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Performance Evaluation Of The U.S. Hog Slaughter Industry

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  • Bullock, J. Bruce

Abstract

Conventional wisdom holds that a small and decreasing number of hog slaughter firms are using their "market power" to take advantage of U.S. hog producers. Existing studies have simply calculated industry concentration ratios and assumed/asserted that the performance of such a concentrated industry must be different from the performance of a perfectly competitive industry. These researchers have rejected without testing the hypothesis that: the observed performance of the U.S. hog slaughter industry is not different from the performance that would be generated by a perfectly competitive industry. This paper derives the theoretical relationships between hog and pork prices, and hence the farm-wholesale price spread, that would exist in a perfectly competitive slaughter hog market. These performance norms are then confronted with observed weekly price/quantity relationships over the 1991-2001 period to compare observed market performance with the ideal performance norms derived from the economic theory of a perfectly competitive market. Based on the market performance measures derived from economic theory of a perfectly competitive market, the hypothesis that the U.S. hog slaughter hog market is a perfectly competitive market cannot be rejected. There simply is not any evidence to support allegations of abuse of market power by meat packers.

Suggested Citation

  • Bullock, J. Bruce, 2003. "Performance Evaluation Of The U.S. Hog Slaughter Industry," Working Papers 26044, University of Missouri Columbia, Department of Agricultural Economics.
    • Handle: RePEc:ags:umcowp:26044
    DOI: 10.22004/ag.econ.26044
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    References listed on IDEAS

    as
    1. Bullock, J. Bruce, 2001. "Why a Well Functioning Market Generates Asymmetry of Farm and Wholesale Prices For Hogs and Pork," Working Papers 92891, University of Missouri Columbia, Department of Agricultural Economics.
    2. 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 3, pages 1-28, January.
    3. Bullock, J. Bruce, 2002. "PARADIGM CHALLENGES: The Writings of a Heretic," Working Papers 93795, University of Missouri Columbia, Department of Agricultural Economics.
    4. Alan Barkema & Nancy Novack, 2001. "The new U.S. meat industry," Main Street Economist, Federal Reserve Bank of Kansas City, issue Apr.
    5. Alan Barkema & Mark Drabenstott & Nancy Novack, 2001. "The new U.S. meat industry," Economic Review, Federal Reserve Bank of Kansas City, vol. 86(Q II), pages 33-56.
    Full references (including those not matched with items on IDEAS)

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