revision:
Handle: RePEc:ags:uerser:34021

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Related research

Keywords: Concentration; consolidation; meatpacking; scale economies; structural change; Industrial Organization; Livestock Production/Industries;

References

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  1. Ollinger, Michael & MacDonald, James M. & Madison, Milton, 2000. "Structural Change In U.S. Chicken And Turkey Slaughter," Agricultural Economics Reports 34049, United States Department of Agriculture, Economic Research Service.
  2. Baltagi, Badi H & Griffin, James M & Rich, Daniel P, 1995. "Airline Deregulation: The Cost Pieces of the Puzzle," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(1), pages 245-60, February.
  3. Morrison Paul, Catherine J., 2000. "Cost Economies and Market Power in U.S. Beef Packing," Monographs, University of California, Davis, Giannini Foundation, number 11934.
  4. James M. MacDonald & Michael E. Ollinger & Kenneth E. Nelson & Charles R. Handy, 1996. "Structural Change in Meat Industries: Implications for Food Safety Regulation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 780-785.
  5. Clement E. Ward, 1990. "Meatpacking plant capacity and utilization: Implications for competition and pricing," Agribusiness, John Wiley & Sons, Ltd., vol. 6(1), pages 65-73.
  6. Hayenga, Marvin L. & Koontz, Stephen R. & Schroeder, Ted C., 1996. "Definition of Regional Cattle Procurement Markets," Staff General Research Papers 10562, Iowa State University, Department of Economics.
  7. Gallant, A. Ronald & Jorgenson, Dale W., 1979. "Statistical inference for a system of simultaneous, non-linear, implicit equations in the context of instrumental variable estimation," Journal of Econometrics, Elsevier, vol. 11(2-3), pages 275-302.
  8. Melton, Brian & Huffman, Wallace, 1995. "Beef and Pork Packing Costs and Input Demands: Effects of Unionization and Technology," Staff General Research Papers 5043, Iowa State University, Department of Economics.
  9. Edward C. Kokkelenberg & Donna R. Sockell, 1985. "Union membership in the United States, 1973รป1981," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 38(4), pages 497-543, July.
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Citations

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Cited by:
  1. John M. Crespi & Richard J. Sexton, 2004. "Bidding for Cattle in the Texas Panhandle," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 660-674.
  2. Ollinger, Michael & Nguyen, Sang V. & Blayney, Donald P. & Chambers, William & Nelson, Kenneth B., 2005. "Structural Change in the Meat, Poultry, Dairy and Grain Processing Industries," Economic Research Report 7217, United States Department of Agriculture, Economic Research Service.
  3. Ward, Clement E., 2002. "A Review of Causes for and Consequences of Economic Concentration in the U.S. Meatpacking Industry," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 03.
  4. Davis, David E. & Schluter, Gerald E., 2005. "Labor-Force Heterogeneity as a Source of Agglomeration Economies in an Empirical Analysis of County-Level Determinants of Food Plant Entry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 30(03), December.
  5. Ollinger, Michael & Nguyen, Sang V. & Blayney, Donald P. & Chambers, William & Nelson, Kenneth B., 2006. "Food Industry Mergers and Acquisitions Lead to Higher Labor Productivity," Economic Research Report 7246, United States Department of Agriculture, Economic Research Service.
  6. Arunas Juska & Lourdes Gouveia & Jackie Gabriel & Kathleen Stanley, 2003. "Manufacturing bacteriological contamination outbreaks in industrialized meat production systems: The case of E. coli O157:H7," Agriculture and Human Values, Springer, vol. 20(1), pages 3-19, March.
  7. Richard T. Rogers, 2001. "Structural change in U.S. food manufacturing, 1958-1997," Agribusiness, John Wiley & Sons, Ltd., vol. 17(1), pages 3-32.
  8. Ollinger, Michael & Ralston, Katherine L. & Guthrie, Joanne F., 2011. "School Breakfast and Lunch Costs: Are There Economies of Scale?," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103191, Agricultural and Applied Economics Association.
  9. Leroux, Nicole & Wortman, Max S., Jr. & Mathias, Eric D., 2001. "Dominant Factors Impacting The Development Of Business-To-Business (B2b) E-Commerce In Agriculture," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 4(02).
  10. Aguero, Jorge M. & Gould, Brian W., 2004. "Structural Change In U.S. Cheese Manufacturing: A Translog Cost Analysis Of A Panel Of Cheese Plants," 2004 Annual meeting, August 1-4, Denver, CO 20274, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  11. Brester, Gary W. & Marsh, John M., 2001. "The Effects Of U.S. Meat Packing And Livestock Production Technologies On Marketing Margins And Prices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(02), December.
  12. Siebert, John W. & Nayga, Rodolfo M., Jr. & Thelen, Gina C. & Kuker, Don, 2000. "Enhancing The Financial Performance Of Small Meat Processors," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 3(03).
  13. Lee, Chinkook & Schluter, Gerald E., 2001. "Consolidation, Economies Of Scale, And The Heckshcer-Ohlin Theory Of Trade - An Empirical Analysis Of Us Meat Processing Industry," International Trade in Livestock Products Symposium, January 18-19, 2001, Auckland, New Zealand 14559, International Agricultural Trade Research Consortium.
  14. Hegde, S. Aaron, 2004. "An Economic History Of The Failure Of Broiler Futures," 2004 Annual meeting, August 1-4, Denver, CO 20397, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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